81 FR 41418 - Truth in Lending (Regulation Z) Annual Threshold Adjustments (CARD Act, HOEPA and ATR/QM)
BUREAU OF CONSUMER FINANCIAL PROTECTION Federal Register Volume 81, Issue 123 (June 27, 2016)
Federal Register Volume 81, Issue 123 (June 27, 2016)
| Page Range | 41418-41422 | |
| FR Document | 2016-14782 |
[Federal Register Volume 81, Number 123 (Monday, June 27, 2016)] [Rules and Regulations] [Pages 41418-41422] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-14782] ======================================================================= ----------------------------------------------------------------------- BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Parts 1026 Truth in Lending (Regulation Z) Annual Threshold Adjustments (CARD Act, HOEPA and ATR/QM) AGENCY: Bureau of Consumer Financial Protection. ACTION: Final rule; official interpretation. ----------------------------------------------------------------------- SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is issuing this final rule amending the regulatory text and official interpretations for [[Page 41419]] Regulation Z, which implements the Truth in Lending Act (TILA). The Bureau is required to calculate annually the dollar amounts for several provisions in Regulation Z; this final rule revises, as applicable, the dollar amounts for provisions implementing amendments to TILA under the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), the Home Ownership and Equity Protection Act of 1994 (HOEPA), and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). In addition to adjusting these amounts, where appropriate, based on the annual percentage change reflected in the Consumer Price Index in effect on June 1, 2016, the Bureau is correcting a calculation error pertaining to the 2016 subsequent violation penalty safe harbor fee. DATES: This final rule is effective January 1, 2017, except for the amendment to Sec. 1026.52(b)(1)(ii)(B) which is effective on June 27, 2016. FOR FURTHER INFORMATION CONTACT: Jaclyn Maier, Counsel, Office of Regulations, Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 20552 at (202) 435-7700. SUPPLEMENTARY INFORMATION: The Bureau is amending the regulatory text and official interpretations for Regulation Z, which implements TILA, to update the dollar amounts of various thresholds that are adjusted annually based on the annual percentage change in the Consumer Price Index. Specifically, for open-end consumer credit plans under the CARD Act, the threshold that triggers requirements to disclose minimum interest charges will remain unchanged in 2017. The adjusted dollar amount for the safe harbor for a first violation penalty fee will remain unchanged at $27 in 2017; the adjusted dollar amount for the safe harbor for a subsequent violation penalty fee will remain unchanged in 2017 from the corrected amount of $38 applicable in 2016, as discussed in this notice. For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages in 2017 will be $20,579. The adjusted points and fees dollar trigger for high-cost mortgages will be $1,029. For the general rule to determine consumers' ability to repay mortgage loans, the maximum threshold for total points and fees for qualified mortgages in 2017 will be 3 percent of the total loan amount for a loan greater than or equal to $102,894; $3,087 for a loan amount greater than or equal to $61,737 but less than $102,894; 5 percent of the total loan amount for a loan greater than or equal to $20,579 but less than $61,737; $1,029 for a loan amount greater than or equal to $12,862 but less than $20,579; and 8 percent of the total loan amount for a loan amount less than $12,862. I. Background A. CARD Act Annual Adjustments In 2010, the Board of Governors of the Federal Reserve System (Board) published amendments to Regulation Z implementing the CARD Act, which amended TILA. Public Law 111-24, 123 Stat. 1734 (2009). Pursuant to the CARD Act, the Board's Regulation Z amendments established new requirements with respect to open-end consumer credit plans, including requirements for the disclosure of minimum interest charge amounts and the establishment of a safe harbor provision allowing card issuers to impose penalty fees for violating account terms without violating the restrictions on penalty fees established by the CARD Act. See 75 FR 7658, 7799 (Feb. 22, 2010) and 75 FR 37526, 37527 (June 29, 2010). The final rule issued by the Board required that these thresholds be calculated annually using the Consumer Price Index as published by the Bureau of Labor Statistics (BLS).