81 FR 93581 - Truth in Lending Act (Regulation Z) Adjustment to Asset-Size Exemption Threshold
BUREAU OF CONSUMER FINANCIAL PROTECTION Federal Register Volume 81, Issue 245 (December 21, 2016)
Federal Register Volume 81, Issue 245 (December 21, 2016)
| Page Range | 93581-93583 | |
| FR Document | 2016-30730 |
[Federal Register Volume 81, Number 245 (Wednesday, December 21, 2016)] [Rules and Regulations] [Pages 93581-93583] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-30730] ----------------------------------------------------------------------- BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1026 Truth in Lending Act (Regulation Z) Adjustment to Asset-Size Exemption Threshold AGENCY: Bureau of Consumer Financial Protection. ACTION: Final rule; official interpretation. ----------------------------------------------------------------------- SUMMARY: The Bureau is amending the official commentary that interprets the requirements of the Bureau's Regulation Z (Truth in Lending) to reflect a change in the asset-size threshold for certain creditors to qualify for an exemption to the requirement to establish an escrow account for a higher-priced mortgage loan based on the annual percentage change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the 12-month period ending in November. The exemption threshold is adjusted to increase to $2.069 billion from $2.052 billion. The adjustment is based on the .8 percent increase in the average of the CPI-W for the 12-month period ending in November 2016. Therefore, creditors with assets of less than $2.069 billion (including assets of certain affiliates) as of December 31, 2016, are exempt, if other requirements of Regulation Z also are met, from establishing escrow accounts for higher-priced mortgage loans in 2017. This asset limit will also apply during a grace period, in certain circumstances, with respect to transactions with applications received before April 1 of 2018. The adjustment to the escrows exemption asset-size threshold will also increase a similar threshold for small-creditor portfolio and balloon-payment qualified mortgages. Balloon-payment qualified [[Page 93582]] mortgages that satisfy all applicable criteria, including being made by creditors that have (together with certain affiliates) total assets below the threshold, are also excepted from the prohibition on balloon payments for high-cost mortgages. DATES: This final rule is effective January 1, 2017. FOR FURTHER INFORMATION CONTACT: Jaclyn Maier, Counsel, Office of Regulations, Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 20552, at (202) 435-7700. SUPPLEMENTARY INFORMATION: I. Background The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amended TILA to add section 129D(a), which contains a general requirement that an escrow account be established by a creditor to pay for property taxes and insurance premiums for certain first-lien higher-priced mortgage loan transactions. TILA section 129D also generally permits an exemption from the higher-priced mortgage loan escrow requirement for a creditor that meets certain requirements, including any asset-size threshold the Bureau may establish. In the 2013 Escrows Final Rule,\1\ the Bureau established such an asset-size threshold of $2 billion, which would adjust automatically each year, based on the year-to-year change in the average of the CPI-W for each 12-month period ending in November, with rounding to the nearest million dollars.\2\ In 2015, the Bureau revised the criteria for small creditors, and rural and underserved areas, for purposes of certain special provisions and exemptions from various requirements provided to certain small creditors under the Bureau's mortgage rules.\3\ As part of this revision the Bureau made certain changes that affect how the asset-size threshold applies. The Bureau revised Sec. 1026.35(b)(2)(iii)(C) and its accompanying commentary to include in the calculation of the asset-size threshold the assets of the creditor's affiliates that regularly extended covered transactions secured by first liens during the applicable period. The Bureau also added a grace period from calendar year to calendar year to allow an otherwise eligible creditor that exceeded the asset limit in the preceding calendar year (but not in the calendar year before the preceding year) to continue to operate as a small creditor with respect to transactions with applications received before April 1 of the current calendar year.4 5 For 2016, the threshold was $2.052 billion. --------------------------------------------------------------------------- \1\ 78 FR 4726 (Jan. 22, 2013). \2\ See 12 CFR 1026.35(b)(2)(iii)(C). \3\ See 80 FR 59943 (Oct. 2, 2015). \4\ See 80 FR 59943, 59951 (Oct. 2, 2015). \5\ The Bureau also issued an interim final rule in March 2016 to revise certain provisions in Regulation Z to effectuate the HELP Rural Communities Act's amendments to TILA (Pub. L. 114-94, section 89003 (2015)). The rule broadened the cohort of creditors that may be eligible under TILA for the special provisions allowing origination of balloon-payment qualified mortgages and balloon- payment high-cost mortgages, as well as for the escrow exemption. See 81 FR 16074 (Mar. 25, 2016). --------------------------------------------------------------------------- During the 12-month period ending in November 2016, the average of the CPI-W increased by .8 percent. As a result, the exemption threshold is increased to $2.069 billion for 2017. Thus, if the creditor's assets together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2016 