81 FR 86250 - Appraisals for Higher-Priced Mortgage Loans Exemption Threshold
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
FEDERAL RESERVE SYSTEM
BUREAU OF CONSUMER FINANCIAL PROTECTION Federal Register Volume 81, Issue 230 (November 30, 2016)
Office of the Comptroller of the Currency
FEDERAL RESERVE SYSTEM
BUREAU OF CONSUMER FINANCIAL PROTECTION
Federal Register Volume 81, Issue 230 (November 30, 2016)
| Page Range | 86250-86256 | |
| FR Document | 2016-28699 |
[Federal Register Volume 81, Number 230 (Wednesday, November 30, 2016)] [Rules and Regulations] [Pages 86250-86256] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-28699] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 34 [Docket No. OCC-2015-0021] RIN 1557-AD99 FEDERAL RESERVE SYSTEM 12 CFR Part 226 [Docket No. R-1443] RIN 7100-AD 90 BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1026 [Docket No. CFPB-2016-0035] RIN 3170-AA68 Appraisals for Higher-Priced Mortgage Loans Exemption Threshold AGENCY: Board of Governors of the Federal Reserve System (Board); Bureau of Consumer Financial Protection (Bureau); and Office of the Comptroller of the Currency, Treasury (OCC). ACTION: Final rules, official interpretations and commentary. ----------------------------------------------------------------------- SUMMARY: The OCC, the Board, and the Bureau are finalizing amendments to the official interpretations for their regulations that implement section 129H of the Truth in Lending Act (TILA). Section 129H of TILA establishes special appraisal requirements for ``higher-risk mortgages,'' termed ``higher-priced mortgage loans'' or ``HPMLs'' in the agencies' regulations. The OCC, the Board, the Bureau, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA) and the Federal Housing Finance Agency (FHFA) (collectively, the Agencies) issued joint final rules implementing these requirements, effective January 18, 2014. The Agencies' rules exempted, among other loan types, transactions of $25,000 or less, and required that this loan amount be adjusted annually based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there is no annual percentage increase in the CPI-W, the OCC, the Board and the Bureau will not adjust this exemption threshold from the prior year. The final rule will memorialize this as well as the agencies' calculation method for determining the adjustment in years following a year in which there is no annual percentage increase in the CPI-W. Based on the CPI-W in effect as of June 1, 2016, the exemption threshold will remain at $25,500 through 2017. DATES: This final rule is effective January 1, 2017. FOR FURTHER INFORMATION CONTACT: OCC: MaryAnn Nash, Counsel, Legislative and Regulatory Activities Division, (202) 649-6287; for persons who are deaf and hard of hearing TTY, (202) 649-5597. Board: Lorna M. Neill, Senior Counsel, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, at (202) 452-3667; for users of Telecommunications Device for the Deaf (TDD) only, contact (202) 263-4869. Bureau: Jaclyn Maier, Counsel, Office of Regulations, Consumer Financial Protection Bureau, at (202) 435-7700. SUPPLEMENTARY INFORMATION: I. Background The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) amended the Truth in Lending Act (TILA) to add special appraisal requirements for ``higher-risk mortgages.'' \1\ In January 2013, the Agencies issued a joint final rule implementing these requirements and adopted the term ``higher-priced mortgage loan'' (HPML) instead of ``higher-risk mortgage'' (the January 2013 Final Rule).\2\ In July 2013, the Agencies proposed additional exemptions from the January 2013 Final Rule (the 2013 Supplemental Proposed Rule).\3\ In December 2013, the Agencies issued a supplemental final rule with additional exemptions from the January 2013 Final Rule (the December 2013 Supplemental Final Rule).\4\ Among other exemptions, the Agencies adopted an exemption from the new HPML appraisal rules for transactions of [[Page 86251]] $25,000 or less, to be adjusted annually for inflation. --------------------------------------------------------------------------- \1\ Public Law 111-203 section 1471, 124 Stat. 1376 (2010), codified at TILA section 129H, 15 U.S.C. 1639h. \2\ 78 FR 10368 (Feb. 13, 2013). \3\ 78 FR 48548 (Aug. 8, 2013). \4\ 78 FR 78520 (Dec. 26, 2013). --------------------------------------------------------------------------- The Bureau's, the OCC's, and the Board's versions of the January 2013 Final Rule and December 2013 Supplemental Final Rule and corresponding official interpretations are substantively identical. The FDIC, NCUA, and FHFA adopted the Bureau's version of the regulations under the January 2013 Final Rule and December 2013 Supplemental Final Rule.\5\ --------------------------------------------------------------------------- \5\ See NCUA: 12 CFR 722.3; FHFA: 12 CFR part 1222. Although the FDIC adopted the Bureau's version of the regulation, the FDIC did not issue its own regulation containing a cross-reference to the Bureau's version. See 78 FR 10368, 10370 (Feb. 13, 2013). --------------------------------------------------------------------------- Section 34.203(b)(2) of subpart G of part 34 of the OCC's regulations, Sec. 226.43(b)(2) of the Board's Regulation Z, and Sec. 1026.35(c)(2)(ii) of the Bureau's Regulation Z, and their accompanying interpretations,\6\ provide that the exemption threshold for smaller loans will be adjusted effective January 1 of each year based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. Any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900. If there is no annual percentage increase in the CPI-W, the OCC, the Board, and the Bureau will not adjust the threshold amounts from the prior year.\7\ --------------------------------------------------------------------------- \6\ See 12 CFR part 34, appendix C to subpart G, comment 203(b)(2)-1 (OCC); 12 CFR part 226, supplement I, comment 43(b)(2)-1 (Board); and 12 CFR part 1026, Supplement I, comment 35(c)(2)(ii)-1 (Bureau). \7\ See 78 FR 48548, 48565 (Aug. 8, 2013) (``Thus, under the proposal, if the CPI-W decreases in an annual period, the percentage increase would be zero, and the dollar amount threshold for the exemption would not change.''). --------------------------------------------------------------------------- II. Commentary Revision On August 4, 2016, the OCC, the Board and the Bureau published a proposed rule in the Federal Register to memorialize the calculation method used by the agencies each year to adjust the exemption threshold. See 81 FR 51394 (Aug. 4, 2016). The proposed commentary stated that if there is no annual percentage increase in the CPI-W, the OCC, the Board and the Bureau will not adjust the exemption threshold from the prior year. The proposed commentary further set forth the calculation method the agencies would use in years following a year in which the exemption threshold was not adjusted because there was no increase in the CPI-W from the previous year. As the OCC, the Board and the Bureau discussed in the proposal, the proposed calculation method would ensure that the values for the exemption threshold keep pace with the CPI-W as contemplated in the December 2013 Supplemental Final Rule. The comment period closed on September 6, 2016. In response to the proposal, the OCC, the Board and the Bureau received one comment from an individual, one from a State bankers association, and one from a community bank. The individual supported the proposal. The State bankers association requested that the smaller dollar loan exemption be raised to $50,000, and the community bank commenter requested an exemption from the HPML rules for small institutions. Both of these comments are beyond the scope of this rulemaking. The OCC, the Board, and the Bureau are adopting the commentary revisions as proposed, with some minor clarifying amendments. These changes will be effective on January 1, 2017. The new commentary is substantively identical for Sec. 34.203(b)(2) of subpart G of part 34 of the OCC's regulations, Sec. 226.43(b)(2) of the Board's Regulation Z, and Sec. 1026.35(c)(2)(ii) of the Bureau's Regulation Z. For ease of reference, this ``Commentary Revision'' discussion refers only