\1\ --------------------------------------------------------------------------- \1\ The responsibility for promulgating rules under TILA was generally transferred from the Board to the Bureau effective July 21, 2011. The Bureau restated Regulation Z on December 22, 2011, and on April 28, 2016, adopted as final the December 22, 2011, notice as subsequently amended. See 76 FR 79768 (Dec. 22, 2011) and 81 FR 25323 (April 28, 2016), respectively. The Bureau's Regulation Z is located at 12 CFR part 1026. See sections 1061 and 1100A of the Dodd-Frank Act, Public Law 111-203, 124 Stat. 1376 (2010). Section 1029 of the Dodd-Frank Act excludes from this transfer of authority, subject to certain exceptions, any rulemaking authority over a motor vehicle dealer that is predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both. --------------------------------------------------------------------------- Minimum Interest Charge Disclosure Thresholds Sections 1026.6(b)(2)(iii) and 1026.60(b)(3) of the Bureau's Regulation Z provide that the minimum interest charge thresholds will be re-calculated annually using the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. When the cumulative change in the adjusted minimum value derived from applying the annual CPI-W level to the current amounts in Sec. Sec. 1026.6(b)(2)(iii) and 1026.60(b)(3) has risen by a whole dollar, the minimum interest charge amounts set forth in the regulation will be increased by $1.00. The BLS publishes consumer-based indices monthly, but does not report a CPI change on June 1; adjustments are reported in the middle of the month. This adjustment is based on the CPI-W index in effect on June 1, 2016, which was reported on May 17, 2016, and reflects the percentage change from April 2015 to April 2016. The CPI-W is a subset of the CPI-U index (based on all urban consumers) and represents approximately 28 percent of the U.S. population. The adjustment accounts for a 0.8 percent increase in the CPI-W from April 2015 to April 2016. This increase in the CPI-W when applied to the current amounts in Sec. Sec. 1026.6(b)(2)(iii) and 1026.60(b)(3) did not trigger an increase in the minimum interest charge threshold of at least $1.00, and therefore the Bureau is not amending Sec. Sec. 1026.6(b)(2)(iii) and 1026.60(b)(3). Penalty Fees Safe Harbor The Bureau's Regulation Z provides that the safe harbor provision which establishes the permissible fee thresholds in Sec. 1026.52(b)(1)(ii)(A) and (B) will be re-calculated annually using the CPI-W that was in effect on the preceding June 1. The BLS publishes consumer-based indices monthly, but does not report a CPI change on June 1; adjustments are reported in the middle of the month. On September 21, 2015, the Bureau published an adjustment, effective January 1, 2016, based on the CPI-W index in effect on June 1, 2015, which was reported on May 22, 2015. The CPI-W is a subset of the CPI-U index (based on all urban consumers) and represents approximately 28 percent of the U.S. population. When the cumulative change in the adjusted value derived from applying the annual CPI-W level to the current amounts in Sec. 1026.52(b)(1)(ii)(A) and (B) has risen by a whole dollar, those amounts will be increased by $1.00. Similarly, when the cumulative change in the adjusted value derived from applying the annual CPI-W level to the current amounts in Sec. 1026.52(b)(1)(ii)(A) and (B) has decreased by a whole dollar, those amounts will be decreased by $1.00. See comment 52(b)(1)(ii)-2. In the September 21, 2015, notice, 80 FR 56895, the subsequent violation penalty safe harbor fee amount in Sec. 1026.52(b)(1)(ii)(B) was miscalculated, as it did not fully account for situations in which the CPI-W decreased, as occurred in 2015. The published subsequent violation penalty safe harbor fee amount was $37. Effective immediately, the Bureau is amending Sec. 1026.52(b)(1)(ii)(B) to reflect the correct subsequent violation penalty safe harbor fee amount of $38. [[Page 41420]] The 2017 adjustment is based on the CPI-W index in effect on June 1, 2016, which was reported on May 17, 2016, and reflects the percentage change from April 2015 to April 2016. The 0.8 percent increase in the CPI-W from April 2015 to April 2016 did not trigger an increase in the first violation penalty safe harbor fee of $27 or the corrected subsequent violation penalty safe harbor fee of $38, and therefore, the Bureau is not further amending Sec. 1026.52(b)(1)(ii)(A) and (B) for the 2017 calendar year. B. HOEPA Annual Threshold Adjustments On January 10, 2013, the Bureau issued a final rule pursuant to, inter alia, section 1431 of the Dodd-Frank Act, which revised the loan amount threshold for HOEPA loans. 