81 FR 86260 - Truth in Lending (Regulation Z)
FEDERAL RESERVE SYSTEM
BUREAU OF CONSUMER FINANCIAL PROTECTION Federal Register Volume 81, Issue 230 (November 30, 2016)
BUREAU OF CONSUMER FINANCIAL PROTECTION
Federal Register Volume 81, Issue 230 (November 30, 2016)
| Page Range | 86260-86268 | |
| FR Document | 2016-28718 |
[Federal Register Volume 81, Number 230 (Wednesday, November 30, 2016)] [Rules and Regulations] [Pages 86260-86268] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-28718] ----------------------------------------------------------------------- FEDERAL RESERVE SYSTEM 12 CFR Part 226 [Docket No. R-1546] RIN 7100 AE-57 BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1026 [Docket No. CFPB-2016-0037] RIN 3170-AA67 Truth in Lending (Regulation Z) AGENCY: Board of Governors of the Federal Reserve System (Board); and Bureau of Consumer Financial Protection (Bureau). ACTION: Final rules, official interpretations and commentary. ----------------------------------------------------------------------- SUMMARY: The Board and the Bureau are finalizing amendments to the official interpretations and commentary for the agencies' regulations that implement the Truth in Lending Act (TILA). The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amended TILA by requiring that the dollar threshold for exempt consumer credit transactions be adjusted annually by the 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 Board and Bureau will not adjust this exemption threshold from the prior year. The final rule memorializes 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 $54,600 through 2017. The Dodd-Frank Act also requires similar adjustments in the Consumer Leasing Act's threshold for exempt consumer leases. Accordingly, the Board and the Bureau are adopting similar amendments to the commentaries to each of their respective regulations implementing the Consumer Leasing Act elsewhere in this issue of the Federal Register. DATES: This final rule is effective January 1, 2017. FOR FURTHER INFORMATION CONTACT: Board: Vivian W. Wong, 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) increased the threshold in the Truth in Lending Act (TILA) for exempt consumer credit transactions,\1\ and the threshold in the Consumer Leasing Act (CLA) for exempt consumer leases, from $25,000 to $50,000, effective July 21, 2011.\2\ In addition, the Dodd-Frank Act requires that, on and after December 31, 2011, these thresholds be adjusted annually for inflation by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as published by the Bureau of Labor Statistics. In April 2011, the Board issued a final rule [[Page 86261]] amending Regulation Z (which implements TILA) consistent with these provisions of the Dodd-Frank Act, along with a similar final rule amending Regulation M (which implements the CLA) (collectively, the Board Final Threshold Rules).\3\ --------------------------------------------------------------------------- \1\ Although consumer credit transactions above the threshold are generally exempt, loans secured by real property or by personal property used or expected to be used as the principal dwelling of a consumer and private education loans are covered by TILA regardless of the loan amount. See 12 CFR 226.3(b)(1)(i) (Board) and 12 CFR 1026.3(b)(1)(i) (Bureau). \2\ Public Law 111-203, section 1100E, 124 Stat. 1376 (2010). \3\ 76 FR 18354 (Apr. 4, 2011); 76 FR 18349 (Apr. 4, 2011). --------------------------------------------------------------------------- Title X of the Dodd-Frank Act transferred rulemaking authority for a number of consumer financial protection laws from the Board to the Bureau, effective July 21, 2011. In connection with this transfer of rulemaking authority, the Bureau issued its own Regulation Z implementing TILA in an interim final rule, 12 CFR part 1026 (Bureau Interim Final Rule).\4\ The Bureau Interim Final Rule substantially duplicated the Board's Regulation Z, including the revisions to the threshold for exempt transactions made by the Board in April 2011. In April 2016, the Bureau adopted the Bureau Interim Final Rule as final, subject to intervening final rules published by the Bureau.\5\ Although the Bureau has the authority to issue rules to implement TILA for most entities, the Board retains authority to issue rules under TILA for certain motor vehicle dealers covered by section 1029(a) of the Dodd- Frank Act, and the Board's Regulation Z continues to apply to those entities.\6\ --------------------------------------------------------------------------- \4\ 76 FR 79768 (Dec. 22, 2011). \5\ 81 FR 25323 (April 28, 2016). \6\ Section 1029(a) of the Dodd-Frank Act states: ``Except as permitted in subsection (b), the Bureau may not exercise any rulemaking, supervisory, enforcement, or any other 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.'' 12 U.S.C. 5519(a). Section 1029(b) of the Dodd-Frank Act states: ``Subsection (a) shall not apply to any person, to the extent that such person (1) provides consumers with any services related to residential or commercial mortgages or self- financing transactions involving real property; (2) operates a line of business (A) that involves the extension of retail credit or retail leases involving motor vehicles; and (B) in which (i) the extension of retail credit or retail leases are provided directly to consumers; and (ii) the contract governing such extension of retail credit or retail leases is not routinely assigned to an unaffiliated third party finance or leasing source; or (3) offers or provides a consumer financial product or service not involving or related to the sale, financing, leasing, rental, repair, refurbishment, maintenance, or other servicing of motor vehicles, motor vehicle parts, or any related or ancillary product or service.'' 12 U.S.C. 5519(b). --------------------------------------------------------------------------- Section 226.3(b)(1)(ii) of the Board's Regulation Z and Sec. 1026.3(b)(1)(ii) of the Bureau's Regulation Z, and their accompanying commentaries, provide that the exemption threshold will be adjusted annually effective January 1 of each year based on any annual percentage increase in the CPI-W that was in effect on the preceding June 1. They further provide that 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.\7\ If there is no annual percentage increase in the CPI-W, the Board and Bureau will not adjust the exemption threshold from the prior year. Since 2011, the Board and the Bureau have adjusted the Regulation Z exemption threshold annually, in accordance with these rules. --------------------------------------------------------------------------- \7\ See comments 3(b)-1 in supplements I of 12 CFR parts 226 and 1026. --------------------------------------------------------------------------- II. Commentary Revision On August 4, 2016, 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 51404 (Aug. 4, 2016). The proposed commentary stated that if there is no annual percentage increase in the CPI-W, the Board and 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 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 by section 1100E(b) of the Dodd-Frank Act. The comment period closed on September 6, 2016. In response to the proposal, the Board and the Bureau received one comment from a consumer, supporting the proposal. 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. Specifically, the Board and the Bureau are adopting comment 3(b)-1 as proposed to move the text regarding the threshold amount that is in effect during a particular period to a new comment 3(b)-3. The discussion of how the agencies round the threshold calculation will remain in comment 3(b)-1. Current comments 3(b)-2, 3(b)-3, 3(b)-4, 3(b)-5, and 3(b)-6 are renumbered as comments 3(b)-4, 3(b)-5, 3(b)-6, 3(b)-7, and 3(b)-8, respectively, and cross-references to these comments are also renumbered accordingly, as proposed. Furthermore, the Board and the Bureau are adopting new comment 3(b)-2 as proposed to provide 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 (i.e., the CPI-W in effect on June 1 is either equal to or less than 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. As the Board and the Bureau discussed in the proposal, this position is consistent with 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), and the position the agencies have previously taken.\8\ Thus, if the threshold in effect from January 1, 2019, through December 31, 2019, is $55,500 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 $55,500. --------------------------------------------------------------------------- \8\ See, e.g., 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.''). --------------------------------------------------------------------------- Comment 3(b)-2 also 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 3(b)-2.i further states that, if the resulting amount, after rounding, is greater than the current threshold, then 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 $55,500 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 $55,500. 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 [[Page 86262]] been $54,900, 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 $54,900, rather than $55,500, resulting in a 2021 threshold of $55,800. Furthermore, comment 3(b)-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 $54,900. The resulting amount, after rounding, is $55,200, which is lower than $55,500, 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 $55,500. 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 $55,200, 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 $54,600. 