to the section numbers of the commentary that will be published in the Bureau's Regulation Z at 12 CFR part 1026, supplement I. Comment 35(c)(2)(ii)-1 to the Bureau's Regulation Z currently provides the threshold amount in effect during a particular period and details the rules the agencies use for rounding the threshold calculation to the nearest $100 or $1,000 increment, as discussed above in part I, ``Background.'' The OCC, the Board and the Bureau are revising comment 35(c)(2)(ii)-1 by moving the text regarding the threshold amount that is in effect during a particular period to a new proposed comment 35(c)(2)(ii)-3. Consistent with the proposal, the discussion of how the agencies round the threshold calculation will remain in comment 35(c)(2)(ii)-1 of the final rule. Additionally, current comments 35(c)(2)(ii)-2 and 35(c)(2)(ii)-3 are re-numbered as comments 35(c)(2)(ii)-4 and 35(c)(2)(ii)-5, respectively. As the Agencies have stated previously,\8\ if there is no annual percentage increase in the CPI-W, the OCC, the Board, and the Bureau will not adjust the exemption threshold from the prior year. This position is consistent with the Board's and the Bureau's approach in adjusting the coverage thresholds for the Consumer Leasing Act (CLA) and TILA, based on section 1100E(b) of the Dodd-Frank Act, which states that the threshold must be adjusted by the ``annual percentage increase'' in the CPI-W (emphasis added).\9\ The Board and the Bureau are publishing similar amendments to the commentaries to each of their respective regulations implementing the CLA (Regulation M) and TILA (Regulation Z) elsewhere in this issue of the Federal Register. --------------------------------------------------------------------------- \8\ See 78 FR 48548, 48565 (Aug. 8, 2013) and 80 FR 73943, 73944 (Nov. 27, 2015). \9\ 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (``[A]n annual period of deflation or no inflation would not require a change in the threshold amount.''). --------------------------------------------------------------------------- For the HPML appraisal rule exemption for smaller loans, the OCC, the Board, and the Bureau are memorializing this concept in comment 35(c)(2)(ii)-2, which provides that, if the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year. For example, if the threshold in effect from January 1, 2019, through December 31, 2019, is $27,500 and the CPI-W in effect on June 1 of 2019, indicates a 1.1 percent decrease from the CPI-W in effect on June 1, 2018, the threshold in effect for January 1, 2020, through December 31, 2020, will remain $27,500. In the final rule, comment 35(c)(2)(ii)-2 further sets forth the calculation method the agencies would use in years following a year in which the exemption threshold was not adjusted because there was no increase in the CPI-W from the previous year. Specifically, comment 35(c)(2)(ii)-2 provides that, for the years after a year in which the threshold did not change because the CPI-W in effect on June 1 decreased from the CPI-W in effect on June 1 of the previous year, the threshold is calculated by applying the annual percentage change in the CPI-W to the dollar amount that would have resulted, after rounding, if the decreases and any subsequent increases in the CPI-W had been taken into account. Comment 35(c)(2)(ii)-2.i further states that, if the resulting amount, after rounding, is greater than the current threshold, then [[Page 86252]] the threshold effective January 1 the following year will increase accordingly. For example, assume that the threshold in effect from January 1, 2019, through December 31, 2019, is $27,500 and that, due to a 1.1 percent decrease from the CPI-W in effect on June 1, 2018, to the CPI-W in effect on June 1, 2019, the threshold in effect from January 1, 2020, through December 31, 2020, remains at $27,500. If, however, the threshold had been adjusted downward to reflect the decrease in the CPI-W over that time period, the threshold in effect from January 1, 2020, through December 31, 2020, would have been $27,200, after rounding. Further assume that the CPI-W in effect on June 1, 2020, increased by 1.6 percent from the CPI-W in effect on June 1, 2019. The calculation for the threshold that will be in effect from January 1, 2021, through December 31, 2021, is based on the impact of a 1.6 percent increase in the CPI-W on $27,200, rather than $27,500, resulting in a 2021 threshold of $27,600. Furthermore, comment 35(c)(2)(ii)-2.ii states that, if the resulting amount calculated, after rounding, is equal to or less than the current threshold, then the threshold effective January 1 the following year will not change, but future increases will be calculated based on the amount that would have resulted, after rounding. To illustrate, assume in the example above that the CPI-W in effect on June 1, 2020, increased by only 0.6 percent from the CPI-W in effect on June 1, 2019. The calculation for the threshold that will be in effect from January 1, 2021, through December 31, 2021, is based on the impact of a 0.6 percent increase in the CPI-W on $27,200. The resulting amount, after rounding, is $27,400, which is lower than $27,500, the threshold in effect from January 1, 2020, through December 31, 2020. Therefore, the threshold in effect from January 1, 2021, through December 31, 2021, will remain $27,500. However, the calculation for the threshold that will be in effect from January 1, 2022, through December 31, 2022, will apply the percentage change in the CPI-W to $27,400, the amount that would have resulted based on the 0.6 percent change from the CPI-W in effect on June 1, 2019, after rounding, to the CPI-W in effect on June 1, 2020. III. 2017 Threshold Based on the calculation method detailed above, the exemption threshold amount for 2017 remains at $25,500. This is based on the CPI- W in effect on June 1, 2016, which was reported on May 17, 2016. The Bureau of Labor Statistics publishes consumer-based indices monthly, but does not report a CPI change on June 1; adjustments are reported in the middle of the month. 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 CPI-W reported on May 17, 2016, reflects a 0.8 percent increase in the CPI-W from April 2015 to April 2016. Because the CPI-W decreased by 0.8 percent from April 2014 to April 2015, the OCC, the Board and the Bureau are calculating the threshold based on the amount that would have resulted had this decrease been taken into account, which is $25,300. A 0.8 percent increase in the CPI-W applied to $25,300 results in $25,500, which is the same threshold amount for 2016. Thus, the exemption threshold amount that will be in effect for 2017 remains at $25,500. The OCC, the Board and the Bureau are revising the commentaries to their respective regulations to add new comments as follows:Comment 203(b)(2)-3.iv to 12 CFR part 34, appendix C to subpart G (OCC); Comment 43(b)(2)-3.iv to supplement I of 12 CFR part 226 (Board); and Comment 35(c)(2)(ii)-3.iv in supplement I of 12 CFR part 1026 (Bureau). These new comments state that, from January 1, 2017, through December 31, 2017, the threshold amount is $25,500. These revisions are effective January 1, 2017. IV. Regulatory Analysis Administrative Procedure Act Under the Administrative Procedure Act, notice and opportunity for public comment are not required if the OCC, the Board and the Bureau find that notice and public comment are impracticable, unnecessary, or contrary to the public interest.\10\ The 2017 threshold amount for exempt transactions announced in this rule, $25,500, is technical and applies the calculation method set forth elsewhere in this final rule, for which notice and public comment were provided.\11\ For these reasons, the OCC, the Board and the Bureau have determined that publishing a notice of proposed rulemaking and providing opportunity for public comment for purposes of the 2017 threshold adjustment are unnecessary. Therefore, the amendments regarding the 2017 threshold amount for exempt transactions are adopted in final form. --------------------------------------------------------------------------- \10\ 5 U.S.C. 553(b)(B). \11\ See 81 FR 51394 (Aug. 4, 2016). --------------------------------------------------------------------------- Bureau's Dodd-Frank Act Section 1022(b)(2) Analysis In developing the final rule, the Bureau has considered potential benefits, costs, and impacts.