78 FR 6856 (Jan. 31, 2013) (2013 HOEPA Final Rule). The 2013 HOEPA Final Rule adjusted the dollar amount threshold to $20,000. Under Sec. 1026.32(a)(1)(ii)(A) and (B), when determining whether a transaction is a high-cost mortgage, the determination of the applicable points and fees coverage test is based upon whether the total loan amount is for $20,000 or more, or less than $20,000. The HOEPA 2013 Final Rule provides that this threshold amount be recalculated annually and the Bureau uses the Consumer Price Index for All Urban Consumers (CPI-U) index, as published by the BLS, as the index for adjusting the $20,000 figure. The CPI-U is based on all urban consumers and represents approximately 88 percent of the U.S. population. The BLS publishes consumer-based indices monthly, but does not report a CPI change on June 1; adjustments are reported in the middle of each month. The adjustment to the CPI-U index reported by BLS on May 17, 2016, was the CPI-U index in effect on June 1, and reflects the percentage change from April 2015 to April 2016. The adjustment to the $20,000 figure being adopted here reflects a 1.1 percent increase in the CPI-U index for this period and is rounded to whole dollars for ease of compliance. Pursuant to section 1431 of the Dodd Frank Act and Sec. 1026.32(a)(1)(ii)(B) as amended by the 2013 HOEPA Final Rule, implementation of the 2013 HOEPA Final Rule also changed the HOEPA points and fees dollar trigger to $1,000. The HOEPA 2013 Final Rule provides that this threshold amount will be recalculated annually and the Bureau uses the CPI-U index, as published by the BLS, as the index for adjusting the $1,000 figure. The adjustment to the CPI-U index reported by BLS on May 17, 2016, was the CPI-U index in effect on June 1, and reflects the percentage change from April 2015 to April 2016. The adjustment to the $1,000 figure being adopted here reflects a 1.1 percent increase in the CPI-U index for this period and is rounded to whole dollars for ease of compliance. C. Ability To Repay and Qualified Mortgages Annual Threshold Adjustments On January 10, 2013, the Bureau issued a final rule pursuant to, inter alia, sections 1411 and 1412 of the Dodd-Frank Act, which implemented laws requiring mortgage lenders to determine consumers' ability to repay mortgage loans before extending them credit. 78 FR 6407 (Jan. 31, 2013) (2013 ATR/QM Final Rule). The 2013 ATR/QM Final Rule established the points and fees limits that a loan must not exceed in order to satisfy the requirements for a qualified mortgage. Specifically, a covered transaction is not a qualified mortgage if the transaction's points and fees exceed 3 percent of the total loan amount for a loan amount greater than or equal to $100,000; $3,000 for a loan amount greater than or equal to $60,000 but less than $100,000; 5 percent of the total loan amount for loans greater than or equal to $20,000 but less than $60,000; $1,000 for a loan amount greater than or equal to $12,500 but less than $20,000; and 8 percent of the total loan amount for loans less than $12,500. The 2013 ATR/QM Final Rule provides that the limits and loan amounts in Sec. 1026.43(e)(3)(i) be recalculated annually for inflation and the Bureau uses the Consumer Price Index for All Urban Consumers (CPI-U) index, as published by the BLS, as the index for adjusting the figures. The CPI-U is based on all urban consumers and represents approximately 88 percent of the U.S. population. The BLS publishes consumer-based indices monthly, but does not report a CPI change on June 1; adjustments are reported in the middle of each month. The adjustment to the CPI-U index reported by BLS on May 17, 2016, was the CPI-U index in effect on June 1, and reflects the percentage change from April 2015 to April 2016. The adjustment to the 2016 figures being adopted here reflects a 1.1 percent increase in the CPI-U index for this period and is rounded to whole dollars for ease of compliance. II. Adjustment and Commentary Revision A. CARD Act Annual Adjustments Minimum Interest Charge Disclosure Thresholds--Sec. Sec. 1026.6(b)(2)(iii) and 1026.60(b)(3) The minimum interest charge amounts for Sec. Sec. 1026.6(b)(2)(iii) and 1026.60(b)(3) will remain unchanged for the year 2017. Accordingly, the Bureau