are less than $2.069 billion on December 31, 2016, and it meets the other requirements of Sec. 1026.35(b)(2)(iii), it will be exempt in 2017 from the escrow-accounts requirement for higher-priced mortgage loans and will also be exempt from the escrow-accounts requirement for higher-priced mortgage loans for purposes of any loan consummated in 2018 for which the application was received before April 1, 2018. The adjustment to the escrows exemption asset-size threshold will also increase the threshold for small-creditor portfolio and balloon-payment qualified mortgages under Regulation Z. The requirements for small- creditor portfolio qualified mortgages at Sec. 1026.43(e)(5)(i)(D) reference the asset threshold in Sec. 1026.35(b)(2)(iii)(C). Likewise, the requirements for balloon-payment qualified mortgages at Sec. 1026.43(f)(1)(vi) reference the asset threshold in Sec. 1026.35(b)(2)(iii)(C). Under Sec. 1026.32(d)(1)(ii)(C), balloon- payment qualified mortgages that satisfy all applicable criteria in Sec. 1026.43(f)(1)(i) through (vi) and (f)(2), including being made by creditors that have (together with certain affiliates) total assets below the threshold in Sec. 1026.35(b)(2)(iii)(C), are also excepted from the prohibition on balloon payments for high-cost mortgages. II. Procedural Requirements A. Administrative Procedure Act Under the Administrative Procedure Act (APA), notice and opportunity for public comment are not required if the Bureau finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest. 5 U.S.C. 553(b)(B). Pursuant to this final rule, comment 35(b)(2)(iii)-1 in Regulation Z is amended to update the exemption threshold. The amendment in this final rule is technical and merely applies the formula previously established in Regulation Z for determining any adjustments to the exemption threshold. For these reasons, the Bureau has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. Therefore, the amendment is adopted in final form. Section 553(d) of the APA generally requires publication of a final rule not less than 30 days before its effective date, except (1) a substantive rule which grants or recognizes an exemption or relieves a restriction; (2) interpretive rules and statements of policy; or (3) as otherwise provided by the agency for good cause found and published with the rule. 5 U.S.C. 553(d). At a minimum, the Bureau believes the amendments fall under the third exception to section 553(d). The Bureau finds that there is good cause to make the amendments effective on January 1, 2017. The amendment in this notice is technical and applies the method previously established in the agency's regulations for automatic adjustments to the threshold. B. Regulatory Flexibility Act Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a). C. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR 1320), the agency reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule. List of Subjects in 12 CFR Part 1026 Advertising, Appraisal, Appraiser, Banking, Banks, Consumer protection, Credit, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending. Authority and Issuance For the reasons set forth above, the Bureau amends Regulation Z, 12 CFR part 1026, as set forth below: PART 1026--TRUTH IN LENDING (REGULATION Z) 0 1. The authority citation for part 1026 continues to read as follows: [[Page 93583]] Authority: 12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353, 5511, 5512, 5532, 5581; 15 U.S.C. 1601 et seq. 0 2. In Supplement I to Part 1026, under Section 1026.35--Requirements for Higher-Priced Mortgage Loans, 35(b)(2) Exemptions, Paragraph 35(b)(2)(iii), paragraph 1.iii.E introductory text is revised and paragraph 1.iii.E.4 is added 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(b)(2) Exemptions. * * * * * Paragraph 35(b)(2)(iii). 1. * * * iii. * * * E. Under Sec. 1026.35(b)(2)(iii)(C), the $2,000,000,000 asset threshold adjusts automatically each year based on the year-to-year change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers, not seasonally adjusted, for each 12- month period ending in November, with rounding to the nearest million dollars. The Bureau will publish notice of the asset threshold each year by amending this comment. For calendar year 2017, the asset threshold is $2,069,000,000. A creditor that together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2016 has total assets of less than $2,069,000,000 on December 31, 2016, satisfies this criterion for purposes of any loan consummated in 2017 and for purposes of any loan consummated in 2018 for which the application was received before April 1, 2018. For historical purposes: * * * * * 4. For calendar year 2016, the asset threshold was $2,052,000,000. A creditor that together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2015 had total assets of less than $2,052,000,000 on December 31, 2015, satisfied this criterion for purposes of any loan consummated in 2016 and for purposes of any loan consummated in 2017 for which the application was received before April 1, 2017. * * * * * Dated: December 15, 2016. Richard Cordray, Director, Bureau of Consumer Financial Protection. [FR Doc. 2016-30730 Filed 12-19-16; 4:15 pm] BILLING CODE 4810-AM-P
![Federal Register / Vol. 81, No. 245 / Wednesday, December 21, 2016 / Rules and Regulations 93581
the public. The Bureau’s Regulation C for public comment are unnecessary. Section 1003.2—Definitions
(12 CFR part 1003) implements HMDA. Therefore, the amendment is adopted in * * * * *
Prior to 1997, HMDA exempted final form. Financial institution.