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 from April 2014 to April 2015, 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 $54,200. A 0.8 percent increase in the CPI-W applied to $54,200 results in $54,600, which is the same threshold amount for 2016. Thus, the exemption threshold amount that will be in effect for 2017 remains at $54,600. The Board and the Bureau are revising the commentaries to their respective regulations to add new comment 3(b)-3.viii to state that, from January 1, 2017, through December 31, 2017, the threshold amount is $54,600. 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 Board and the Bureau find that notice and public comment are impracticable, unnecessary, or contrary to the public interest.\9\ The 2017 threshold amount for exempt consumer credit transactions announced in this rule, $54,600, is technical and applies the calculation method set forth elsewhere in this final rule, for which notice and public comment were provided.\10\ For these reasons, 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 consumer credit transactions are adopted in final form. --------------------------------------------------------------------------- \9\ 5 U.S.C. 553(b)(B). \10\ See 81 FR 51404 (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.\11\ 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. --------------------------------------------------------------------------- \11\ 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 Board previously stated that if there is no annual percentage increase in the CPI-W, then the Board (and now the Bureau) will not adjust the exemption threshold from the prior year.\12\ 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. --------------------------------------------------------------------------- \12\ 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.''). --------------------------------------------------------------------------- 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. Regulatory Flexibility Act Board: An initial regulatory flexibility analysis (IRFA) was included in the proposal in accordance with section 3(a) of the Regulatory Flexibility Act, 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. 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. 1. Statement of the need for, and objectives of, the final rule. The final rule memorializes the calculation [[Page 86263]] method used by the Board each year to adjust the exemption threshold in accordance with section 1100E of the Dodd-Frank Act. 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 this final rule. 2. Summary of issues raised by comments in response to the initial regulatory flexibility analysis. The Board did not receive any comments on the initial regulatory flexibility analysis. 3. Small entities affected by the final rule. This rule would affect motor vehicle dealers that are subject to the Board's Regulation Z and offer closed-end or open-end credit that may be exempt from Regulation Z under 12 CFR 226.3(b). While the total number of small entities likely to be affected by the final rule is unknown, the Board does not believe the final rule will have a significant economic impact on the entities that it affects. 4. Recordkeeping, reporting, and compliance requirements. The final rule would not impose any recordkeeping, reporting, or compliance requirements. 5. Significant alternatives to the final revisions. The Board has not identified any significant alternatives that would reduce the regulatory burden on small entities associated with this final 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.\13\ These analyses must describe the impact of the proposed and final rules on small entities.\14\ 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.\15\ 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.\16\ --------------------------------------------------------------------------- \13\ 5 U.S.C. 601 et seq. \14\ 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). \15\ Id. at 605(b). \16\ 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,\17\ the agencies reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule. --------------------------------------------------------------------------- \17\ 44 U.S.C. 3506; 5 CFR 1320. --------------------------------------------------------------------------- List of Subjects 12 CFR Part 226 Advertising, Consumer protection, Federal Reserve System, 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. 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 1. 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), and 1639(l); Public Law 111-24, section 2, 123 Stat. 1734; Public Law 111-203, 124 Stat. 1376. Subpart A--General 0 2. In supplement I to part 226, under Section 226.3--Exempt Transactions, the entry for 3(b) Credit over applicable threshold amount is revised to read as follows: Supplement I to Part 226--Official Staff Interpretations * * * * * Subpart A--General * * * * * Section 226.3--Exempt Transactions * * * * * 3(b) Credit over applicable threshold amount. 1. Threshold amount. For purposes of Sec. 226.3(b), the threshold amount in effect during a particular period is the amount stated in comment 3(b)-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 3(b)-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 [[Page 86264]] calculated based on the amount that would have resulted. 3. Threshold. For purposes of Sec. 226.3(b), the threshold amount in effect during a particular period is the amount stated below for that period. i. Prior to July 21, 2011, the threshold amount is $25,000. ii. From July 21, 2011 through December 31, 2011, the threshold amount is $50,000. iii. From January 1, 2012 through December 31, 2012, the threshold amount is $51,800. iv. From January 1, 2013 through December 31, 2013, the threshold amount is $53,000. v. From January 1, 2014 through December 31, 2014, the threshold amount is $53,500. vi. From January 1, 2015 through December 31, 2015, the threshold amount is $54,600. vii. From January 1, 2016 through December 31, 2016, the threshold amount is $54,600. viii. From January 1, 2017 through December 31, 2017, the threshold amount is $54,600. 4. Open-end credit. i. Qualifying for exemption. An open-end account is exempt under Sec. 226.3(b) (unless secured by any real property, or by personal property used or expected to be used as the consumer's principal dwelling) if either of the following conditions is met: A. The creditor makes an initial extension of credit at or after account opening that exceeds the threshold amount in effect at the time the initial extension is made. If a creditor makes an initial extension of credit after account opening that does not exceed the threshold amount in effect at the time the extension is made, the creditor must have satisfied all of the applicable requirements of this part from the date the account was opened (or earlier, if applicable), including but not limited to the requirements of Sec. 226.6 (account-opening disclosures), Sec. 226.7 (periodic statements), Sec. 226.52 (limitations on fees), and Sec. 226.55 (limitations on increasing annual percentages rates, fees, and charges). For example: (1) Assume that the threshold amount in effect on January 1 is $50,000. On February 1, an account is opened but the creditor does not make an initial extension of credit at that time. On July 1, the creditor makes an initial extension of credit of $60,000. In this circumstance, no requirements of this part apply to the account. (2) Assume that the threshold amount in effect on January 1 is $50,000. On February 1, an account is opened but the creditor does not make an initial extension of credit at that time. On July 1, the creditor makes an initial extension of credit of $50,000 or less. In this circumstance, the account is not exempt and the creditor must have satisfied all of the applicable requirements of this part from the date the account was opened (or earlier, if applicable). B. The creditor makes a firm written commitment at account opening to extend a total amount of credit in excess of the threshold amount in effect at the time the account is opened with no requirement of additional credit information for any advances on the account (except as permitted from time to time with respect to open-end accounts pursuant to Sec. 226.2(a)(20)). ii. Subsequent changes generally. Subsequent changes to an open-end account or the threshold amount may result in the account no longer qualifying for the exemption in Sec. 226.3(b). In these circumstances, the creditor must begin to comply with all of the applicable requirements of this part within a reasonable period of time after the account ceases to be exempt. Once an account ceases to be exempt, the requirements of this part apply to any balances on the account. The creditor, however, is not required to comply with the requirements of this part with respect to the period of time during which the account was exempt. For example, if an open-end credit account ceases to be exempt, the creditor must within a reasonable period of time provide the disclosures required by Sec. 226.6 reflecting the current terms of the account and begin to provide periodic statements consistent with Sec. 226.7. However, the creditor is not required to disclose fees or charges imposed while the account was exempt. Furthermore, if the creditor provided disclosures consistent with the requirements of this part while the account was exempt, it is not required to provide disclosures required by Sec. 226.6 reflecting the current terms of the account. See also comment 3(b)-6. iii. Subsequent changes when exemption is based on initial extension of credit. If a creditor makes an initial extension of credit that exceeds the threshold amount in effect at that time, the open-end account remains exempt under Sec. 226.3(b) regardless of a subsequent increase in the threshold amount, including an increase pursuant to Sec. 226.3(b)(1)(ii) as a result of an increase in the CPI-W. Furthermore, in these circumstances, the account remains exempt even if there are no further extensions of credit, subsequent extensions of credit do not exceed the threshold amount, the