is not amending these sections. Penalty Fees Safe Harbor--Sec. 1026.52(b)(1)(ii)(A) and (B) As discussed above, effective immediately, the permissible safe harbor fee amount in Sec. 1026.52(b)(1)(ii)(B) is $38. Accordingly, the Bureau is revising Sec. 1026.52(b)(1)(ii)(B) to reflect the corrected subsequent violation penalty safe harbor fee amount of $38. Effective January 1, 2017, the permissible safe harbor fee amounts are $27 for Sec. 1026.52(b)(1)(ii)(A) and $38 for Sec. 1026.52(b)(1)(ii)(B). These amounts did not change based on the increase in CPI-W from April 2015 to April 2016. Thus, they remain the same as the 2016 amount for Sec. 1026.52(b)(1)(ii)(A) and the 2016 amount corrected in this notice for Sec. 1026.52(b)(1)(ii)(B). The Bureau is amending comment 52(b)(1)(ii)-2.i to preserve a list of the historical thresholds for this provision. B. HOEPA Annual Threshold Adjustment--Comments 32(a)(1)(ii)-1 and -3 Effective January 1, 2017, for purposes of determining under Sec. 1026.32(a)(1)(ii) the points and fees coverage test under HOEPA to which a transaction is subject, the total loan amount threshold is $20,579, and the adjusted points and fees dollar trigger under Sec. 1026.32(a)(1)(ii)(B) is $1,029. When the total loan amount for a transaction is $20,579 or more, and the points and fees amount exceeds 5 percent of the total loan amount, the transaction is a high-cost mortgage. When the total loan amount for a transaction is less than $20,579, and the points and fees amount exceeds the lesser of the adjusted points and fees dollar trigger of $1,029 or 8 percent of the total loan amount, the transaction is a high-cost mortgage. Comments 32(a)(1)(ii)-1 and -3, which list the adjustments for each year, are amended to reflect for 2017 the new dollar threshold amount and the new points and fees dollar trigger, respectively. [[Page 41421]] C. Ability To Repay and Qualified Mortgages Annual Threshold Adjustments Effective January 1, 2017, for purposes of determining whether a covered transaction is a qualified mortgage under Sec. 1026.43(e), a covered transaction is not a qualified mortgage if, pursuant to Sec. 1026.43(e)(3), the transaction's total points and fees exceed 3 percent of the total loan amount for a loan amount greater than or equal to $102,894; $3,087 for a loan amount greater than or equal to $61,737 but less than $102,894; 5 percent of the total loan amount for loans greater than or equal to $20,579 but less than $61,737; $1,029 for a loan amount greater than or equal to $12,862 but less than $20,579; and 8 percent of the total loan amount for loans less than $12,862. Comment 43(e)(3)(ii)-1, which lists the adjustments for each year, is amended to reflect the new dollar threshold amounts for 2017. III. Procedural Requirements A. Administrative Procedure Act Under the Administrative Procedure Act (APA), notice and opportunity for public comment are not required if the Bureau finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest. 5 U.S.C. 553(b)(B). Pursuant to this final rule, in Regulation Z, Sec. 1026.52(b)(1)(ii)(B) in subpart E is amended and comments 32(a)(1)(ii)-1.iii and -3.iii, 43(e)(3)(ii)-1.iii, and 52(b)(1)(ii)-2.i.D in supplement I are added to update the exemption thresholds. Comments 32(a)(1)(ii)-1.iii and -3.iii, 43(e)(3)(ii)-1.iii, and 52(b)(1)(ii)-2.1.D added by this final rule are technical and non-discretionary, and they merely apply the method previously established in Regulation Z for determining adjustments to the thresholds. The amendment to Sec. 1026.52(b)(1)(ii)(B) merely applies a necessary correction to address an inadvertent calculation error for the 2016 safe harbor fee. For these reasons, the Bureau has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. Therefore, the amendments are adopted in final form. The Bureau also finds that there is good cause for making the technical calculation correction to the safe harbor fee amount in Sec. 1026.52(b)(1)(ii)(B) in this final rule effective immediately upon publication in the Federal Register. 5 U.S.C. 553(d). This portion of the final rule does not establish any new requirements; instead, it corrects an inadvertent error in the September 21, 2015, notice, 80 FR 56895, regarding the subsequent violation penalty safe harbor fee. Making the rule effective immediately will allow the correct amount to be used upon publication. B. Regulatory Flexibility Act Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a). C. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR 1320), the Bureau reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule. List of Subjects in 12 CFR Part 1026 Advertising, Consumer protection, Credit, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending. Authority and Issuance For the reasons set forth in the preamble, the Bureau amends Regulation Z, 12 CFR part 1026, as set forth below: PART 1026--TRUTH IN LENDING (REGULATION Z) 0 1. The authority citation for part 1026 continues to read as follows: Authority: 12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353, 5511, 5512, 5532, 5581; 15 U.S.C. 1601 et seq. Subpart G--Special Rules Applicable to Credit Card Accounts and Open End Credit Offered to College Students 0 2. Effective on June 27, 2016, Sec. 1026.52(b)(1)(ii)(B) is revised to read as follows: Sec. 1026.52 Limitation on fees. * * * * * (b) * * * (1) * * * (ii) * * * (B) $38 if the card issuer previously imposed a fee pursuant to paragraph (b)(1)(ii)(A) of this section for a violation of the same type that occurred during the same billing cycle or one of the next six billing cycles; or * * * * * 0 3. Effective on January 1, 2017, in Supplement I to Part 1026--Official Interpretations: 0 a. Under Section 1026.32--Requirements for High-Cost Mortgages, under 32(a)--Coverage, under Paragraph 32(a)(1)(ii), paragraphs 1.iii and 3.iii are added. 0 b. Under Section 1026.43--Minimum Standards for Transactions Secured by a Dwelling, under 43(e)--Qualified mortgages, under Paragraph 43(e)(3)(ii), paragraph 1.iii is added. 0 c. Under Section 1026.52--Limitations on Fees, under 52(b)--Limitations on penalty fees, under 52(b)(1)(ii)--Safe harbors, paragraph 2.i.D is added. The additions read as follows: SUPPLEMENT I TO PART 1026--OFFICIAL INTERPRETATIONS * * * * * Subpart E--Special Rules for Certain Home Mortgage Transactions * * * * * Section 1026.32--Requirements for Certain Closed-End Home Mortgages 32(a) Coverage. Paragraph (a)(1). * * * * * Paragraph 32(a)(1)(ii). 1. * * * iii. For 2017, $1,029, reflecting a 1.1 percent increase in the CPI-U from June 2015 to June 2016, rounded to the nearest whole dollar. * * * * * 3. * * * iii. For 2017, $20,579, reflecting a 1.1 percent increase in the CPI-U from June 2015 to June 2016, rounded to the nearest whole dollar. * * * * * Section 1026.43--Minimum Standards for Transactions Secured by a Dwelling * * * * * 43(e) Qualified mortgages. * * * * * 43(e)(3) Limits on points and fees for qualified mortgages. * * * * * Paragraph 43(e)(3)(ii). 1. * * * iii. For 2017, reflecting a 1.1 percent increase in the CPI-U that was reported on the preceding June 1, a covered transaction is not a qualified mortgage unless the transactions total points and fees do not exceed: A. For a loan amount greater than or equal to $102,894: 3 percent of the total loan amount; B. For a loan amount greater than or equal to $61,737 but less than $102,894: $3,087; C. For a loan amount greater than or equal to $20,579 but less than $61,737: 5 percent of the total loan amount; D. For a loan amount greater than or equal to $12,862 but less than $20,579: $1,029; [[Page 41422]] E. For a loan amount less than $12,862: 8 percent of the total loan amount. * * * * * Subpart G--Special Rules Applicable to Credit Card Accounts and Open-End Credit Offered to College Students Section 1026.52--Limitations on Fees * * * * * 52(b) Limitations on penalty fees. * * * * * 52(b)(1) General rule. * * * * * 52(b)(1)(ii) Safe harbors. * * * * * 2. * * * i. * * * D. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $27 under Sec. 1026.52(b)(1)(ii)(A), through December 31, 2016. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $37 under Sec. 1026.52(b)(1)(ii)(B), through June 26, 2016, and $38 under Sec. 1026.52(b)(1)(ii)(B) from June 27, 2016 through December 31, 2016. * * * * * Dated: June 14, 2016. Richard Cordray Director, Bureau of Consumer Financial Protection. [FR Doc. 2016-14782 Filed 6-24-16; 8:45 am] BILLING CODE 4810-AM-P
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(ii) Subject to a Congressional United States Government (2) Exclusions. Documentary material
subpoena or relates to an ongoing Accountability Office, or the is not an inherited record nor a
investigation by Congress, the United Corporation’s Office of Inspector receivership record and is not subject to
States Government Accountability General shall be retained pursuant to the record retention requirements of
Office, or the Corporation’s Inspector the conditions of such hold, subpoena, section 12 U.S.C. 5390(a)(16)(D) and this