certain depository institutions as Section 553(d) of the APA generally * * * * *
defined in HMDA (i.e., banks, savings requires publication of a final rule not 2. Adjustment of exemption threshold for
associations, and credit unions) with less than 30 days before its effective banks, savings associations, and credit
assets totaling $10 million or less as of unions. For data collection in 2017, the asset-
date, except (1) a substantive rule which
the preceding year-end. In 1996, HMDA size exemption threshold is $44 million.
grants or recognizes an exemption or Banks, savings associations, and credit
was amended to expand the asset-size relieves a restriction; (2) interpretive unions with assets at or below $44 million
exemption for these depository rules and statements of policy; or (3) as as of December 31, 2016, are exempt from
institutions. 12 U.S.C. 2808(b). The otherwise provided by the agency for collecting data for 2017.
amendment increased the dollar amount good cause found and published with * * * * *
of the asset-size exemption threshold by the rule. 5 U.S.C. 553(d). At a minimum,
requiring a one-time adjustment of the Dated: December 15, 2016.
the Bureau believes the amendments fall
$10 million figure based on the Richard Cordray,
under the third exception to section
percentage by which the CPI–W for 553(d). The Bureau finds that there is Director, Bureau of Consumer Financial
1996 exceeded the CPI–W for 1975, and Protection.
good cause to make the amendments
it provided for annual adjustments effective on January 1, 2017. The [FR Doc. 2016–30731 Filed 12–19–16; 4:15 pm]
thereafter based on the annual amendment in this final rule is BILLING CODE 4810–AM–P
percentage increase in the CPI–W, technical and non-discretionary, and it
rounded to the nearest multiple of $1 applies the method previously
million. BUREAU OF CONSUMER FINANCIAL
established in the agency’s regulations
The definition of ‘‘financial PROTECTION
for determining adjustments to the
institution’’ in § 1003.2 provides that threshold.
the Bureau will adjust the asset 12 CFR Part 1026
threshold based on the year-to-year B. Regulatory Flexibility Act
Truth in Lending Act (Regulation Z)
change in the average of the CPI–W, not Because no notice of proposed Adjustment to Asset-Size Exemption
seasonally adjusted, for each 12-month rulemaking is required, the Regulatory Threshold
period ending in November, rounded to Flexibility Act does not require an
the nearest $1 million. For 2016, the AGENCY: Bureau of Consumer Financial
initial or final regulatory flexibility Protection.
threshold was $44 million. During the analysis. 5 U.S.C. 603(a), 604(a).
12-month period ending in November ACTION: Final rule; official
2016, the average of the CPI–W C. Paperwork Reduction Act interpretation.
increased by 0.8 percent. This increase
In accordance with the Paperwork SUMMARY: The Bureau is amending the
results in no change to the asset-size
Reduction Act of 1995 (44 U.S.C. 3506; official commentary that interprets the
threshold when rounded to the nearest
5 CFR 1320), the agency reviewed this requirements of the Bureau’s Regulation
$1 million. Thus, the exemption
final rule. No collections of information Z (Truth in Lending) to reflect a change
threshold will remain at $44 million.
pursuant to the Paperwork Reduction in the asset-size threshold for certain
Therefore, banks, savings associations,
Act are contained in the final rule. creditors to qualify for an exemption to
and credit unions with assets of $44
the requirement to establish an escrow
million or less as of December 31, 2016, List of Subjects in 12 CFR Part 1003
account for a higher-priced mortgage
are exempt from collecting data in 2017.