account balance is subsequently reduced below the threshold amount (such as through repayment of the extension), or the credit limit for the account is subsequently reduced below the threshold amount. However, if the initial extension of credit on an account does not exceed the threshold amount in effect at the time of the extension, the account is not exempt under Sec. 226.3(b) even if a subsequent extension exceeds the threshold amount or if the account balance later exceeds the threshold amount (for example, due to the subsequent accrual of interest). iv. Subsequent changes when exemption is based on firm commitment. A. General. If a creditor makes a firm written commitment at account opening to extend a total amount of credit that exceeds the threshold amount in effect at that time, the open-end account remains exempt under Sec. 226.3(b) regardless of a subsequent increase in the threshold amount pursuant to Sec. 226.3(b)(1)(ii) as a result of an increase in the CPI-W. However, see comment 3(b)-8 with respect to the increase in the threshold amount from $25,000 to $50,000. If an open- end account is exempt under Sec. 226.3(b) based on a firm commitment to extend credit, the account remains exempt even if the amount of credit actually extended does not exceed the threshold amount. In contrast, if the firm commitment does not exceed the threshold amount at account opening, the account is not exempt under Sec. 226.3(b) even if the account balance later exceeds the threshold amount. In addition, if a creditor reduces a firm commitment, the account ceases to be exempt unless the reduced firm commitment exceeds the threshold amount in effect at the time of the reduction. For example: (1) Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under Sec. 226.3(b) based on the creditor's firm commitment to extend $55,000 in credit. If during year one the creditor reduces its firm commitment to $53,000, the account remains exempt under Sec. 226.3(b). However, if during year one the creditor reduces its firm commitment to $40,000, the account is no longer exempt under Sec. 226.3(b). (2) Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under Sec. 226.3(b) based on the creditor's firm commitment to extend $55,000 in credit. If the threshold amount is $56,000 on January 1 of year six as a result of increases in the CPI-W, the account remains exempt. However, if the creditor reduces its firm [[Page 86265]] commitment to $54,000 on July 1 of year six, the account ceases to be exempt under Sec. 226.3(b). B. Initial extension of credit. If an open-end account qualifies for a Sec. 226.3(b) exemption at account opening based on a firm commitment, that account may also subsequently qualify for a Sec. 226.3(b) exemption based on an initial extension of credit. However, that initial extension must be a single advance in excess of the threshold amount in effect at the time the extension is made. In addition, the account must continue to qualify for an exemption based on the firm commitment until the initial extension of credit is made. For example: (1) Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under Sec. 226.3(b) based on the creditor's firm commitment to extend $55,000 in credit. The account is not used for an extension of credit during year one. On January 1 of year two, the threshold amount is increased to $51,000 pursuant to Sec. 226.3(b)(1)(ii) as a result of an increase in the CPI-W. On July 1 of year two, the consumer uses the account for an initial extension of $52,000. As a result of this extension of credit, the account remains exempt under Sec. 226.3(b) even if, after July 1 of year two, the creditor reduces the firm commitment to $51,000 or less. (2) Same facts as in paragraph iv.B(1) above except that the consumer uses the account for an initial extension of $30,000 on July 1 of year two and for an extension of $22,000 on July 15 of year two. In these circumstances, the account is not exempt under Sec. 226.3(b) based on the $30,000 initial extension of credit because that extension did not exceed the applicable threshold amount ($51,000), although the account remains exempt based on the firm commitment to extend $55,000 in credit. (3) Same facts as in paragraph iv.B(1) above except that, on April 1 of year two, the creditor reduces the firm commitment to $50,000, which is below the $51,000 threshold then in effect. Because the account ceases to qualify for a Sec. 226.3(b) exemption on April 1 of year two, the account does not qualify for a Sec. 226.3(b) exemption based on a $52,000 initial extension of credit on July 1 of year two. 5. Closed-end credit. i. Qualifying for exemption. A closed-end loan is exempt under Sec. 226.3(b) (unless the extension of credit is secured by any real property, or by personal property used or expected to be used as the consumer's principal dwelling; or is a private education loan as defined in Sec. 226.46(b)(5)), if either of the following conditions is met. A. The creditor makes an extension of credit at consummation that exceeds the threshold amount in effect at the time of consummation. In these circumstances, the loan remains exempt under Sec. 226.3(b) even if the amount owed is subsequently reduced below the threshold amount (such as through repayment of the loan). B. The creditor makes a commitment at consummation to extend a total amount of credit in excess of the threshold amount in effect at the time of consummation. In these circumstances, the loan remains exempt under Sec. 226.3(b) even if the total amount of credit extended does not exceed the threshold amount. ii. Subsequent changes. If a creditor makes a closed-end extension of credit or commitment to extend closed-end credit that exceeds the threshold amount in effect at the time of consummation, the closed-end loan remains exempt under Sec. 226.3(b) regardless of a subsequent increase in the threshold amount. However, a closed-end loan is not exempt under Sec. 226.3(b) merely because it is used to satisfy and replace an existing exempt loan, unless the new extension of credit is itself exempt under the applicable threshold amount. For example, assume a closed-end loan that qualified for a Sec. 226.3(b) exemption at consummation in year one is refinanced in year ten and that the new loan amount is less than the threshold amount in effect in year ten. In these circumstances, the creditor must comply with all of the applicable requirements of this part with respect to the year ten transaction if the original loan is satisfied and replaced by the new loan, which is not exempt under Sec. 226.3(b). See also comment 3(b)- 6. 6. Addition of a security interest in real property or a dwelling after account opening or consummation. i. Open-end credit. For open-end accounts, if, after account opening, a security interest is taken in real property, or in personal property used or expected to be used as the consumer's principal dwelling, a previously exempt account ceases to be exempt under Sec. 226.3(b) and the creditor must begin to comply with all of the applicable requirements of this part within a reasonable period of time. See comment 3(b)-4.ii. If a security interest is taken in the consumer's principal dwelling, the creditor must also give the consumer the right to rescind the security interest consistent with Sec. 226.15. ii. Closed-end credit. For closed-end loans, if, after consummation, a security interest is taken in any real property, or in personal property used or expected to be used as the consumer's principal dwelling, an exempt loan remains exempt under Sec. 226.3(b). However, the addition of a security interest in the consumer's principal dwelling is a transaction for purposes of Sec. 226.23, and the creditor must give the consumer the right to rescind the security interest consistent with that section. See Sec. 226.23(a)(1) and the accompanying commentary. In contrast, if a closed-end loan that is exempt under Sec. 226.3(b) is satisfied and replaced by a loan that is secured by any real property, or by personal property used or expected to be used as the consumer's principal dwelling, the new loan is not exempt under Sec. 226.3(b) and the creditor must comply with all of the applicable requirements of this part. See comment 3(b)-5. 7. Application to extensions secured by mobile homes. Because a mobile home can be a dwelling under Sec. 226.2(a)(19), the exemption in Sec. 226.3(b) does not apply to a credit extension secured by a mobile home that is used or expected to be used as the principal dwelling of the consumer. See comment 3(b)-6. 8. Transition rule for open-end accounts exempt prior to July 21, 2011. Section 226.3(b)(2) applies only to open-end accounts opened prior to July 21, 2011. Section 226.3(b)(2) does not apply if a security interest is taken by the creditor in any real property, or in personal property used or expected to be used as the consumer's principal dwelling. If, on July 20, 2011, an open-end account is exempt under Sec. 226.3(b) based on a firm commitment to extend credit in excess of $25,000, the account remains exempt under Sec. 226.3(b)(2) until December 31, 2011 (unless the firm commitment is reduced to $25,000 or less). If the firm commitment is increased on or before December 31, 2011 to an amount in excess of $50,000, the account remains exempt under Sec. 226.3(b)(1) regardless of subsequent increases in the threshold amount as a result of increases in the CPI- W. If the firm commitment is not increased on or before December 31, 2011 to an amount in excess of $50,000, the account ceases to be exempt under Sec. 226.3(b) based on a firm commitment to extend credit. For example: i. Assume that, on July 20, 2011, the account is exempt under Sec. 226.3(b) based on the creditor's firm commitment to extend $30,000 in credit. On November 1, 2011, the creditor increases the firm commitment on the account to $55,000. In these circumstances, the account remains [[Page 86266]] exempt under Sec. 226.3(b)(1) regardless of subsequent increases in the threshold amount as a result of increases in the CPI-W. ii. Same facts as paragraph i. above except, on November 1, 2011, the creditor increases the firm commitment on the account to $40,000. In these circumstances, the account ceases to be exempt under Sec. 226.3(b)(2) after December 31, 2011, and the creditor must begin to comply with the applicable requirements of this part. * * * * * 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 3. 