General; or or investigation. section if it is:
(iii) An inherited record that the (iii) In no event shall a receivership (i) A duplicate copy of retained
Corporation has determined is necessary record be retained by the Corporation documentary material, reference
for a present or reasonably foreseeable for a period of less than six years material, a draft of a document that is
future evidentiary need of the following the termination of the superseded by later drafts or revisions,
Corporation or the public. receivership to which it relates. documentary material provided to the
(2) Examples. Examples of inherited (2) Not included in receivership Corporation by other parties in
records include, without limitation: records. Receivership records do not concluded litigation for which all
Correspondence; tax forms, accounting include inherited records. appeals have expired, transitory
forms, and related work papers; internal (3) Examples. Examples of information including routine system
audits; inventories; board of directors or receivership records include, without messages and system-generated log files,
committee meeting minutes; personnel limitation: Correspondence; tax forms, notes and other material of a personal
files and employee benefits information; accounting forms and related work nature, or other documentary material
general ledger and financial reports; papers; inventories; contracts and other not routinely maintained under the
financial data; litigation files; loan information relating to the management standard record retention policies and
documents including records relating to and disposition of the assets of the procedures of the Corporation;
intercompany debt; contracts and covered financial company; (ii) Documentary material generated
agreements to which the covered documentary material relating to the or maintained by a bridge financial
financial company was a party; appointment of the Corporation as company, or by a subsidiary or affiliate
customer accounts and transactions; receiver; administrative records and of a covered financial company, that
qualified financial contracts and related other information relating to was not provided to the covered
information; and reports or other administrative proceedings; pleadings financial company or to the Corporation
records of subsidiaries or affiliates of the and similar documents in civil as receiver; or
covered financial company that were litigation, criminal restitution, forfeiture (iii) Non-publicly available
provided to the covered financial litigation, and all other litigation matters confidential supervisory information or
company. in which the Corporation as receiver is operating or condition reports prepared
(3) Transfer of an inherited record to a party; the charter and formation by, on behalf of, or at the requirement
an acquirer of assets or liabilities of a documents of a bridge financial of any agency responsible for the
covered financial company. If the company; contracts, other documents, regulation or supervision of financial
Corporation transfers an inherited and information relating to the role of companies or their subsidiaries.
record of a covered financial company the Corporation as receiver in (f) Policies and procedures. The
to a third party (including a bridge overseeing the operations of the bridge Corporation may establish policies and
financial company) in connection with financial company; reports or other procedures with respect to the retention
the acquisition of assets or liabilities of records of the bridge financial company of inherited records and receivership
the covered financial company by such and its subsidiaries or affiliates that records that are consistent with this
third party, the record retention were provided to the Corporation as section.
requirements of 12 U.S.C. 5390(a)(16)(D) receiver; and documentary material
Dated at Washington, DC, this 21st day of
and paragraph (c)(1) of this section shall relating to the administration, June, 2016.
be satisfied if the third party agrees, in determination, and payment of claims
By order of the Board of Directors.
writing, that: by the Corporation as receiver.
(e) General provisions. With respect to Federal Deposit Insurance Corporation.
(i) It will maintain the inherited
record for at least six years from the date any documentary material described in Robert E. Feldman,
of the appointment of the Corporation as paragraphs (c) and (d) of this section, Executive Secretary.