Banking, Banks, Credit unions, loan based on the annual percentage
An institution’s exemption from
Mortgages, National banks, Reporting change in the average of the Consumer
collecting data in 2017 does not affect
and recordkeeping requirements, Price Index for Urban Wage Earners and
its responsibility to report data it was
Savings associations. Clerical Workers (CPI–W) for the 12-
required to collect in 2016.
month period ending in November. The
II. Procedural Requirements Authority and Issuance exemption threshold is adjusted to
For the reasons set forth above, the increase to $2.069 billion from $2.052
A. Administrative Procedure Act
Bureau amends Regulation C, 12 CFR billion. The adjustment is based on the
Under the Administrative Procedure part 1003, as set forth below: .8 percent increase in the average of the
Act (APA), notice and opportunity for CPI–W for the 12-month period ending
public comment are not required if the PART 1003—HOME MORTGAGE in November 2016. Therefore, creditors
Bureau finds that notice and public DISCLOSURE (REGULATION C) with assets of less than $2.069 billion
comment are impracticable, (including assets of certain affiliates) as
unnecessary, or contrary to the public ■ 1. The authority citation for part 1003 of December 31, 2016, are exempt, if
interest. 5 U.S.C. 553(b)(B). Pursuant to continues to read as follows: other requirements of Regulation Z also
this final rule, comment 2(Financial Authority: 12 U.S.C. 2803, 2804, 2805, are met, from establishing escrow
institution)-2 in Regulation C, 5512, 5581. accounts for higher-priced mortgage
supplement I, is amended to update the loans in 2017. This asset limit will also
exemption threshold. The amendment ■ 2. In Supplement I to Part 1003, under apply during a grace period, in certain
asabaliauskas on DSK3SPTVN1PROD with RULES
in this final rule is technical and non- Section 1003.2—Definitions, under the circumstances, with respect to
discretionary, and it merely applies the definition ‘‘Financial institution’’, transactions with applications received
formula established by Regulation C for paragraph 2 is revised to read as before April 1 of 2018. The adjustment
determining any adjustments to the follows: to the escrows exemption asset-size
exemption threshold. For these reasons, Supplement I to Part 1003—Staff threshold will also increase a similar
the Bureau has determined that Commentary threshold for small-creditor portfolio
publishing a notice of proposed and balloon-payment qualified
rulemaking and providing opportunity * * * * * mortgages. Balloon-payment qualified
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![Federal Register / Vol. 81, No. 245 / Wednesday, December 21, 2016 / Rules and Regulations 93583
Authority: 12 U.S.C. 2601, 2603–2605, SMALL BUSINESS ADMINISTRATION Loan programs—business, Reporting
2607, 2609, 2617, 3353, 5511, 5512, 5532, and recordkeeping requirements, Small
5581; 15 U.S.C. 1601 et seq. 13 CFR Part 121 businesses.
RIN 3245–AG50 Accordingly, 13 CFR part 121 is
■ 2. In Supplement I to Part 1026, under
corrected by making the following
Section 1026.35—Requirements for
Small Business Size Standards for correcting amendments:
Higher-Priced Mortgage Loans, 35(b)(2)
Exemptions, Paragraph 35(b)(2)(iii), Manufacturing; Correction
PART 121—SMALL BUSINESS SIZE
paragraph 1.iii.E introductory text is AGENCY: U.S. Small Business REGULATIONS
revised and paragraph 1.iii.E.4 is added Administration.
to read as follows: ACTION: Correcting amendments. ■ 1. The authority citation for part 121
continues to read as follows:
Supplement I to Part 1026—Official
SUMMARY: The U.S. Small Business Authority: 15 U.S.C. 632, 634(b)(6), 662,
Interpretations
Administration (SBA) is correcting a and 694a(9).
* * * * * final rule that appeared in the Federal
Register on January 26, 2016 (81 FR § 121.201 [Amended]
Subpart E—Special Rules for Certain Home
Mortgage Transactions 4469). The rule increased small business ■ 2. In Footnote 5 to the table in
size standards for a number of § 121.201, amend paragraphs (a) and (b)
* * * * * industries in North American Industry by adding the phrase ‘‘3262111 and’’
Section 1026.35—Requirements for Higher-
Classification System (NAICS) Sector before the number ‘‘3262113’’ each time
Priced Mortgage Loans
31–33, Manufacturing. The rule also it appears.
* * * * * stated that SBA was amending Footnote
35(b)(2) Exemptions. A. John Shoraka,
5 to the table of size standards relating
to NAICS 326211, Tire Manufacturing Associate Administrator for Government
* * * * *
Contracting and Business Development.