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 4. In supplement I to part 1026, under Section 1026.3--Exempt Transactions, the entry for 3(b)--Credit Over Applicable Threshold Amount is revised to read as follows: Supplement I to Part 1026--Official Interpretations * * * * * Subpart A--General * * * * * Section 1026.3--Exempt Transactions * * * * * 3(b) Credit Over Applicable Threshold Amount 1. Threshold amount. For purposes of Sec. 1026.3(b), the threshold amount in effect during a particular period is the amount stated in comment 3(b)-3 below 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 3(b)-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. 1026.3(b), the threshold amount in effect during a particular period is the amount stated below for that period. i. Prior to July 21, 2011, the threshold amount is $25,000. ii. From July 21, 2011 through December 31, 2011, the threshold amount is $50,000. iii. From January 1, 2012 through December 31, 2012, the threshold amount is $51,800. iv. From January 1, 2013 through December 31, 2013, the threshold amount is $53,000. v. From January 1, 2014 through December 31, 2014, the threshold amount is $53,500. vi. From January 1, 2015 through December 31, 2015, the threshold amount is $54,600. vii. From January 1, 2016 through December 31, 2016, the threshold amount is $54,600. viii. From January 1, 2017 through December 31, 2017, the threshold amount is $54,600. 4. Open-end credit. i. Qualifying for exemption. An open-end account is exempt under Sec. 1026.3(b) (unless secured by real property, or by personal property used or expected to be used as the consumer's principal dwelling) if either of the following conditions is met: A. The creditor makes an initial extension of credit at or after account opening that exceeds the threshold amount in effect at the time the initial extension is made. If a creditor makes an initial extension of credit after account opening that does not exceed the threshold amount in effect at the time the extension is made, the creditor must have satisfied all of the applicable requirements of this part from the date the account was opened (or earlier, if applicable), including but not limited to the requirements of Sec. 1026.6 (account-opening disclosures), Sec. 1026.7 (periodic statements), Sec. 1026.52 (limitations on fees), and Sec. 1026.55 (limitations on increasing annual percentage rates, fees, and charges). For example: 1. Assume that the threshold amount in effect on January 1 is $50,000. On February 1, an account is opened but the creditor does not make an initial extension of credit at that time. On July 1, the creditor makes an initial extension of credit of $60,000. In this circumstance, no requirements of this part apply to the account. 2. Assume that the threshold amount in effect on January 1 is $50,000. On February 1, an account is opened but the creditor does not make an initial extension of credit at that time. On July 1, the creditor makes an initial extension of credit of $50,000 or less. In this circumstance, the account is not exempt and the creditor must have satisfied all of the applicable requirements of this part from the date the account was opened (or earlier, if applicable). B. The creditor makes a firm written commitment at account opening to extend a total amount of credit in excess of the threshold amount in effect at the time the account is opened with no requirement of additional credit information for any advances on the account (except as permitted from time to time with respect to open-end accounts pursuant to Sec. 1026.2(a)(20)). ii. Subsequent changes generally. Subsequent changes to an open-end account or the threshold amount may result in the account no longer qualifying for the exemption in Sec. 1026.3(b). In these circumstances, the creditor must begin to comply with all of the applicable requirements of this part within a reasonable period of time after the account ceases to be exempt. Once an account ceases to be exempt, the requirements of this part apply to any balances on the account. The creditor, however, is not required to comply with the requirements of this part with respect to the period of time [[Page 86267]] during which the account was exempt. For example, if an open-end credit account ceases to be exempt, the creditor must within a reasonable period of time provide the disclosures required by Sec. 1026.6 reflecting the current terms of the account and begin to provide periodic statements consistent with Sec. 1026.7. However, the creditor is not required to disclose fees or charges imposed while the account was exempt. Furthermore, if the creditor provided disclosures consistent with the requirements of this part while the account was exempt, it is not required to provide disclosures required by Sec. 1026.6 reflecting the current terms of the account. See also comment 3(b)-6. iii. Subsequent changes when exemption is based on initial extension of credit. If a creditor makes an initial extension of credit that exceeds the threshold amount in effect at that time, the open-end account remains exempt under Sec. 1026.3(b) regardless of a subsequent increase in the threshold amount, including an increase pursuant to Sec. 1026.3(b)(1)(ii) as a result of an increase in the CPI-W. Furthermore, in these circumstances, the account remains exempt even if there are no further extensions of credit, subsequent extensions of credit do not exceed the threshold amount, the account balance is subsequently reduced below the threshold amount (such as through repayment of the extension), or the credit limit for the account is subsequently reduced below the threshold amount. However, if the initial extension of credit on an account does not exceed the threshold amount in effect at the time of the extension, the account is not exempt under Sec. 1026.3(b) even if a subsequent extension exceeds the threshold amount or if the account balance later exceeds the threshold amount (for example, due to the subsequent accrual of interest). iv. Subsequent changes when exemption is based on firm commitment. A. General. If a creditor makes a firm written commitment at account opening to extend a total amount of credit that exceeds the threshold amount in effect at that time, the open-end account remains exempt under Sec. 1026.3(b) regardless of a subsequent increase in the threshold amount pursuant to Sec. 1026.3(b)(1)(ii) as a result of an increase in the CPI-W. However, see comment 3(b)-8 with respect to the increase in the threshold amount from $25,000 to $50,000. If an open- end account is exempt under Sec. 1026.3(b) based on a firm commitment to extend credit, the account remains exempt even if the amount of credit actually extended does not exceed the threshold amount. In contrast, if the firm commitment does not exceed the threshold amount at account opening, the account is not exempt under Sec. 1026.3(b) even if the account balance later exceeds the threshold amount. In addition, if a creditor reduces a firm commitment, the account ceases to be exempt unless the reduced firm commitment exceeds the threshold amount in effect at the time of the reduction. For example: 1. Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under Sec. 1026.3(b) based on the creditor's firm commitment to extend $55,000 in credit. If during year one the creditor reduces its firm commitment to $53,000, the account remains exempt under Sec. 1026.3(b). However, if during year one the creditor reduces its firm commitment to $40,000, the account is no longer exempt under Sec. 1026.3(b). 2. Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under Sec. 1026.3(b) based on the creditor's firm commitment to extend $55,000 in credit. If the threshold amount is $56,000 on January 1 of year six as a result of increases in the CPI-W, the account remains exempt. However, if the creditor reduces its firm commitment to $54,000 on July 1 of year six, the account ceases to be exempt under Sec. 1026.3(b). B. Initial extension of credit. If an open-end account qualifies for a Sec. 1026.3(b) exemption at account opening based on a firm commitment, that account may also subsequently qualify for a Sec. 1026.3(b) exemption based on an initial extension of credit. However, that initial extension must be a single advance in excess of the threshold amount in effect at the time the extension is made. In addition, the account must continue to qualify for an exemption based on the firm commitment until the initial extension of credit is made. For example: 1. Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under Sec. 1026.3(b) based on the creditor's firm commitment to extend $55,000 in credit. The account is not used for an extension of credit during year one. On January 1 of year two, the threshold amount is increased to $51,000 pursuant to Sec. 1026.3(b)(1)(ii) as a result of an increase in the CPI-W. On July 1 of year two, the consumer uses the account for an initial extension of $52,000. As a result of this extension of credit, the account remains exempt under Sec. 1026.3(b) even if, after July 1 of year two, the creditor reduces the firm commitment to $51,000 or less. 2. Same facts as in paragraph iv.B.1 above except that the consumer uses the account for an initial extension of $30,000 on July 1 of year two and for an extension of $22,000 on July 15 of year two. In these circumstances, the account is not exempt under Sec. 1026.3(b) based on the $30,000 initial extension of credit because that extension did not exceed the applicable threshold amount ($51,000), although the account remains exempt based on the firm commitment to extend $55,000 in credit. 