\12\ In addition, the Bureau has consulted, or offered to consult with, the prudential regulators, the Securities and Exchange Commission, the Department of Housing and Urban Development, the Federal Housing Finance Agency, the Federal Trade Commission, and the Department of the Treasury, including regarding consistency with any prudential, market, or systemic objectives administered by such agencies. --------------------------------------------------------------------------- \12\ Specifically, section 1022(b)(2)(A) calls for the Bureau to consider the potential benefits and costs of a regulation to consumers and covered persons, including the potential reduction of access by consumers to consumer financial products or services; the impact on depository institutions and credit unions with $10 billion or less in total assets as described in section 1026 of the Act; and the impact on consumers in rural areas. --------------------------------------------------------------------------- The Bureau has chosen to evaluate the benefits, costs and impacts of the final rule against the current state of the world, which takes into account the current regulatory regime. The Bureau is not aware of any significant benefits or costs to consumers or covered persons associated with the final rule relative to the baseline. The OCC, the Board, and the Bureau previously stated that if there is no annual percentage increase in the CPI-W, then the agencies will not adjust the exemption threshold from the prior year.\13\ The final rule memorializes this in official commentary. The final rule also clarifies how the threshold is calculated for years after a year in which the threshold did not change. The Bureau believes that this clarification memorializes the method that the Bureau would be expected to use: This method holds the threshold fixed until a notional threshold calculated using the Bureau's methodology, taking into account both decreases and increases in the CPI-W, exceeds the actual threshold. The Bureau requested, but did not receive, comment on this point. Thus, the Bureau concludes that the final rule will not change the regulatory regime relative to the baseline and will create no significant benefits, costs, or impacts. --------------------------------------------------------------------------- \13\ 78 FR 48547, 48565 (Aug. 8, 2013) and 80 FR 73943, 73944 (Nov. 27, 2015). --------------------------------------------------------------------------- The final rule will have no unique impact on depository institutions or credit unions with $10 billion or less in assets as described in section 1026(a) of the Dodd-Frank Act or on rural consumers. The Bureau does not expect this final rule to affect consumers' access to credit. [[Page 86253]] Regulatory Flexibility Act OCC: Pursuant to the Regulatory Flexibility Act (RFA), an agency must prepare a regulatory flexibility analysis for all proposed and final rules that describes the impact of the rule on small entities.\14\ Under section 605(b) of the RFA, this analysis is not required if the head of the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities and publishes its certification and a short explanatory statement in the Federal Register along with its rule. The OCC has concluded that the final rule does not have a significant economic impact on a substantial number of small entities supervised by the OCC. --------------------------------------------------------------------------- \14\ See 5 U.S.C. 601 et seq. --------------------------------------------------------------------------- As explained in the Commentary Revision section of the preamble, this final rule memorializes the calculation method used by the OCC, the Board, and the Bureau each year to adjust the threshold for exemption from the special appraisal requirements for HPMLs and clarifies the agencies' calculation method for determining the adjustment in the years following a year in which there is no annual percentage increase in the CPI-W. The economic impact of this final rule on small national banks and Federal savings associations is not expected to be significant. Accordingly, the OCC certifies that the proposed rule would not have a significant economic impact on a substantial number of small OCC-supervised entities. Therefore, pursuant to section 605(b) of the RFA, the OCC hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not required. Board: An initial regulatory flexibility analysis (IRFA) was included in the proposal in accordance with section 3(a) of the Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq. (RFA). In the IRFA, the Board requested comments on any approaches, other than the proposed alternatives, that would reduce the burden on small entities. The RFA requires an agency to prepare a final regulatory flexibility analysis (FRFA) unless the agency certifies that the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.\15\ In accordance with section 3(a) of the RFA, the Board has reviewed the final regulation. Based on its analysis, and for the reasons stated below, the Board believes that the rule will not have a significant economic impact on a substantial number of small entities. --------------------------------------------------------------------------- \15\ See 5 U.S.C. 601 et seq. --------------------------------------------------------------------------- 1. Statement of the need for, and objectives of, the final rule. The final rule memorializes the calculation method used by the Board each year to adjust the exemption threshold in accordance with Regulation Z, 12 CFR 226.43(b)(2). The final rule also adopts the exemption threshold that will apply from January 1, 2017, through December 31, 2017, based on the calculation method memorialized in the final rule. 2. Summary of issues raised by comments in response to the IFRA. The Board did not receive any comments on the IFRA. 3. Small entities affected by the final rule. For purposes of the RFA, the Small Business Administration defines small entities to include banking entities with total assets of $550 million or less. Of Board supervised institutions with an asset size of $550 million or less as of March 2016, 223 reported making 5,135 higher-priced mortgage loans in 2015.\16\ The Board does not believe that the final rule will have a significant economic impact on the entities that it affects. --------------------------------------------------------------------------- \16\ Board supervised institutions include State Member Banks, uninsured State branches and agencies of foreign banks. The number of institutions making higher-priced mortgage loans and the number of higher-priced mortgage loans is based on data reported pursuant to the Home Mortgage Disclosure Act (HMDA), 12 U.S.C. 2801 et seq. --------------------------------------------------------------------------- 4. Recordkeeping, reporting, and compliance requirements. The final rule would not impose any recordkeeping, reporting, or compliance requirements. 5. Other Federal rules. The Board has not identified any likely duplication, overlap and/or potential conflict between the final rule and any Federal rule. Bureau: The RFA generally requires an agency to conduct an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) of any rule subject to notice-and-comment rulemaking requirements.\17\ These analyses must describe the impact of the proposed and final rules on small entities.\18\ An IRFA or FRFA is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.\19\ The Bureau also is subject to certain additional procedures under the RFA involving the convening of a panel to consult with small business representatives prior to proposing a rule for which an IRFA is required.