82 FR 61147 - Truth in Lending Act (Regulation Z) Adjustment to Asset-Size Exemption Threshold
BUREAU OF CONSUMER FINANCIAL PROTECTION Federal Register Volume 82, Issue 247 (December 27, 2017)
Federal Register Volume 82, Issue 247 (December 27, 2017)
| Page Range | 61147-61151 | |
| FR Document | 2017-27897 |
[Federal Register Volume 82, Number 247 (Wednesday, December 27, 2017)] [Rules and Regulations] [Pages 61147-61151] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-27897] ----------------------------------------------------------------------- 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 $2.112 billion from $2.069 billion. The adjustment is based on the 2.1 percent increase in the average of the CPI-W for the 12-month period ending in November 2017. Therefore, creditors with assets of less than $2.112 billion (including assets of certain affiliates) as of December 31, 2017, are exempt, if other requirements of Regulation Z also are met, from establishing escrow accounts for higher-priced mortgage loans in 2018. This asset limit will also apply during a grace period, in certain circumstances, with respect to transactions with applications received before April 1 of 2019. The adjustment to the escrows asset- size exemption threshold will also increase a similar threshold for small-creditor portfolio and balloon-payment qualified mortgages. Balloon-payment qualified mortgages that satisfy all applicable [[Page 61148]] 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, 2018. FOR FURTHER INFORMATION CONTACT: Monique Chenault, Paralegal Specialist, 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 2017, the threshold was $2.069 billion. --------------------------------------------------------------------------- \1\ 78 FR 4726 (Jan. 22, 2013). \2\ See 12 CFR 1026.35(b)(2)(iii)(C). \3\ See 80 FR 59944 (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 Helping Expand Lending Practices in Rural Communities Act's amendments to TILA (Pub. L. 114-94, section 89003, 129 Stat. 1312, 1800-01 (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 2017, the average of the CPI-W increased by 2.1 percent. As a result, the exemption threshold is increased to $2.112 billion for 2018. Thus, if the creditor's assets together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2017 are less than $2.112 billion on December 31, 2017, and it meets the other requirements of Sec. 1026.35(b)(2)(iii), it will be exempt in 2018 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 2019 for which the application was received before April 1, 2019. The adjustment to the escrows asset-size exemption 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, 2018. The amendment in this document 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 part 1320), the agency reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule. D. Congressional Review Act Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), CFPB will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to the rule taking effect. The Office of Information and Regulatory Affairs (OIRA) has designated this rule as not a ``major rule'' as defined by 5 U.S.C. 804(2). List of Subjects in 10 CFR Part 1026 Advertising, Appraisal, Appraiser, Banking, Banks, Consumer protection, Credit, Credit unions, Mortgages, [[Page 61149]] 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: 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--Official Interpretations, under Section 1026.35--Requirements for Higher-Priced Mortgage Loans, 35(b)(2) Exemptions, Paragraph 35(b)(2)(iii) is revised to read as follows: Supplement I to Part 1026--Official Interpretations * * * * * Section 1026.35--Requirements for Higher-Priced Mortgage Loans * * * * * 35(b)(2) Exemptions. * * * * * Paragraph 35(b)(2)(iii). 1. Requirements for exemption. Under Sec. 1026.35(b)(2)(iii), except as provided in Sec. 1026.35(b)(2)(v), a creditor need not establish an escrow account for taxes and insurance for a higher-priced mortgage loan, provided the following four conditions are satisfied when the higher-priced mortgage loan is consummated: i. During the preceding calendar year, or during either of the two preceding calendar years if the application for the loan was received before April 1 of the current calendar year, a creditor extended a first-lien covered transaction, as defined in Sec. 1026.43(b)(1), secured by a property located in an area that is either ``rural'' or ``underserved,'' as set forth in Sec. 1026.35(b)(2)(iv). A. In general, whether the rural-or-underserved test is satisfied depends on the creditor's activity during the preceding calendar year. However, if the application for the loan in question was received before April 1 of the current calendar year, the creditor may instead