3. Same facts as in paragraph iv.B.1 above except that, on April 1 of year two, the creditor reduces the firm commitment to $50,000, which is below the $51,000 threshold then in effect. Because the account ceases to qualify for a Sec. 1026.3(b) exemption on April 1 of year two, the account does not qualify for a Sec. 1026.3(b) exemption based on a $52,000 initial extension of credit on July 1 of year two. 5. Closed-end credit. i. Qualifying for exemption. A closed-end loan is exempt under Sec. 1026.3(b) (unless the extension of credit is secured by real property, or by personal property used or expected to be used as the consumer's principal dwelling; or is a private education loan as defined in Sec. 1026.46(b)(5)), if either of the following conditions is met: A. The creditor makes an extension of credit at consummation that exceeds the threshold amount in effect at the time of consummation. In these circumstances, the loan remains exempt under Sec. 1026.3(b) even if the amount owed is subsequently reduced below the threshold amount (such as through repayment of the loan). B. The creditor makes a commitment at consummation to extend a total amount of credit in excess of the threshold amount in effect at the time of consummation. In these circumstances, the loan remains exempt under Sec. 1026.3(b) even if the total amount of credit extended does not exceed the threshold amount. ii. Subsequent changes. If a creditor makes a closed-end extension of credit or commitment to extend closed-end credit that exceeds the threshold amount in effect at the time of consummation, the closed-end loan remains exempt under Sec. 1026.3(b) regardless of a subsequent increase in the threshold amount. However, a closed-end loan is not exempt under Sec. 1026.3(b) merely because it is used to satisfy and replace an existing exempt loan, unless the new extension of credit is itself exempt under the applicable threshold amount. For example, assume a closed-end loan that qualified for a [[Page 86268]] Sec. 1026.3(b) exemption at consummation in year one is refinanced in year ten and that the new loan amount is less than the threshold amount in effect in year ten. In these circumstances, the creditor must comply with all of the applicable requirements of this part with respect to the year ten transaction if the original loan is satisfied and replaced by the new loan, which is not exempt under Sec. 1026.3(b). See also comment 3(b)-6. 6. Addition of a security interest in real property or a dwelling after account opening or consummation. i. Open-end credit. For open-end accounts, if after account opening a security interest is taken in real property, or in personal property used or expected to be used as the consumer's principal dwelling, a previously exempt account ceases to be exempt under Sec. 1026.3(b) and the creditor must begin to comply with all of the applicable requirements of this part within a reasonable period of time. See comment 3(b)-4.ii. If a security interest is taken in the consumer's principal dwelling, the creditor must also give the consumer the right to rescind the security interest consistent with Sec. 1026.15. ii. Closed-end credit. For closed-end loans, if after consummation a security interest is taken in real property, or in personal property used or expected to be used as the consumer's principal dwelling, an exempt loan remains exempt under Sec. 1026.3(b). However, the addition of a security interest in the consumer's principal dwelling is a transaction for purposes of Sec. 1026.23, and the creditor must give the consumer the right to rescind the security interest consistent with that section. See Sec. 1026.23(a)(1) and its commentary. In contrast, if a closed-end loan that is exempt under Sec. 1026.3(b) is satisfied and replaced by a loan that is secured by real property, or by personal property used or expected to be used as the consumer's principal dwelling, the new loan is not exempt under Sec. 1026.3(b), and the creditor must comply with all of the applicable requirements of this part. See comment 3(b)-5. 7. Application to extensions secured by mobile homes. Because a mobile home can be a dwelling under Sec. 1026.2(a)(19), the exemption in Sec. 1026.3(b) does not apply to a credit extension secured by a mobile home that is used or expected to be used as the principal dwelling of the consumer. See comment 3(b)-6. 8. Transition rule for open-end accounts exempt prior to July 21, 2011. Section 1026.3(b)(2) applies only to open-end accounts opened prior to July 21, 2011. Section 1026.3(b)(2) does not apply if a security interest is taken by the creditor in real property, or in personal property used or expected to be used as the consumer's principal dwelling. If, on July 20, 2011, an open-end account is exempt under Sec. 1026.3(b) based on a firm commitment to extend credit in excess of $25,000, the account remains exempt under Sec. 1026.3(b)(2) until December 31, 2011 (unless the firm commitment is reduced to $25,000 or less). If the firm commitment is increased on or before December 31, 2011 to an amount in excess of $50,000, the account remains exempt under Sec. 1026.3(b)(1) regardless of subsequent increases in the threshold amount as a result of increases in the CPI- W. If the firm commitment is not increased on or before December 31, 2011 to an amount in excess of $50,000, the account ceases to be exempt under Sec. 1026.3(b) based on a firm commitment to extend credit. For example: i. Assume that, on July 20, 2011, the account is exempt under Sec. 1026.3(b) based on the creditor's firm commitment to extend $30,000 in credit. On November 1, 2011, the creditor increases the firm commitment on the account to $55,000. In these circumstances, the account remains exempt under Sec. 1026.3(b)(1) regardless of subsequent increases in the threshold amount as a result of increases in the CPI-W. ii. Same facts as paragraph i above except, on November 1, 2011, the creditor increases the firm commitment on the account to $40,000. In these circumstances, the account ceases to be exempt under Sec. 1026.3(b)(2) after December 31, 2011, and the creditor must begin to comply with the applicable requirements of this part. * * * * * By order of the Board of Governors of the Federal Reserve System, November 17, 2016. Robert deV. Frierson, Secretary of the Board. Dated: November 7, 2016. Richard Cordray, Director, Bureau of Consumer Financial Protection. [FR Doc. 2016-28718 Filed 11-29-16; 8:45 am] BILLING CODE 6210-01-4810-AM-P
![86260 Federal Register / Vol. 81, No. 230 / Wednesday, November 30, 2016 / Rules and Regulations
this part if the total contractual i. Prior to July 21, 2011, the threshold by the annual percentage increase in the
obligation exceeds the threshold amount amount is $25,000. Consumer Price Index for Urban Wage
in effect at the time of consummation. ii. From July 21, 2011 through Earners and Clerical Workers (CPI–W).
The threshold amount in effect during a December 31, 2011, the threshold If there is no annual percentage increase
particular time period is the amount amount is $50,000. in the CPI–W, the Board and Bureau
stated in comment 2(e)–11 for that iii. From January 1, 2012 through will not adjust this exemption threshold
period. The threshold amount is December 31, 2012, the threshold from the prior year. The final rule
adjusted effective January 1 of each year amount is $51,800. memorializes this as well as the
by any annual percentage increase in iv. From January 1, 2013 through agencies’ calculation method for
the Consumer Price Index for Urban December 31, 2013, the threshold determining the adjustment in years
Wage Earners and Clerical Workers amount is $53,000. following a year in which there is no
(CPI–W) that was in effect on the v. From January 1, 2014 through annual percentage increase in the CPI–
preceding June 1. Comment 2(e)–11 will December 31, 2014, the threshold W. Based on the CPI–W in effect as of
be amended to provide the threshold amount is $53,500. June 1, 2016, the exemption threshold
amount for the upcoming year after the vi. From January 1, 2015 through will remain at $54,600 through 2017.
annual percentage change in the CPI–W December 31, 2015, the threshold The Dodd-Frank Act also requires
that was in effect on June 1 becomes amount is $54,600. similar adjustments in the Consumer
available. Any increase in the threshold vii. From January 1, 2016 through Leasing Act’s threshold for exempt
amount will be rounded to the nearest December 31, 2016, the threshold consumer leases. Accordingly, the
$100 increment. For example, if the amount is $54,600. Board and the Bureau are adopting
annual percentage increase in the CPI– viii. From January 1, 2017 through similar amendments to the
W would result in a $950 increase in the December 31, 2017, the threshold commentaries to each of their respective
threshold amount, the threshold amount amount is $54,600. regulations implementing the Consumer
will be increased by $1,000. However, if By order of the Board of Governors of the Leasing Act elsewhere in this issue of
the annual percentage increase in the Federal Reserve System, November 17, 2016. the Federal Register.
CPI–W would result in a $949 increase Robert deV. Frierson, DATES: This final rule is effective
in the threshold amount, the threshold Secretary of the Board. January 1, 2017.
amount will be increased by $900. If a Dated: November 7, 2016. FOR FURTHER INFORMATION CONTACT:
consumer lease is exempt from the Board: Vivian W. Wong, Senior
Richard Cordray,
requirements of this part because the Counsel, Division of Consumer and
total contractual obligation exceeds the Director, Bureau of Consumer Financial
Protection.