\20\ --------------------------------------------------------------------------- \17\ 5 U.S.C. 601 et seq. \18\ Id. at 603(a) and 604(a). For purposes of assessing the impacts of the rule on small entities, ``small entities'' is defined in the RFA to include small businesses, small not-for-profit organizations, and small government jurisdictions. Id. at 601(6). A ``small business'' is determined by application of Small Business Administration regulations and reference to the North American Industry Classification System (NAICS) classifications and size standards. Id. at 601(3). A ``small organization'' is any ``not-for- profit enterprise which is independently owned and operated and is not dominant in its field.'' Id. at 601(4). A ``small governmental jurisdiction'' is the government of a city, county, town, township, village, school district, or special district with a population of less than 50,000. Id. at 601(5). \19\ Id. at 605(b). \20\ Id. at 609. --------------------------------------------------------------------------- A FRFA is not required for this final rule because it will not have a significant economic impact on a substantial number of small entities. As discussed in the Bureau's Section 1022(b)(2) Analysis above, this final rule does not introduce costs or benefits to covered persons because it seeks only to clarify the method of threshold adjustment which has already been established in previous Agency rules. Therefore this final rule will not have a significant impact on small entities. Certification Accordingly, the Bureau Director, by signing below, certifies that this final rule will not have a significant economic impact on a substantial number of small entities. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995,\21\ the agencies reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule. --------------------------------------------------------------------------- \21\ 44 U.S.C. 3506; 5 CFR part 1320. --------------------------------------------------------------------------- Unfunded Mandates Reform Act The OCC has analyzed the final rule under the factors set forth in the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532). Under this analysis, the OCC considered whether the final rule includes a Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (adjusted annually for inflation). The final rule memorializes the calculation method used by the OCC, the Board, and the Bureau each year to adjust the threshold for exemption from the special appraisal requirements for HPMLs and clarifies the agencies' calculation method for determining the adjustment in the years following a year in which there is no annual percentage increase in the CPI-W. Because the final rule is designed to clarify existing rules, and does not introduce any new requirements, the OCC has determined [[Page 86254]] that it would not result in expenditures by State, local, and Tribal governments or by the private sector, of $100 million or more. Accordingly, the OCC has not prepared a written statement to accompany its final rule. List of Subjects 12 CFR Part 34 Appraisal, Appraiser, Banks, Banking, Consumer protection, Credit, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending. 12 CFR Part 226 Advertising, Appraisal, Appraiser, Consumer protection, Credit, Federal Reserve System, Mortgages, Reporting and recordkeeping requirements, Truth in lending. 12 CFR Part 1026 Advertising, Appraisal, Appraiser, Banking, Banks, Consumer protection, Credit, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending. Department of the Treasury Office of the Comptroller of the Currency Authority and Issuance For the reasons set forth in the preamble, the OCC amends 12 CFR part 34 as set forth below: PART 34--REAL ESTATE LENDING AND APPRAISALS 0 1. The authority citation for part 34 continues to read as follows: Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a, 371, 1463, 1464, 1465, 1701j-3, 1828(o), 3331 et seq., 5101 et seq., 5412(b)(2)(B) and 15 U.S.C. 1639h. Subpart G--Appraisals for Higher-Priced Mortgage Loans 0 2. In appendix C to subpart G, under Section 34.203--Appraisals for Higher-Priced Mortgage Loans, the entry for Paragraph 34.203(b)(2) is revised to read as follows: Appendix C to Subpart G of Part 34--OCC Interpretations * * * * * Section 34.203--Appraisals for Higher-Priced Mortgage Loans * * * * * 34.203(b) Exemptions * * * * * Paragraph 34.203(b)(2) 1. Threshold amount. For purposes of Sec. 34.203(b)(2), the threshold amount in effect during a particular period is the amount stated in comment 203(b)(2)-3 for that period. The threshold amount is adjusted effective January 1 of each year by any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. Comment 203(b)(2)-3 will be amended to provide the threshold amount for the upcoming year after the annual percentage change in the CPI-W that was in effect on June 1 becomes available. Any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900. 2. No increase in the CPI-W. If the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year. When this occurs, for the years that follow, the threshold is calculated based on the annual percentage change in the CPI-W applied to the dollar amount that would have resulted, after rounding, if decreases and any subsequent increases in the CPI-W had been taken into account. i. Net increases. If the resulting amount calculated, after rounding, is greater than the current threshold, then the threshold effective January 1 the following year will increase accordingly. ii. Net decreases. If the resulting amount calculated, after rounding, is equal to or less than the current threshold, then the threshold effective January 1 the following year will not change, but future increases will be calculated based on the amount that would have resulted. 3. Threshold. For purposes of Sec. 34.203(b)(2), the threshold amount in effect during a particular period is the amount stated below for that period. i. From January 18, 2014, through December 31, 2014, the threshold amount is $25,000. ii. From January 1, 2015, through December 31, 2015, the threshold amount is $25,500. iii. From January 1, 2016, through December 31, 2016, the threshold amount is $25,500. iv. From January 1, 2017, through December 31, 2017, the threshold amount is $25,500. 4. Qualifying for exemption--in general. A transaction is exempt under Sec. 34.203(b)(2) if the creditor makes an extension of credit at consummation that is equal to or below the threshold amount in effect at the time of consummation. 5. Qualifying for exemption--subsequent changes. A transaction does not meet the condition for an exemption under Sec. 34.203(b)(2) merely because it is used to satisfy and replace an existing exempt loan, unless the amount of the new extension of credit is equal to or less than the applicable threshold amount. For example, assume a closed-end loan that qualified for a Sec. 34.203(b)(2) exemption at consummation in year one is refinanced in year ten and that the new loan amount is greater than the threshold amount in effect in year ten. In these circumstances, the creditor must comply with all of the applicable requirements of Sec. 34.203 with respect to the year ten transaction if the original loan is satisfied and replaced by the new loan, unless another exemption from the requirements of Sec. 34.203 applies. See Sec. 34.203(b) and (d)(7). * * * * * Board of Governors of the Federal Reserve System Authority and Issuance For the reasons set forth in the preamble, the Board amends Regulation Z, 12 CFR part 226, as set forth below: PART 226--TRUTH IN LENDING (REGULATION Z) 0 3. The authority citation for part 226 continues to read as follows: Authority: 12 U.S.C. 3806; 15 U.S.C. 1604, 1637(c)(5), 1639(l), and 1639h; Pub. L. 111-24, section 2, 123 Stat. 1734; Pub. L. 111- 203, 124 Stat. 1376. 0 4. In supplement I to part 226, under Section 226.43--Appraisals for Higher-Risk Mortgage Loans, the entry for Paragraph 43(b)(2) is revised to read as follows: Supplement I to Part 226--Official Staff Interpretations * * * * * Subpart E--Special Rules for Certain Home Mortgage Transactions * * * * * Section 226.43--Appraisals for Higher-Risk Mortgage Loans * * * * * 43(b) Exemptions * * * * * Paragraph 43(b)(2) 1. Threshold amount. For purposes of Sec. 226.43(b)(2), the threshold amount in effect during a particular period is the amount stated in comment 43(b)(2)-3 for that period. The threshold amount is adjusted effective January 1 of each year by any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. Comment 43(b)(2)-3 will be amended to provide the threshold amount for the upcoming year after the annual percentage change in the CPI-W that was in effect on June 1 becomes available. Any increase in the [[Page 86255]] threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900. 