receiver for the covered financial the following applies: [FR Doc. 2016–15020 Filed 6–24–16; 8:45 am]
company unless otherwise notified in (1) Impact on discoverability, BILLING CODE 6714–01–P
writing by the Corporation; and admissibility, or release; compliance
(ii) Prior to destruction of such with court orders. The Corporation’s
inherited record it will provide the determination that documentary BUREAU OF CONSUMER FINANCIAL
Corporation with notice and the material must be maintained pursuant PROTECTION
opportunity to cause the inherited to 12 U.S.C. 5390(a)(16)(D) and this
record to be returned to the Corporation. section shall not bear on the 12 CFR Parts 1026
(d) Receivership records—(1) discoverability or admissibility of such
Retention schedule for receivership documentary material in any court, Truth in Lending (Regulation Z) Annual
records. (i) A receivership record shall tribunal, or other adjudicative Threshold Adjustments (CARD Act,
be retained indefinitely to the extent proceeding nor on whether such HOEPA and ATR/QM)
that there is a present or reasonably documentary material is subject to AGENCY: Bureau of Consumer Financial
foreseeable future evidentiary or release under the Freedom of Protection.
historical need for such receivership Information Act, 5 U.S.C. 552, the ACTION: Final rule; official
Lhorne on DSK30JT082PROD with RULES
record. Privacy Act of 1974, 5 U.S.C. 552a, or interpretation.
(ii) A receivership record that is any other law. The Corporation shall
subject to a litigation hold imposed by comply with any applicable court order SUMMARY: The Bureau of Consumer
the Corporation, is subject to a concerning mandatory retention or Financial Protection (Bureau) is issuing
Congressional subpoena, or relates to an destruction of any documentary this final rule amending the regulatory
ongoing investigation by Congress, the material subject to this section. text and official interpretations for
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E. For a loan amount less than E. Sloan, Counsel, Legal Division, (703) of residential mortgage loans. This
$12,862: 8 percent of the total loan 562–6137. paragraph includes a condition that the
amount. SUPPLEMENTARY INFORMATION securitization documents must require
* * * * * that the servicer commence action to
I. Background mitigate losses no later than ninety days
Subpart G—Special Rules Applicable The FDIC, in its regulation codified at after an asset first becomes delinquent
to Credit Card Accounts and Open-End 12 CFR 360.6 (the ‘‘Securitization Safe unless all delinquencies on such asset
Credit Offered to College Students Harbor Rule’’), set forth criteria under have been cured.
which, in its capacity as receiver or In January, 2013, the Consumer
Section 1026.52—Limitations on Fees Financial Protection Bureau (‘‘CFPB’’)
conservator of an insured depository
* * * * * institution, it will not, in the exercise of adopted mortgage loan servicing
52(b) Limitations on penalty fees. its authority to repudiate contracts, requirements that became effective on
* * * * * recover or reclaim financial assets January 10, 2014. One of the
52(b)(1) General rule. transferred in connection with requirements, set forth in Subpart C to
securitization transactions. Asset Regulation X, at 12 CFR 1024.41, in
* * * * * general prohibits a servicer from
52(b)(1)(ii) Safe harbors. transfers that, under the Securitization
Safe Harbor Rule, are not subject to commencing a foreclosure unless the
* * * * * borrower’s mortgage loan obligation is
2. * * * recovery or reclamation through the
exercise of the FDIC’s repudiation more than 120 days delinquent. This
i. * * * section of Regulation X also provides
D. Card issuers were permitted to authority include those that pertain to
certain grandfathered transactions, such additional rules that, among other
impose a fee for violating the terms of things, require a lender to further delay
an agreement if the fee did not exceed as, for example, asset transfers made
foreclosure if the borrower submits a
$27 under § 1026.52(b)(1)(ii)(A), through prior to December 31, 2010 that satisfied
loss mitigation application before the
December 31, 2016. Card issuers were the conditions (except for the legal
lender has commenced the foreclosure
permitted to impose a fee for violating isolation condition addressed by the
process and requires a lender to delay
the terms of an agreement if the fee did Securitization Safe Harbor Rule) for sale
a foreclosure for which it has
not exceed $37 under accounting treatment under generally
commenced the foreclosure process if a
§ 1026.52(b)(1)(ii)(B), through June 26, accepted accounting principles
borrower has submitted a complete loss
2016, and $38 under (‘‘GAAP’’) in effect for reporting periods