Community Affairs, Board of Governors
threshold amount in effect at the time of of the Federal Reserve System, at (202)
[FR Doc. 2016–28710 Filed 11–29–16; 8:45 am]
consummation, the lease remains 452–3667; for users of
exempt regardless of a subsequent BILLING CODE 6210–01–P; 4810–AM–P
Telecommunications Device for the Deaf
increase in the threshold amount. (TDD) only, contact (202) 263–4869.
10. No increase in the CPI–W. If the Bureau: Jaclyn Maier, Counsel, Office
FEDERAL RESERVE SYSTEM
CPI–W in effect on June 1 does not of Regulations, Consumer Financial
increase from the CPI–W in effect on 12 CFR Part 226 Protection Bureau, at (202) 435–7700.
June 1 of the previous year, the SUPPLEMENTARY INFORMATION:
threshold amount effective the [Docket No. R–1546]
following January 1 through December I. Background
RIN 7100 AE–57
31 will not change from the previous The Dodd-Frank Wall Street Reform
year. When this occurs, for the years BUREAU OF CONSUMER FINANCIAL and Consumer Protection Act of 2010
that follow, the threshold is calculated PROTECTION (Dodd-Frank Act) increased the
based on the annual percentage change threshold in the Truth in Lending Act
in the CPI–W applied to the dollar 12 CFR Part 1026 (TILA) for exempt consumer credit
amount that would have resulted, after transactions,1 and the threshold in the
[Docket No. CFPB–2016–0037]
rounding, if decreases and any Consumer Leasing Act (CLA) for exempt
subsequent increases in the CPI–W had RIN 3170–AA67 consumer leases, from $25,000 to
been taken into account. $50,000, effective July 21, 2011.2 In
i. Net increases. If the resulting Truth in Lending (Regulation Z) addition, the Dodd-Frank Act requires
amount calculated, after rounding, is AGENCY: Board of Governors of the that, on and after December 31, 2011,
greater than the current threshold, then Federal Reserve System (Board); and these thresholds be adjusted annually
the threshold effective January 1 the Bureau of Consumer Financial for inflation by the annual percentage
following year will increase Protection (Bureau). increase in the Consumer Price Index
accordingly. for Urban Wage Earners and Clerical
ACTION: Final rules, official
ii. Net decreases. If the resulting Workers (CPI–W), as published by the
interpretations and commentary.
amount calculated, after rounding, is Bureau of Labor Statistics. In April
equal to or less than the current SUMMARY: The Board and the Bureau are 2011, the Board issued a final rule
threshold, then the threshold effective finalizing amendments to the official
1 Although consumer credit transactions above
January 1 the following year will not interpretations and commentary for the
sradovich on DSK3GMQ082PROD with RULES
the threshold are generally exempt, loans secured
change, but future increases will be agencies’ regulations that implement the by real property or by personal property used or
calculated based on the amount that Truth in Lending Act (TILA). The Dodd- expected to be used as the principal dwelling of a
would have resulted. Frank Wall Street Reform and Consumer consumer and private education loans are covered
11. Threshold. For purposes of Protection Act (Dodd-Frank Act) by TILA regardless of the loan amount. See 12 CFR
226.3(b)(1)(i) (Board) and 12 CFR 1026.3(b)(1)(i)
§ 1013.2(e)(1), the threshold amount in amended TILA by requiring that the (Bureau).
effect during a particular period is the dollar threshold for exempt consumer 2 Public Law 111–203, section 1100E, 124 Stat.
amount stated below for that period. credit transactions be adjusted annually 1376 (2010).
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amending Regulation Z (which was in effect on the preceding June 1. 5, 3(b)–6, 3(b)–7, and 3(b)–8,
implements TILA) consistent with these They further provide that any increase respectively, and cross-references to
provisions of the Dodd-Frank Act, along in the threshold amount will be these comments are also renumbered
with a similar final rule amending rounded to the nearest $100 increment. accordingly, as proposed.
Regulation M (which implements the For example, if the annual percentage Furthermore, the Board and the
CLA) (collectively, the Board Final increase in the CPI–W would result in Bureau are adopting new comment 3(b)–
Threshold Rules).3 a $950 increase in the threshold 2 as proposed to provide that if the CPI–
Title X of the Dodd-Frank Act amount, the threshold amount will be W in effect on June 1 does not increase
transferred rulemaking authority for a increased by $1,000. However, if the from the CPI–W in effect on June 1 of
number of consumer financial annual percentage increase in the CPI– the previous year (i.e., the CPI–W in
protection laws from the Board to the W would result in a $949 increase in the effect on June 1 is either equal to or less
Bureau, effective July 21, 2011. In threshold amount, the threshold amount than the CPI–W in effect on June 1 of
connection with this transfer of will be increased by $900.7 If there is no the previous year), the threshold
rulemaking authority, the Bureau issued annual percentage increase in the CPI– amount effective the following January
its own Regulation Z implementing W, the Board and Bureau will not adjust 1 through December 31 will not change
TILA in an interim final rule, 12 CFR the exemption threshold from the prior from the previous year. As the Board
part 1026 (Bureau Interim Final Rule).4 year. Since 2011, the Board and the and the Bureau discussed in the
The Bureau Interim Final Rule Bureau have adjusted the Regulation Z proposal, this position is consistent
substantially duplicated the Board’s exemption threshold annually, in with section 1100E(b) of the Dodd-Frank
Regulation Z, including the revisions to accordance with these rules. Act, which states that the threshold
the threshold for exempt transactions II. Commentary Revision must be adjusted by the ‘‘annual
made by the Board in April 2011. In percentage increase’’ in the CPI–W
April 2016, the Bureau adopted the On August 4, 2016, the Board and the (emphasis added), and the position the
Bureau Interim Final Rule as final, Bureau published a proposed rule in the agencies have previously taken.8 Thus,
subject to intervening final rules Federal Register to memorialize the if the threshold in effect from January 1,
published by the Bureau.5 Although the calculation method used by the agencies 2019, through December 31, 2019, is
Bureau has the authority to issue rules each year to adjust the exemption $55,500 and the CPI–W in effect on June
to implement TILA for most entities, the threshold. See 81 FR 51404 (Aug. 4, 1 of 2019 indicates a 1.1 percent
Board retains authority to issue rules 2016). The proposed commentary stated decrease from the CPI–W in effect on
under TILA for certain motor vehicle that if there is no annual percentage June 1, 2018, the threshold in effect for
dealers covered by section 1029(a) of the increase in the CPI–W, the Board and January 1, 2020, through December 31,
Dodd-Frank Act, and the Board’s Bureau will not adjust the exemption 2020, will remain $55,500.
Regulation Z continues to apply to those threshold from the prior year. The Comment 3(b)–2 also provides that,
entities.6 proposed commentary further set forth for the years after a year in which the
Section 226.3(b)(1)(ii) of the Board’s the calculation method the agencies threshold did not change because the
Regulation Z and § 1026.3(b)(1)(ii) of the would use in years following a year in CPI–W in effect on June 1 decreased
Bureau’s Regulation Z, and their which the exemption threshold was not from the CPI–W in effect on June 1 of
accompanying commentaries, provide adjusted because there was no increase the previous year, the threshold is
that the exemption threshold will be in the CPI–W from the previous year. As calculated by applying the annual
adjusted annually effective January 1 of the Board and the Bureau discussed in percentage change in the CPI–W to the
each year based on any annual the proposal, the proposed calculation dollar amount that would have resulted,
percentage increase in the CPI–W that method would ensure that the values for after rounding, if the decreases and any
the exemption threshold keep pace with subsequent increases in the CPI–W had
3 76 FR 18354 (Apr. 4, 2011); 76 FR 18349 (Apr. the CPI–W as contemplated by section been taken into account. Comment 3(b)–
4, 2011). 1100E(b) of the Dodd-Frank Act. 2.i further states that, if the resulting
4 76 FR 79768 (Dec. 22, 2011). The comment period closed on amount, after rounding, is greater than
5 81 FR 25323 (April 28, 2016). September 6, 2016. In response to the the current threshold, then the
6 Section 1029(a) of the Dodd-Frank Act states:
proposal, the Board and the Bureau threshold effective January 1 the
‘‘Except as permitted in subsection (b), the Bureau received one comment from a consumer,
may not exercise any rulemaking, supervisory, following year will increase
enforcement, or any other authority . . . over a supporting the proposal. The Board and accordingly.
motor vehicle dealer that is predominantly engaged the Bureau are adopting the For example, assume that the
in the sale and servicing of motor vehicles, the commentary revisions as proposed, with threshold in effect from January 1, 2019,
leasing and servicing of motor vehicles, or both.’’ some minor clarifying amendments.