2. No increase in the CPI-W. If the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year. When this occurs, for the years that follow, the threshold is calculated based on the annual percentage change in the CPI-W applied to the dollar amount that would have resulted, after rounding, if decreases and any subsequent increases in the CPI-W had been taken into account. i. Net increases. If the resulting amount calculated, after rounding, is greater than the current threshold, then the threshold effective January 1 the following year will increase accordingly. ii. Net decreases. If the resulting amount calculated, after rounding, is equal to or less than the current threshold, then the threshold effective January 1 the following year will not change, but future increases will be calculated based on the amount that would have resulted. 3. Threshold. For purposes of Sec. 226.43(b)(2), the threshold amount in effect during a particular period is the amount stated below for that period. i. From January 18, 2014, through December 31, 2014, the threshold amount is $25,000. ii. From January 1, 2015, through December 31, 2015, the threshold amount is $25,500. iii. From January 1, 2016, through December 31, 2016, the threshold amount is $25,500. iv. From January 1, 2017, through December 31, 2017, the threshold amount is $25,500. 4. Qualifying for exemption--in general. A transaction is exempt under Sec. 226.43(b)(2) if the creditor makes an extension of credit at consummation that is equal to or below the threshold amount in effect at the time of consummation. 5. Qualifying for exemption--subsequent changes. A transaction does not meet the condition for an exemption under Sec. 226.43(b)(2) merely because it is used to satisfy and replace an existing exempt loan, unless the amount of the new extension of credit is equal to or less than the applicable threshold amount. For example, assume a closed-end loan that qualified for a Sec. 226.43(b)(2) exemption at consummation in year one is refinanced in year ten and that the new loan amount is greater than the threshold amount in effect in year ten. In these circumstances, the creditor must comply with all of the applicable requirements of Sec. 226.43 with respect to the year ten transaction if the original loan is satisfied and replaced by the new loan, unless another exemption from the requirements of Sec. 226.43 applies. See Sec. 226.43(b) and (d)(7). * * * * * Bureau of Consumer Financial Protection 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 5. 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. 0 6. In supplement I to part 1026, under Section 1026.35--Requirements for Higher-Priced Mortgage Loans, the entry for Paragraph 35(c)(2)(ii) is revised to read as follows: Supplement I to Part 1026--Official Interpretations * * * * * Subpart E--Special Rules for Certain Home Mortgage Transactions * * * * * Section 1026.35--Requirements for Higher-Priced Mortgage Loans * * * * * 35(c)--Appraisals * * * * * 35(c)(2) Exemptions * * * * * Paragraph 35(c)(2)(ii) 1. Threshold amount. For purposes of Sec. 1026.35(c)(2)(ii), the threshold amount in effect during a particular period is the amount stated in comment 35(c)(2)(ii)-3 for that period. The threshold amount is adjusted effective January 1 of each year by any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. Comment 35(c)(2)(ii)-3 will be amended to provide the threshold amount for the upcoming year after the annual percentage change in the CPI-W that was in effect on June 1 becomes available. Any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900. 2. No increase in the CPI-W. If the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year. When this occurs, for the years that follow, the threshold is calculated based on the annual percentage change in the CPI-W applied to the dollar amount that would have resulted, after rounding, if decreases and any subsequent increases in the CPI-W had been taken into account. i. Net increases. If the resulting amount calculated, after rounding, is greater than the current threshold, then the threshold effective January 1 the following year will increase accordingly. ii. Net decreases. If the resulting amount calculated, after rounding, is equal to or less than the current threshold, then the threshold effective January 1 the following year will not change, but future increases will be calculated based on the amount that would have resulted. 3. Threshold. For purposes of Sec. 1026.35(c)(2)(ii), the threshold amount in effect during a particular period is the amount stated below for that period. i. From January 18, 2014, through December 31, 2014, the threshold amount is $25,000. ii. From January 1, 2015, through December 31, 2015, the threshold amount is $25,500. iii. From January 1, 2016, through December 31, 2016, the threshold amount is $25,500. iv. From January 1, 2017, through December 31, 2017, the threshold amount is $25,500. 4. Qualifying for exemption--in general. A transaction is exempt under Sec. 1026.35(c)(2)(ii) if the creditor makes an extension of credit at consummation that is equal to or below the threshold [[Page 86256]] amount in effect at the time of consummation. 5. Qualifying for exemption--subsequent changes. A transaction does not meet the condition for an exemption under Sec. 1026.35(c)(2)(ii) merely because it is used to satisfy and replace an existing exempt loan, unless the amount of the new extension of credit is equal to or less than the applicable threshold amount. For example, assume a closed-end loan that qualified for a Sec. 1026.35(c)(2)(ii) exemption at consummation in year one is refinanced in year ten and that the new loan amount is greater than the threshold amount in effect in year ten. In these circumstances, the creditor must comply with all of the applicable requirements of Sec. 1026.35(c) with respect to the year ten transaction if the original loan is satisfied and replaced by the new loan, unless another exemption from the requirements of Sec. 1026.35(c) applies. See Sec. 1026.35(c)(2) and (c)(4)(vii). * * * * * Dated: November 22, 2016. Thomas J. Curry, Comptroller of the Currency. By order of the Board of Governors of the Federal Reserve System, November 21, 2016. Robert deV. Frierson, Secretary of the Board. Dated: November 7, 2016. Richard Cordray, Director, Bureau of Consumer Financial Protection. [FR Doc. 2016-28699 Filed 11-29-16; 8:45 am] BILLING CODE 4810-33-P; 6210-01-P; 4810-AM-P
![86250 Federal Register / Vol. 81, No. 230 / Wednesday, November 30, 2016 / Rules and Regulations
second step rates on each one of the Atlantic Agencies’ rules exempted, among other
regular wage schedules applicable in the Cape May loan types, transactions of $25,000 or
otherwise overlapped wage areas. Cumberland less, and required that this loan amount
Mercer be adjusted annually based on any
■ 3. Appendix C to subpart B is
Warren
amended by revising the wage area Pennsylvania:
annual percentage increase in the
listing for the New York, NY, and Carbon Consumer Price Index for Urban Wage
Philadelphia, PA, wage areas to read as Lehigh Earners and Clerical Workers (CPI–W).
follows: Northampton If there is no annual percentage increase
in the CPI–W, the OCC, the Board and
Appendix C to Subpart B of Part 532— * * * * * the Bureau will not adjust this
Appropriated Fund Wage and Survey exemption threshold from the prior
[FR Doc. 2016–28769 Filed 11–29–16; 8:45 am]
Areas year. The final rule will memorialize
BILLING CODE 6325–39–P
this as well as the agencies’ calculation
method for determining the adjustment
* * * * *
in years following a year in which there
NEW YORK DEPARTMENT OF THE TREASURY
is no annual percentage increase in the
* * * * * Office of the Comptroller of the CPI–W. Based on the CPI–W in effect as
New York Currency of June 1, 2016, the exemption threshold
Survey Area will remain at $25,500 through 2017.