meet the rural-or-underserved test based on its activity during the next-to-last calendar year. This provides creditors with a grace period if their activity meets the rural-or-underserved test (in Sec. 1026.35(b)(2)(iii)(A)) in one calendar year but fails to meet it in the next calendar year. B. A creditor meets the rural-or-underserved test for any higher- priced mortgage loan consummated during a calendar year if it extended a first-lien covered transaction in the preceding calendar year secured by a property located in a rural-or-underserved area. If the creditor does not meet the rural-or-underserved test in the preceding calendar year, the creditor meets this condition for a higher-priced mortgage loan consummated during the current calendar year only if the application for the loan was received before April 1 of the current calendar year and the creditor extended a first-lien covered transaction during the next-to-last calendar year that is secured by a property located in a rural or underserved area. The following examples are illustrative: 1. Assume that a creditor extended during 2016 a first-lien covered transaction that is secured by a property located in a rural or underserved area. Because the creditor extended a first-lien covered transaction during 2016 that is secured by a property located in a rural or underserved area, the creditor can meet this condition for exemption for any higher-priced mortgage loan consummated during 2017. 2. Assume that a creditor did not extend during 2016 a first-lien covered transaction secured by a property that is located in a rural or underserved area. Assume further that the same creditor extended during 2015 a first-lien covered transaction that is located in a rural or underserved area. Assume further that the creditor consummates a higher-priced mortgage loan in 2017 for which the application was received in November 2017. Because the creditor did not extend during 2016 a first-lien covered transaction secured by a property that is located in a rural or underserved area, and the application was received on or after April 1, 2017, the creditor does not meet this condition for exemption. However, assume instead that the creditor consummates a higher-priced mortgage loan in 2017 based on an application received in February 2017. The creditor meets this condition for exemption for this loan because the application was received before April 1, 2017, and the creditor extended during 2015 a first-lien covered transaction that is located in a rural or underserved area. ii. The creditor and its affiliates together extended no more than 2,000 covered transactions, as defined in Sec. 1026.43(b)(1), secured by first liens, that were sold, assigned, or otherwise transferred by the creditor or its affiliates to another person, or that were subject at the time of consummation to a commitment to be acquired by another person, during the preceding calendar year or during either of the two preceding calendar years if the application for the loan was received before April 1 of the current calendar year. For purposes of Sec. 1026.35(b)(2)(iii)(B), a transfer of a first-lien covered transaction to ``another person'' includes a transfer by a creditor to its affiliate. A. In general, whether this condition is satisfied depends on the creditor's activity during the preceding calendar year. However, if the application for the loan in question is received before April 1 of the current calendar year, the creditor may instead meet this condition based on activity during the next-to-last calendar year. This provides creditors with a grace period if their activity falls at or below the threshold in one calendar year but exceeds it in the next calendar year. B. For example, assume that in 2015 a creditor and its affiliates together extended 1,500 loans that were sold, assigned, or otherwise transferred by the creditor or its affiliates to another person, or that were subject at the time of consummation to a commitment to be acquired by another person, and 2,500 such loans in 2016. Because the 2016 transaction activity exceeds the threshold but the 2015 transaction activity does not, the creditor satisfies this condition for exemption for a higher-priced mortgage loan consummated during 2017 if the creditor received the application for the loan before April 1, 2017, but does not satisfy this condition for a higher-priced mortgage loan consummated during 2017 if the application for the loan was received on or after April 1, 2017. C. For purposes of Sec. 1026.35(b)(2)(iii)(B), extensions of first-lien covered transactions, during the applicable time period, by all of a creditor's affiliates, as ``affiliate'' is defined in Sec. 1026.32(b)(5), are counted toward the threshold in this