12 U.S.C. 5519(a). Section 1029(b) of the Dodd- through December 31, 2019, is $55,500
Frank Act states: ‘‘Subsection (a) shall not apply to These changes will be effective on and that, due to a 1.1 percent decrease
any person, to the extent that such person (1) January 1, 2017. from the CPI–W in effect on June 1,
provides consumers with any services related to Specifically, the Board and the 2018, to the CPI–W in effect on June 1,
residential or commercial mortgages or self- Bureau are adopting comment 3(b)–1 as
financing transactions involving real property; (2) 2019, the threshold in effect from
operates a line of business (A) that involves the proposed to move the text regarding the January 1, 2020, through December 31,
extension of retail credit or retail leases involving threshold amount that is in effect during 2020, remains at $55,500. If, however,
motor vehicles; and (B) in which (i) the extension a particular period to a new comment the threshold had been adjusted
of retail credit or retail leases are provided directly 3(b)–3. The discussion of how the
to consumers; and (ii) the contract governing such downward to reflect the decrease in the
agencies round the threshold
sradovich on DSK3GMQ082PROD with RULES
extension of retail credit or retail leases is not CPI–W over that time period, the
routinely assigned to an unaffiliated third party calculation will remain in comment threshold in effect from January 1, 2020,
finance or leasing source; or (3) offers or provides 3(b)–1. Current comments 3(b)–2, 3(b)– through December 31, 2020, would have
a consumer financial product or service not 3, 3(b)–4, 3(b)–5, and 3(b)–6 are
involving or related to the sale, financing, leasing,
rental, repair, refurbishment, maintenance, or other renumbered as comments 3(b)–4, 3(b)– 8 See, e.g., 76 FR 18354, 18355 n.1 (Apr. 4, 2011)
servicing of motor vehicles, motor vehicle parts, or (‘‘[A]n annual period of deflation or no inflation
any related or ancillary product or service.’’ 12 7 See comments 3(b)–1 in supplements I of 12 would not require a change in the threshold
U.S.C. 5519(b). CFR parts 226 and 1026. amount.’’).
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![86262 Federal Register / Vol. 81, No. 230 / Wednesday, November 30, 2016 / Rules and Regulations
been $54,900, after rounding. Further to $54,200 results in $54,600, which is world, which takes into account the
assume that the CPI–W in effect on June the same threshold amount for 2016. current regulatory regime. The Bureau is
1, 2020, increased by 1.6 percent from Thus, the exemption threshold amount not aware of any significant benefits or
the CPI–W in effect on June 1, 2019. The that will be in effect for 2017 remains costs to consumers or covered persons
calculation for the threshold that will be at $54,600. The Board and the Bureau associated with the final rule relative to
in effect from January 1, 2021, through are revising the commentaries to their the baseline. The Board previously
December 31, 2021, is based on the respective regulations to add new stated that if there is no annual
impact of a 1.6 percent increase in the comment 3(b)–3.viii to state that, from percentage increase in the CPI–W, then
CPI–W on $54,900, rather than $55,500, January 1, 2017, through December 31, the Board (and now the Bureau) will not
resulting in a 2021 threshold of $55,800. 2017, the threshold amount is $54,600. adjust the exemption threshold from the
Furthermore, comment 3(b)–2.ii states These revisions are effective January 1, prior year.12 The final rule memorializes
that, if the resulting amount calculated, 2017. this in official commentary. The final
after rounding, is equal to or less than rule also clarifies how the threshold is
the current threshold, then the IV. Regulatory Analysis
calculated for years after a year in which
threshold effective January 1 the Administrative Procedure Act the threshold did not change. The
following year will not change, but Bureau believes that this clarification
Under the Administrative Procedure
future increases will be calculated based memorializes the method that the
Act, notice and opportunity for public
on the amount that would have resulted, Bureau would be expected to use: This
after rounding. To illustrate, assume in comment are not required if the Board
and the Bureau find that notice and method holds the threshold fixed until
the example above that the CPI–W in a notional threshold calculated using
effect on June 1, 2020, increased by only public comment are impracticable,
unnecessary, or contrary to the public the Bureau’s methodology, taking into
0.6 percent from the CPI–W in effect on account both decreases and increases in
June 1, 2019. The calculation for the interest.9 The 2017 threshold amount
for exempt consumer credit transactions the CPI–W, exceeds the actual
threshold that will be in effect from threshold. The Bureau requested, but
January 1, 2021, through December 31, announced in this rule, $54,600, is
technical and applies the calculation did not receive, comment on this point.
2021, is based on the impact of a 0.6 Thus, the Bureau concludes that the
percent increase in the CPI–W on method set forth elsewhere in this final
rule, for which notice and public final rule will not change the regulatory
$54,900. The resulting amount, after regime relative to the baseline and will
rounding, is $55,200, which is lower comment were provided.10 For these
reasons, the Board and the Bureau have create no significant benefits, costs, or
than $55,500, the threshold in effect impacts.
from January 1, 2020, through December determined that publishing a notice of
proposed rulemaking and providing The final rule will have no unique
31, 2020. Therefore, the threshold in impact on depository institutions or
effect from January 1, 2021, through opportunity for public comment for
purposes of the 2017 threshold credit unions with $10 billion or less in
December 31, 2021, will remain assets as described in section 1026(a) of
$55,500. However, the calculation for adjustment are unnecessary. Therefore,
the amendments regarding the 2017 the Dodd-Frank Act or on rural
the threshold that will be in effect from consumers. The Bureau does not expect
January 1, 2022, through December 31, threshold amount for exempt consumer
credit transactions are adopted in final this final rule to affect consumers’
2022, will apply the percentage change access to credit.
in the CPI–W to $55,200, the amount form.
that would have resulted based on the Bureau’s Dodd-Frank Act Section Regulatory Flexibility Act
0.6 percent change from the CPI–W in 1022(b)(2) Analysis Board: An initial regulatory flexibility
effect on June 1, 2019, after rounding, to analysis (IRFA) was included in the
the CPI–W in effect on June 1, 2020. In developing the final rule, the
Bureau has considered potential proposal in accordance with section 3(a)
III. 2017 Threshold benefits, costs, and impacts.11 In of the Regulatory Flexibility Act, 5
addition, the Bureau has consulted, or U.S.C. 601 et seq. (RFA). In the IRFA,
Based on the calculation method the Board requested comments on any
detailed above, the exemption threshold offered to consult with, the prudential
regulators, the Securities and Exchange approaches, other than the proposed
amount for 2017 remains at $54,600. alternatives, that would reduce the
This is based on the CPI–W in effect on Commission, the Department of Housing
and Urban Development, the Federal burden on small entities. The RFA
June 1, 2016, which was reported on
Housing Finance Agency, the Federal requires an agency to prepare a final
May 17, 2016. The Bureau of Labor
Trade Commission, and the Department regulatory flexibility analysis (FRFA)
Statistics publishes consumer-based
of the Treasury, including regarding unless the agency certifies that the rule
indices monthly, but does not report a
consistency with any prudential, will not, if promulgated, have a
CPI change on June 1; adjustments are
market, or systemic objectives significant economic impact on a
reported in the middle of the month.