Paragraph 35(b)(2)(iii). (except Retreading), to reflect the
current Census Product Classification [FR Doc. 2016–30568 Filed 12–20–16; 8:45 am]
1. * * *
iii. * * * Codes 3262111 and 3262113. However, BILLING CODE 8205–01–P
E. Under § 1026.35(b)(2)(iii)(C), the SBA inadvertently omitted code
$2,000,000,000 asset threshold adjusts 3262111 from the revised text in
automatically each year based on the year-to- Footnote 5. This action corrects the DEPARTMENT OF TRANSPORTATION
year change in the average of the Consumer omission. This correction does not affect
Price Index for Urban Wage Earners and the 1,500-employee small business size Federal Aviation Administration
Clerical Workers, not seasonally adjusted, for standard for NAICS 326211.
each 12-month period ending in November, 14 CFR Part 39
DATES: Effective December 21, 2016.
with rounding to the nearest million dollars. [Docket No. FAA–2016–9056; Directorate
FOR FURTHER INFORMATION CONTACT: Dr.
The Bureau will publish notice of the asset Identifier 2016–NM–007–AD; Amendment
threshold each year by amending this Jorge Laboy-Bruno at (202) 205–6618 or
39–18743; AD 2016–25–17]
comment. For calendar year 2017, the asset sizestandards@sba.gov, Office of Size
threshold is $2,069,000,000. A creditor that Standards, U.S. Small Business RIN 2120–AA64
together with the assets of its affiliates that Administration, 409 Third Street SW.,
Washington, DC 20416. Airworthiness Directives; Saab AB,
regularly extended first-lien covered
Saab Aeronautics (Formerly Known as
transactions during calendar year 2016 has SUPPLEMENTARY INFORMATION: On
Saab AB, Saab Aerosystems)
total assets of less than $2,069,000,000 on January 26, 2016, SBA published a final
Airplanes
December 31, 2016, satisfies this criterion for rule implementing changes to the size
purposes of any loan consummated in 2017 standards for a number of industries in AGENCY: Federal Aviation
and for purposes of any loan consummated NAICS Sectors 31–33, Manufacturing Administration (FAA), Department of
in 2018 for which the application was (81 FR 4469). As discussed in the Transportation (DOT).
received before April 1, 2018. For historical preamble of the rule, SBA intended to ACTION: Final rule.
purposes: amend paragraphs (a) and (b) of
* * * * * Footnote 5 to the table of size standards SUMMARY: We are adopting a new
4. For calendar year 2016, the asset relating to NAICS 326211, Tire airworthiness directive (AD) for certain
threshold was $2,052,000,000. A creditor that Manufacturing (except Retreading), by Saab AB, Saab Aeronautics Model
together with the assets of its affiliates that replacing the former Census SAAB 2000 airplanes. This AD was
regularly extended first-lien covered classification codes 30111 and 30112 prompted by an occurrence that was
transactions during calendar year 2015 had with the new Census Product reported of rudder pedal restriction on
total assets of less than $2,052,000,000 on Classification Codes 3262111 and a SAAB Model 2000 airplane with the
December 31, 2015, satisfied this criterion for 3262113. However, the amended text large potable water system (LPWS)
purposes of any loan consummated in 2016 inadvertently omitted the new Census installed, equipped with in-line heaters.
and for purposes of any loan consummated Product Classification code 3262111. This AD requires installation of
in 2017 for which the application was This action corrects that omission, but shrinkable tubes on the water piping of
received before April 1, 2017. does not affect the 1,500-employee the basic potable water system (BPWS).
asabaliauskas on DSK3SPTVN1PROD with RULES
* * * * * small business size standard for NAICS We are issuing this AD to address the
326211. unsafe condition on these products.
Dated: December 15, 2016.
DATES: This AD is effective January 25,
Richard Cordray, List of Subjects in 13 CFR Part 121
2017.
Director, Bureau of Consumer Financial Administrative practice and The Director of the Federal Register
Protection. procedure, Government procurement, approved the incorporation by reference
[FR Doc. 2016–30730 Filed 12–19–16; 4:15 pm] Government property, Grant programs— of a certain publication listed in this AD
BILLING CODE 4810–AM–P business, Individuals with disabilities, as of January 25, 2017.
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Document Created: 2018-02-14 09:12:04
Document Modified: 2018-02-14 09:12:04
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule; official interpretation. | |
| Dates | This final rule is effective January 1, 2017. | |
| Contact | Jaclyn Maier, Counsel, Office of Regulations, Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 20552, at (202) 435-7700. | |
| FR Citation | 81 FR 93581 | |
| CFR Associated | Advertising; Appraisal; Appraiser; Banking; Banks; Consumer Protection; Credit; Credit Unions; Mortgages; National Banks; Reporting and Recordkeeping Requirements; Savings Associations and Truth in Lending |
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