section. ``Affiliate'' is defined in Sec. 1026.32(b)(5) as ``any company that controls, is controlled by, or is under common control with another company, as set forth in the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.).'' Under the Bank Holding Company Act, a company has control over a bank or another company if it ``directly or indirectly or acting through one or more persons owns, controls, or has power to vote 25 per centum or more of any class of voting securities of the bank or company''; it ``controls in any manner the election of a majority of the directors [[Page 61150]] or trustees of the bank or company''; or the Federal Reserve Board ``determines, after notice and opportunity for hearing, that the company directly or indirectly exercises a controlling influence over the management or policies of the bank or company.'' 12 U.S.C. 1841(a)(2). iii. As of the end of the preceding calendar year, or as of the end of either of the two preceding calendar years if the application for the loan was received before April 1 of the current calendar year, the creditor and its affiliates that regularly extended covered transactions secured by first liens, together, had total assets that are less than the applicable annual asset threshold. A. For purposes of Sec. 1026.35(b)(2)(iii)(C), in addition to the creditor's assets, only the assets of a creditor's ``affiliate'' (as defined by Sec. 1026.32(b)(5)) that regularly extended covered transactions (as defined by Sec. 1026.43(b)(1)) secured by first liens, are counted toward the applicable annual asset threshold. See comment 35(b)(2)(iii)-1.ii.C for discussion of definition of ``affiliate.'' B. Only the assets of a creditor's affiliate that regularly extended first-lien covered transactions during the applicable period are included in calculating the creditor's assets. The meaning of ``regularly extended'' is based on the number of times a person extends consumer credit for purposes of the definition of ``creditor'' in Sec. 1026.2(a)(17). Because covered transactions are ``transactions secured by a dwelling,'' consistent with Sec. 1026.2(a)(17)(v), an affiliate regularly extended covered transactions if it extended more than five covered transactions in a calendar year. Also consistent with Sec. 1026.2(a)(17)(v), because a covered transaction may be a high-cost mortgage subject to Sec. 1026.32, an affiliate regularly extends covered transactions if, in any 12-month period, it extends more than one covered transaction that is subject to the requirements of Sec. 1026.32 or one or more such transactions through a mortgage broker. Thus, if a creditor's affiliate regularly extended first-lien covered transactions during the preceding calendar year, the creditor's assets as of the end of the preceding calendar year, for purposes of the asset limit, take into account the assets of that affiliate. If the creditor, together with its affiliates that regularly extended first-lien covered transactions, exceeded the asset limit in the preceding calendar year-- to be eligible to operate as a small creditor for transactions with applications received before April 1 of the current calendar year--the assets of the creditor's affiliates that regularly extended covered transactions in the year before the preceding calendar year are included in calculating the creditor's assets. C. If multiple creditors share ownership of a company that regularly extended first-lien covered transactions, the assets of the company count toward the asset limit for a co-owner creditor if the company is an ``affiliate,'' as defined in Sec. 1026.32(b)(5), of the co-owner creditor. Assuming the company is not an affiliate of the co- owner creditor by virtue of any other aspect of the definition (such as by the company and co-owner creditor being under common control), the company's assets are included toward the asset limit of the co-owner creditor only if the company is controlled by the co-owner creditor, ``as set forth in the Bank Holding Company Act.'' If the co-owner creditor and the company are affiliates (by virtue of any aspect of the definition), the co-owner creditor counts all of the company's assets toward the asset limit, regardless of the co-owner creditor's ownership share. Further, because the co-owner and the company are mutual affiliates the company also would count all of the co-owner's assets towards its own asset limit. See comment 35(b)(2)(iii)-1.ii.C for discussion of the definition of ``affiliate.'' D. A creditor satisfies the criterion in Sec. 1026.35(b)(2)(iii)(C) for purposes of any higher-priced mortgage loan consummated during 2016, for example, if the creditor (together with its affiliates that regularly extended first-lien covered transactions) had total assets of less than the applicable asset threshold on December 31, 2015. A creditor that (together with its affiliates that regularly extended first-lien covered transactions) did not meet the applicable asset threshold on December 31, 2015 satisfies this criterion for a higher-priced mortgage loan consummated during 2016 if the application for the loan was received before April 1, 2016 and the creditor (together with its affiliates that regularly extended first- lien covered transactions) had total assets of less than the applicable asset threshold on December 31, 2014. 