mitigation application more than 37
§ 1026.52(b)(1)(ii)(B) from June 27, 2016 prior to November 15, 2009 and that
days before a foreclosure sale.1
through December 31, 2016. pertain to a securitization transaction
that satisfied certain other requirements. II. The Proposed Rule
* * * * *
In addition, the Securitization Safe While the Securitization Safe Harbor
Dated: June 14, 2016. Harbor Rule provides that asset transfers Rule does not define what constitutes
Richard Cordray that are not grandfathered, but that action to mitigate losses, the preamble
Director, Bureau of Consumer Financial satisfy the conditions (except for the to the notice of proposed rulemaking
Protection. legal isolation condition addressed by that accompanied an earlier amendment
[FR Doc. 2016–14782 Filed 6–24–16; 8:45 am] the Securitization Safe Harbor Rule) for to the Securitization Safe Harbor Rule
BILLING CODE 4810–AM–P sale accounting treatment under GAAP stated, ‘‘action to mitigate losses may
in effect for reporting periods after include contact with the borrower or
November 15, 2009 and that pertain to other steps designed to return the asset
FEDERAL DEPOSIT INSURANCE a securitization transaction that satisfies to regular payments, but does not
CORPORATION all other conditions of the Securitization require initiation of foreclosure or other
Safe Harbor Rule (such asset transfers, formal enforcement proceedings.’’ 2
12 CFR Part 360 together with grandfathered asset Accordingly, it should be unlikely that
RIN 3064–AE38
transfers, are referred to collectively as the 90-day loss mitigation requirement
Safe Harbor Transfers) will not be of the Securitization Safe Harbor Rule
Treatment of Financial Assets subject to FDIC recovery or reclamation would conflict with the foreclosure
Transferred in Connection With a actions through the exercise of the commencement delays mandated by the
Securitization or Participation FDIC’s repudiation authority. For any CFPB under Regulation X. However, as
securitization transaction in respect of there may be circumstances where
AGENCY: Federal Deposit Insurance which transfers of financial assets do commencement of foreclosure is the
Corporation (‘‘FDIC’’). not qualify as Safe Harbor Transfers but only available and reasonable loss
ACTION: Final rule. which transaction satisfies all of its mitigation action, the FDIC recently
other requirements, the Securitization issued a notice of proposed rulemaking
SUMMARY: The FDIC is revising a Safe Harbor Rule provides that, in the
provision of its Securitization Safe (the ‘‘NPR’’) to amend the Securitization
event the FDIC as receiver or Safe Harbor Rule to clarify that the
Harbor Rule, which relates to the conservator remains in monetary default
treatment of financial assets transferred documents governing a securitization
for a specified period under a transaction need not require an action
in connection with a securitization or securitization due to its failure to pay or
participation, in order to clarify a prohibited by Regulation X in order to
apply collections or repudiates the satisfy the loss mitigation conditions for
requirement as to loss mitigation by securitization asset transfer agreement safe harbor. The NPR was published in
Lhorne on DSK30JT082PROD with RULES
servicers of residential mortgage loans. and does not pay damages within a the Federal Register on November 25,
DATES: Effective July 27, 2016. specified period, certain remedies can 2015 with a 60-day comment period.3
FOR FURTHER INFORMATION CONTACT: be exercised on an expedited basis.
George H. Williamson, Manager, Paragraph (b)(3)(ii) of the 1 See 12 CFR 1024.41(f) and (g).
Division of Resolutions and Securitization Safe Harbor Rule sets 2 75 FR 27471, 27479 (May 17, 2010).
Receiverships, (571) 858–8199. Phillip forth conditions relating to the servicing 3 80 FR 73680 (November 25, 2015).
VerDate Sep<11>2014 15:06 Jun 24, 2016 Jkt 238001 PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 E:\FR\FM\27JNR1.SGM 27JNR1](https://thefederalregister.org/doc/81_FR_41541/page/5.svg)
Document Created: 2016-06-25 02:06:38
Document Modified: 2016-06-25 02:06:38
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule; official interpretation. | |
| Dates | This final rule is effective January 1, 2017, except for the amendment to Sec. 1026.52(b)(1)(ii)(B) which is effective on June 27, 2016. | |
| Contact | Jaclyn Maier, Counsel, Office of Regulations, Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 20552 at (202) 435-7700. | |
| FR Citation | 81 FR 41418 | |
| CFR Associated | Advertising; Consumer Protection; Credit; Credit Unions; Mortgages; National Banks; Reporting and Recordkeeping Requirements; Savings Associations and Truth in Lending |
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