New Jersey: 12 CFR Part 34 DATES: This final rule is effective
Bergen January 1, 2017.
Essex [Docket No. OCC–2015–0021] FOR FURTHER INFORMATION CONTACT:
Hudson RIN 1557–AD99 OCC: MaryAnn Nash, Counsel,
Middlesex Legislative and Regulatory Activities
Morris FEDERAL RESERVE SYSTEM Division, (202) 649–6287; for persons
Passaic
who are deaf and hard of hearing TTY,
Somerset
Union
12 CFR Part 226 (202) 649–5597. Board: Lorna M. Neill,
New York: Senior Counsel, Division of Consumer
[Docket No. R–1443]
Bronx and Community Affairs, Board of
Kings RIN 7100–AD 90 Governors of the Federal Reserve
Nassau System, at (202) 452–3667; for users of
New York BUREAU OF CONSUMER FINANCIAL Telecommunications Device for the Deaf
Orange PROTECTION (TDD) only, contact (202) 263–4869.
Queens Bureau: Jaclyn Maier, Counsel, Office of
Suffolk 12 CFR Part 1026 Regulations, Consumer Financial
Westchester
[Docket No. CFPB–2016–0035] Protection Bureau, at (202) 435–7700.
Area of Application. Survey area plus:
SUPPLEMENTARY INFORMATION:
New Jersey: RIN 3170–AA68
Burlington (Joint Base McGuire-Dix- I. Background
Lakehurst portion only) Appraisals for Higher-Priced Mortgage
Hunterdon
The Dodd-Frank Wall Street Reform
Loans Exemption Threshold and Consumer Protection Act of 2010
Monmouth
Ocean AGENCY: Board of Governors of the (Dodd-Frank Act) amended the Truth in
Sussex Federal Reserve System (Board); Bureau Lending Act (TILA) to add special
New York: of Consumer Financial Protection appraisal requirements for ‘‘higher-risk
Dutchess (Bureau); and Office of the Comptroller mortgages.’’ 1 In January 2013, the
Putnam Agencies issued a joint final rule
Richmond
of the Currency, Treasury (OCC).
implementing these requirements and
Rockland ACTION: Final rules, official
adopted the term ‘‘higher-priced
Pennsylvania: interpretations and commentary.
Pike
mortgage loan’’ (HPML) instead of
SUMMARY: The OCC, the Board, and the ‘‘higher-risk mortgage’’ (the January
* * * * * Bureau are finalizing amendments to the 2013 Final Rule).2 In July 2013, the
PENNSYLVANIA official interpretations for their Agencies proposed additional
regulations that implement section exemptions from the January 2013 Final
* * * * * 129H of the Truth in Lending Act Rule (the 2013 Supplemental Proposed
Philadelphia (TILA). Section 129H of TILA Rule).3 In December 2013, the Agencies
Survey Area establishes special appraisal issued a supplemental final rule with
New Jersey: requirements for ‘‘higher-risk additional exemptions from the January
Burlington (Excluding the Joint Base mortgages,’’ termed ‘‘higher-priced 2013 Final Rule (the December 2013
McGuire-Dix-Lakehurst portion) mortgage loans’’ or ‘‘HPMLs’’ in the Supplemental Final Rule).4 Among
Camden other exemptions, the Agencies adopted
Gloucester
agencies’ regulations. The OCC, the
Board, the Bureau, the Federal Deposit an exemption from the new HPML
Pennsylvania:
sradovich on DSK3GMQ082PROD with RULES
Bucks Insurance Corporation (FDIC), the appraisal rules for transactions of
Chester National Credit Union Administration
1 Public Law 111–203 section 1471, 124 Stat.
Delaware (NCUA) and the Federal Housing
1376 (2010), codified at TILA section 129H, 15
Montgomery Finance Agency (FHFA) (collectively, U.S.C. 1639h.
Philadelphia the Agencies) issued joint final rules 2 78 FR 10368 (Feb. 13, 2013).
Area of Application. Survey area plus: implementing these requirements, 3 78 FR 48548 (Aug. 8, 2013).
New Jersey: effective January 18, 2014. The 4 78 FR 78520 (Dec. 26, 2013).
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![Federal Register / Vol. 81, No. 230 / Wednesday, November 30, 2016 / Rules and Regulations 86251
$25,000 or less, to be adjusted annually calculation method the agencies would As the Agencies have stated
for inflation. use in years following a year in which previously,8 if there is no annual
The Bureau’s, the OCC’s, and the the exemption threshold was not percentage increase in the CPI–W, the
Board’s versions of the January 2013 adjusted because there was no increase OCC, the Board, and the Bureau will not
Final Rule and December 2013 in the CPI–W from the previous year. As adjust the exemption threshold from the
Supplemental Final Rule and the OCC, the Board and the Bureau prior year. This position is consistent
corresponding official interpretations discussed in the proposal, the proposed with the Board’s and the Bureau’s
are substantively identical. The FDIC, calculation method would ensure that approach in adjusting the coverage
NCUA, and FHFA adopted the Bureau’s thresholds for the Consumer Leasing
the values for the exemption threshold
version of the regulations under the Act (CLA) and TILA, based on section
keep pace with the CPI–W as
January 2013 Final Rule and December 1100E(b) of the Dodd-Frank Act, which
2013 Supplemental Final Rule.5 contemplated in the December 2013
Supplemental Final Rule. states that the threshold must be
Section 34.203(b)(2) of subpart G of adjusted by the ‘‘annual percentage
part 34 of the OCC’s regulations, The comment period closed on increase’’ in the CPI–W (emphasis
§ 226.43(b)(2) of the Board’s Regulation September 6, 2016. In response to the added).9 The Board and the Bureau are
Z, and § 1026.35(c)(2)(ii) of the Bureau’s proposal, the OCC, the Board and the publishing similar amendments to the
Regulation Z, and their accompanying Bureau received one comment from an commentaries to each of their respective
interpretations,6 provide that the individual, one from a State bankers regulations implementing the CLA
exemption threshold for smaller loans association, and one from a community (Regulation M) and TILA (Regulation Z)
will be adjusted effective January 1 of bank. The individual supported the elsewhere in this issue of the Federal
each year based on any annual proposal. The State bankers association Register.