administered by such agencies. substantial number of small entities. In
The CPI–W is a subset of the CPI–U
The Bureau has chosen to evaluate the accordance with section 3(a) of the RFA,
index (based on all urban consumers)
benefits, costs and impacts of the final the Board has reviewed the final
and represents approximately 28
rule against the current state of the regulation. Based on its analysis, and for
percent of the U.S. population. The CPI–
the reasons stated below, the Board
W reported on May 17, 2016 reflects a
95 U.S.C. 553(b)(B). believes that the rule will not have a
0.8 percent increase in the CPI–W from
10 See 81 FR 51404 (Aug. 4, 2016). significant economic impact on a
April 2015 to April 2016. Because the
substantial number of small entities.
sradovich on DSK3GMQ082PROD with RULES
11 Specifically, section 1022(b)(2)(A) calls for the
CPI–W decreased from April 2014 to Bureau to consider the potential benefits and costs 1. Statement of the need for, and
April 2015, the Board and the Bureau of a regulation to consumers and covered persons, objectives of, the final rule. The final
are calculating the threshold based on including the potential reduction of access by
rule memorializes the calculation
the amount that would have resulted consumers to consumer financial products or
services; the impact on depository institutions and
had this decrease been taken into credit unions with $10 billion or less in total assets 12 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (‘‘[A]n
account, which is $54,200. A 0.8 as described in section 1026 of the Act; and the annual period of deflation or no inflation would not
percent increase in the CPI–W applied impact on consumers in rural areas. require a change in the threshold amount.’’).
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![86268 Federal Register / Vol. 81, No. 230 / Wednesday, November 30, 2016 / Rules and Regulations
§ 1026.3(b) exemption at consummation the creditor in real property, or in DEPARTMENT OF HEALTH AND
in year one is refinanced in year ten and personal property used or expected to HUMAN SERVICES
that the new loan amount is less than be used as the consumer’s principal
the threshold amount in effect in year dwelling. If, on July 20, 2011, an open- Food and Drug Administration
ten. In these circumstances, the creditor end account is exempt under § 1026.3(b)
must comply with all of the applicable based on a firm commitment to extend 21 CFR Part 573
requirements of this part with respect to credit in excess of $25,000, the account
the year ten transaction if the original remains exempt under § 1026.3(b)(2) [Docket No. FDA–2015–F–2337]
loan is satisfied and replaced by the until December 31, 2011 (unless the
new loan, which is not exempt under Food Additives Permitted in Feed and
firm commitment is reduced to $25,000
§ 1026.3(b). See also comment 3(b)–6. Drinking Water of Animals;
6. Addition of a security interest in or less). If the firm commitment is
Guanidinoacetic Acid
real property or a dwelling after account increased on or before December 31,
opening or consummation. i. Open-end 2011 to an amount in excess of $50,000, AGENCY: Food and Drug Administration,
credit. For open-end accounts, if after the account remains exempt under HHS.
account opening a security interest is § 1026.3(b)(1) regardless of subsequent ACTION: Final rule.
taken in real property, or in personal increases in the threshold amount as a
property used or expected to be used as result of increases in the CPI–W. If the SUMMARY: The Food and Drug
the consumer’s principal dwelling, a firm commitment is not increased on or Administration (FDA, we, the Agency)
previously exempt account ceases to be before December 31, 2011 to an amount is amending the regulations for food
exempt under § 1026.3(b) and the in excess of $50,000, the account ceases additives permitted in feed and drinking
creditor must begin to comply with all to be exempt under § 1026.3(b) based on water of animals to provide for the safe
of the applicable requirements of this a firm commitment to extend credit. For use of guanidinoacetic acid as a
part within a reasonable period of time. example: substance that spares arginine and
See comment 3(b)–4.ii. If a security serves as a precursor of creatine in
i. Assume that, on July 20, 2011, the broiler chicken and turkey feeds. This
interest is taken in the consumer’s
principal dwelling, the creditor must account is exempt under § 1026.3(b) action is in response to a food additive
also give the consumer the right to based on the creditor’s firm petition filed by Alzchem AG.
rescind the security interest consistent commitment to extend $30,000 in
DATES: This rule is effective November
with § 1026.15. credit. On November 1, 2011, the
30, 2016. Submit either written or
ii. Closed-end credit. For closed-end creditor increases the firm commitment
electronic objections and requests for a
loans, if after consummation a security on the account to $55,000. In these
hearing by December 30, 2016. See
interest is taken in real property, or in circumstances, the account remains section V of this document for
personal property used or expected to exempt under § 1026.3(b)(1) regardless information on the filing of objections.
be used as the consumer’s principal of subsequent increases in the threshold
dwelling, an exempt loan remains ADDRESSES: You may submit objections
amount as a result of increases in the
exempt under § 1026.3(b). However, the and requests for a hearing as follows:
CPI–W.
addition of a security interest in the Electronic Submissions
ii. Same facts as paragraph i above
consumer’s principal dwelling is a
except, on November 1, 2011, the Submit electronic objections in the
transaction for purposes of § 1026.23,
and the creditor must give the consumer creditor increases the firm commitment following way:
the right to rescind the security interest on the account to $40,000. In these • Federal eRulemaking Portal: http://
consistent with that section. See circumstances, the account ceases to be www.regulations.gov. Follow the
§ 1026.23(a)(1) and its commentary. In exempt under § 1026.3(b)(2) after instructions for submitting comments.
contrast, if a closed-end loan that is December 31, 2011, and the creditor Objections submitted electronically,
exempt under § 1026.3(b) is satisfied must begin to comply with the including attachments, to http://
and replaced by a loan that is secured applicable requirements of this part. www.regulations.gov will be posted to
by real property, or by personal property * * * * * the docket unchanged. Because your
used or expected to be used as the objection will be made public, you are
By order of the Board of Governors of the solely responsible for ensuring that your
consumer’s principal dwelling, the new
Federal Reserve System, November 17, 2016. objection does not include any
loan is not exempt under § 1026.3(b),
and the creditor must comply with all Robert deV. Frierson, confidential information that you or a
of the applicable requirements of this Secretary of the Board. third party may not wish to be posted,
part. See comment 3(b)–5. Dated: November 7, 2016. such as medical information, your or
7. Application to extensions secured anyone else’s Social Security number, or
Richard Cordray,
by mobile homes. Because a mobile confidential business information, such
Director, Bureau of Consumer Financial as a manufacturing process. Please note
home can be a dwelling under
Protection. that if you include your name, contact
§ 1026.2(a)(19), the exemption in
[FR Doc. 2016–28718 Filed 11–29–16; 8:45 am] information, or other information that
§ 1026.3(b) does not apply to a credit
extension secured by a mobile home BILLING CODE 6210–01–4810–AM–P identifies you in the body of your
that is used or expected to be used as objection, that information will be
the principal dwelling of the consumer. posted on http://www.regulations.gov.
sradovich on DSK3GMQ082PROD with RULES
See comment 3(b)–6. • If you want to submit an objection
8. Transition rule for open-end with confidential information that you
accounts exempt prior to July 21, 2011. do not wish to be made available to the
Section 1026.3(b)(2) applies only to public, submit the objection as a
open-end accounts opened prior to July written/paper submission and in the
21, 2011. Section 1026.3(b)(2) does not manner detailed (see ‘‘Written/Paper
apply if a security interest is taken by Submissions’’ and ‘‘Instructions’’).
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Document Created: 2016-11-30 02:17:57
Document Modified: 2016-11-30 02:17:57
| 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 | Board: Vivian W. Wong, 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. | |
| FR Citation | 81 FR 86260 | |
| RIN Number | 7100 AE57 and 3170-AA67 | |
| CFR Citation | 12
CFR
1026 12 CFR 226 | |
| CFR Associated | Appraisal; Appraiser; Banking; Banks; Credit; Credit Unions; Mortgages; National Banks; Savings Associations; Advertising; Consumer Protection; Federal Reserve System; Reporting and Recordkeeping Requirements and Truth in Lending |
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