percentage increase in the Consumer requested that the smaller dollar loan For the HPML appraisal rule
Price Index for Urban Wage Earners and exemption for smaller loans, the OCC,
exemption be raised to $50,000, and the
Clerical Workers (CPI–W) that was in the Board, and the Bureau are
community bank commenter requested
effect on the preceding June 1. Any memorializing this concept in comment
increase in the threshold amount will be an exemption from the HPML rules for
small institutions. Both of these 35(c)(2)(ii)–2, which provides that, if the
rounded to the nearest $100 increment. CPI–W in effect on June 1 does not
For example, if the annual percentage comments are beyond the scope of this
rulemaking. increase from the CPI–W in effect on
increase in the CPI–W would result in June 1 of the previous year, the
a $950 increase in the threshold The OCC, the Board, and the Bureau threshold amount effective the
amount, the threshold amount will be are adopting the commentary revisions following January 1 through December
increased by $1,000. However, if the as proposed, with some minor clarifying 31 will not change from the previous
annual percentage increase in the CPI– amendments. These changes will be year. For example, if the threshold in
W would result in a $949 increase in the effective on January 1, 2017. The new effect from January 1, 2019, through
threshold amount, the threshold amount commentary is substantively identical December 31, 2019, is $27,500 and the
will be increased by $900. If there is no for § 34.203(b)(2) of subpart G of part 34 CPI–W in effect on June 1 of 2019,
annual percentage increase in the CPI– of the OCC’s regulations, § 226.43(b)(2) indicates a 1.1 percent decrease from
W, the OCC, the Board, and the Bureau of the Board’s Regulation Z, and the CPI–W in effect on June 1, 2018, the
will not adjust the threshold amounts § 1026.35(c)(2)(ii) of the Bureau’s threshold in effect for January 1, 2020,
from the prior year.7 Regulation Z. For ease of reference, this through December 31, 2020, will remain
II. Commentary Revision ‘‘Commentary Revision’’ discussion $27,500.
On August 4, 2016, the OCC, the refers only to the section numbers of the In the final rule, comment 35(c)(2)(ii)–
Board and the Bureau published a commentary that will be published in 2 further sets forth the calculation
proposed rule in the Federal Register to the Bureau’s Regulation Z at 12 CFR method the agencies would use in years
memorialize the calculation method part 1026, supplement I. following a year in which the exemption
used by the agencies each year to adjust Comment 35(c)(2)(ii)–1 to the threshold was not adjusted because
the exemption threshold. See 81 FR Bureau’s Regulation Z currently there was no increase in the CPI–W
51394 (Aug. 4, 2016). The proposed provides the threshold amount in effect from the previous year. Specifically,
commentary stated that if there is no comment 35(c)(2)(ii)–2 provides that, for
during a particular period and details
annual percentage increase in the CPI– the years after a year in which the
the rules the agencies use for rounding
W, the OCC, the Board and the Bureau threshold did not change because the
the threshold calculation to the nearest
will not adjust the exemption threshold CPI–W in effect on June 1 decreased
$100 or $1,000 increment, as discussed from the CPI–W in effect on June 1 of
from the prior year. The proposed above in part I, ‘‘Background.’’ The
commentary further set forth the the previous year, the threshold is
OCC, the Board and the Bureau are calculated by applying the annual
5 See NCUA: 12 CFR 722.3; FHFA: 12 CFR part
revising comment 35(c)(2)(ii)–1 by percentage change in the CPI–W to the
1222. Although the FDIC adopted the Bureau’s moving the text regarding the threshold dollar amount that would have resulted,
version of the regulation, the FDIC did not issue its amount that is in effect during a after rounding, if the decreases and any
own regulation containing a cross-reference to the particular period to a new proposed
Bureau’s version. See 78 FR 10368, 10370 (Feb. 13, subsequent increases in the CPI–W had
2013). comment 35(c)(2)(ii)–3. Consistent with been taken into account. Comment
6 See 12 CFR part 34, appendix C to subpart G, the proposal, the discussion of how the 35(c)(2)(ii)–2.i further states that, if the
sradovich on DSK3GMQ082PROD with RULES
comment 203(b)(2)–1 (OCC); 12 CFR part 226, agencies round the threshold resulting amount, after rounding, is
supplement I, comment 43(b)(2)–1 (Board); and 12 calculation will remain in comment
CFR part 1026, Supplement I, comment 35(c)(2)(ii)– greater than the current threshold, then
1 (Bureau). 35(c)(2)(ii)–1 of the final rule.
7 See 78 FR 48548, 48565 (Aug. 8, 2013) (‘‘Thus, Additionally, current comments 8 See 78 FR 48548, 48565 (Aug. 8, 2013) and 80
under the proposal, if the CPI–W decreases in an 35(c)(2)(ii)–2 and 35(c)(2)(ii)–3 are re- FR 73943, 73944 (Nov. 27, 2015).
annual period, the percentage increase would be 9 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (‘‘[A]n
zero, and the dollar amount threshold for the
numbered as comments 35(c)(2)(ii)–4 annual period of deflation or no inflation would not
exemption would not change.’’). and 35(c)(2)(ii)–5, respectively. require a change in the threshold amount.’’).
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![86256 Federal Register / Vol. 81, No. 230 / Wednesday, November 30, 2016 / Rules and Regulations
amount in effect at the time of interpretations and commentary for the after December 31, 2011, these
consummation. agencies’ regulations that implement the thresholds be adjusted annually for
5. Qualifying for exemption— Consumer Leasing Act (CLA). The inflation by the annual percentage
subsequent changes. A transaction does Dodd-Frank Wall Street Reform and increase in the Consumer Price Index
not meet the condition for an exemption Consumer Protection Act (Dodd-Frank for Urban Wage Earners and Clerical
under § 1026.35(c)(2)(ii) merely because Act) amended the CLA by requiring that Workers (CPI–W), as published by the
it is used to satisfy and replace an the dollar threshold for exempt Bureau of Labor Statistics. In April
existing exempt loan, unless the amount consumer leases be adjusted annually 2011, the Board issued a final rule
of the new extension of credit is equal by the annual percentage increase in the amending Regulation M (which
to or less than the applicable threshold Consumer Price Index for Urban Wage implements the CLA) consistent with
amount. For example, assume a closed- Earners and Clerical Workers (CPI–W). these provisions of the Dodd-Frank Act,
end loan that qualified for a If there is no annual percentage increase along with a similar final rule amending
§ 1026.35(c)(2)(ii) exemption at in the CPI–W, the Board and Bureau Regulation Z (which implements TILA)
consummation in year one is refinanced will not adjust this exemption threshold (collectively, the Board Final Threshold
in year ten and that the new loan from the prior year. The final rule Rules).3
amount is greater than the threshold memorializes this as well as the Title X of the Dodd-Frank Act
amount in effect in year ten. In these agencies’ calculation method for transferred rulemaking authority for a
circumstances, the creditor must determining the adjustment in years number of consumer financial
comply with all of the applicable following a year in which there is no protection laws from the Board to the
requirements of § 1026.35(c) with annual percentage increase in the CPI– Bureau, effective July 21, 2011. In
respect to the year ten transaction if the W. Based on the CPI–W in effect as of connection with this transfer of
original loan is satisfied and replaced by June 1, 2016, the exemption threshold rulemaking authority, the Bureau issued
the new loan, unless another exemption will remain at $54,600 through 2017. its own Regulation M implementing the
from the requirements of § 1026.35(c) The Dodd-Frank Act also requires CLA in an interim final rule, 12 CFR
applies. See § 1026.35(c)(2) and similar adjustments in the Truth in part 1013 (Bureau Interim Final Rule).4
(c)(4)(vii). Lending Act’s threshold for exempt The Bureau Interim Final Rule
* * * * * consumer credit transactions. substantially duplicated the Board’s
Accordingly, the Board and the Bureau Regulation M, including the revisions to
Dated: November 22, 2016.
are adopting similar amendments to the the threshold for exempt transactions
Thomas J. Curry, commentaries to each of their respective made by the Board in April 2011. In
Comptroller of the Currency. regulations implementing the Truth in April 2016, the Bureau adopted the
By order of the Board of Governors of the Lending Act elsewhere in this issue of Bureau Interim Final Rule as final,
Federal Reserve System, November 21, 2016. the Federal Register. subject to intervening final rules
Robert deV. Frierson, DATES: This final rule is effective published by the Bureau.5 Although the
Secretary of the Board. January 1, 2017. Bureau has the authority to issue rules
FOR FURTHER INFORMATION CONTACT: to implement the CLA for most entities,
Dated: November 7, 2016.
Board: Vivian W. Wong, Senior the Board retains authority to issue rules
Richard Cordray, under the CLA for certain motor vehicle
Counsel, Division of Consumer and
Director, Bureau of Consumer Financial Community Affairs, Board of Governors dealers covered by section 1029(a) of the
Protection. Dodd-Frank Act, and the Board’s
of the Federal Reserve System, at (202)
[FR Doc. 2016–28699 Filed 11–29–16; 8:45 am] Regulation M continues to apply to
452–3667; for users of
BILLING CODE 4810–33–P; 6210–01–P; 4810–AM–P Telecommunications Device for the Deaf those entities.6
(TDD) only, contact (202) 263–4869.
Bureau: Jaclyn Maier, Counsel, Office 3 76 FR 18349 (Apr. 4, 2011); 76 FR 18354 (Apr.
FEDERAL RESERVE SYSTEM of Regulations, Consumer Financial 4, 2011).
4 76 FR 78500 (Dec. 19, 2011).
12 CFR Part 213 Protection Bureau, at (202) 435–7700. 5 81 FR 25323 (April 28, 2016).
SUPPLEMENTARY INFORMATION: 6 Section 1029(a) of the Dodd-Frank Act states:
[Docket No. R–1545] ‘‘Except as permitted in subsection (b), the Bureau
I. Background may not exercise any rulemaking, supervisory,
RIN 7100 AE–56
The Dodd-Frank Wall Street Reform enforcement, or any other authority * * * over a
motor vehicle dealer that is predominantly engaged
BUREAU OF CONSUMER FINANCIAL and Consumer Protection Act of 2010 in the sale and servicing of motor vehicles, the
PROTECTION (Dodd-Frank Act) increased the leasing and servicing of motor vehicles, or both.’’
threshold in the Consumer Leasing Act 12 U.S.C. 5519(a). Section 1029(b) of the Dodd-
(CLA) for exempt consumer leases, and Frank Act states: ‘‘Subsection (a) shall not apply to
12 CFR Part 1013 any person, to the extent that such person (1)
the threshold in the Truth in Lending provides consumers with any services related to
[Docket No. CFPB–2016–0036] Act (TILA) for exempt consumer credit residential or commercial mortgages or self-
RIN 3170–AA66 transactions,1 from $25,000 to $50,000, financing transactions involving real property; (2)
effective July 21, 2011.2 In addition, the operates a line of business (A) that involves the
Consumer Leasing (Regulation M) extension of retail credit or retail leases involving
Dodd-Frank Act requires that, on and motor vehicles; and (B) in which (i) the extension
AGENCY: Board of Governors of the of retail credit or retail leases are provided directly
1 Although consumer credit transactions above
to consumers; and (ii) the contract governing such
Federal Reserve System (Board); and
sradovich on DSK3GMQ082PROD with RULES
the threshold are generally exempt, loans secured extension of retail credit or retail leases is not
Bureau of Consumer Financial by real property or by personal property used or routinely assigned to an unaffiliated third party
Protection (Bureau). expected to be used as the principal dwelling of a finance or leasing source; or (3) offers or provides
consumer and private education loans are covered a consumer financial product or service not
ACTION: Final rules, official by TILA regardless of the loan amount. See 12 CFR involving or related to the sale, financing, leasing,
interpretations and commentary. 226.3(b)(1)(i) (Board) and 12 CFR 1026.3(b)(1)(i) rental, repair, refurbishment, maintenance, or other
(Bureau). servicing of motor vehicles, motor vehicle parts, or
SUMMARY: The Board and the Bureau are 2 Public Law 111–203, section 1100E, 124 Stat. any related or ancillary product or service.’’ 12
finalizing amendments to the official 1376 (2010). U.S.C. 5519(b).
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Document Created: 2016-11-30 02:17:49
Document Modified: 2016-11-30 02:17:49
| 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 rules, official interpretations and commentary. | |
| Dates | This final rule is effective January 1, 2017. | |
| Contact | OCC: MaryAnn Nash, Counsel, Legislative and Regulatory Activities Division, (202) 649-6287; for persons who are deaf and hard of hearing TTY, (202) 649-5597. Board: Lorna M. Neill, Senior Counsel, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, at (202) 452-3667; for users of Telecommunications Device for the Deaf (TDD) only, contact (202) 263-4869. Bureau: Jaclyn Maier, Counsel, Office of Regulations, Consumer Financial Protection Bureau, at (202) 435-7700. | |
| FR Citation | 81 FR 86250 | |
| RIN Number | 1557-AD99 and 3170-AA68 | |
| CFR Citation | 12
CFR
1026 12 CFR 226 12 CFR 34 | |
| CFR Associated | Credit Unions; Advertising; Federal Reserve System; Appraisal; Appraiser; Banks; Banking; Consumer Protection; Credit; Mortgages; National Banks; Reporting and Recordkeeping Requirements; Savings Associations and Truth in Lending |
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