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 2018, the asset threshold is $2,112,000,000. A creditor that together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2017 has total assets of less than $2,112,000,000 on December 31, 2017, satisfies this criterion for purposes of any loan consummated in 2018 and for purposes of any loan consummated in 2019 for which the application was received before April 1, 2019. For historical purposes: 1. For calendar year 2013, the asset threshold was $2,000,000,000. Creditors that had total assets of less than $2,000,000,000 on December 31, 2012, satisfied this criterion for purposes of the exemption during 2013. 2. For calendar year 2014, the asset threshold was $2,028,000,000. Creditors that had total assets of less than $2,028,000,000 on December 31, 2013, satisfied this criterion for purposes of the exemption during 2014. 3. For calendar year 2015, the asset threshold was $2,060,000,000. Creditors that had total assets of less than $2,060,000,000 on December 31, 2014, satisfied this criterion for purposes of any loan consummated in 2015 and, if the creditor's assets together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2014 were less than that amount, for purposes of any loan consummated in 2016 for which the application was received before April 1, 2016. 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. 5. For calendar year 2017, the asset threshold was $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 had total assets of less than $2,069,000,000 on December 31, 2016, satisfied 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. iv. The creditor and its affiliates do not maintain an escrow account for any mortgage transaction being serviced by the creditor or its affiliate at the time the transaction is consummated, except as [[Page 61151]] provided in Sec. 1026.35(b)(2)(iii)(D)(1) and (2). Thus, the exemption applies, provided the other conditions of Sec. 1026.35(b)(2)(iii) are satisfied, even if the creditor previously maintained escrow accounts for mortgage loans, provided it no longer maintains any such accounts except as provided in Sec. 1026.35(b)(2)(iii)(D)(1) and (2). Once a creditor or its affiliate begins escrowing for loans currently serviced other than those addressed in Sec. 1026.35(b)(2)(iii)(D)(1) and (2), however, the creditor and its affiliate become ineligible for the exemption in Sec. 1026.35(b)(2)(iii) on higher-priced mortgage loans they make while such escrowing continues. Thus, as long as a creditor (or its affiliate) services and maintains escrow accounts for any mortgage loans, other than as provided in Sec. 1026.35(b)(2)(iii)(D)(1) and (2), the creditor will not be eligible for the exemption for any higher-priced mortgage loan it may make. For purposes of Sec. 1026.35(b)(2)(iii), a creditor or its affiliate ``maintains'' an escrow account only if it services a mortgage loan for which an escrow account has been established at least through the due date of the second periodic payment under the terms of the legal obligation. * * * * * Dated: December 14, 2017. Mick Mulvaney, Acting Director, Bureau of Consumer Financial Protection. [FR Doc. 2017-27897 Filed 12-21-17; 4:15 pm] BILLING CODE 4810-AM-P
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example, A and B merge. The surviving iii. A covered institution and an Act, 12 U.S.C. 601 and 611 (Edge Act
or newly formed institution meets the institution that is not covered merge. and agreement corporations) may not
loan threshold described in The institution that is not covered is the meet the definition of ‘‘bank’’ under the
§ 1003.2(g)(1)(v)(B) if the surviving or surviving institution, or a new Federal Deposit Insurance Act and may
newly formed institution, A, and B institution that is not covered is formed. thereby fail to satisfy the definition of a
originated a combined total of at least For the calendar year of the merger, data depository financial institution under
500 open-end lines of credit in each of collection is required for covered loans § 1003.2(g)(1). An entity is nonetheless
the two preceding calendar years. and applications handled in offices of a financial institution if it meets the
Likewise, the surviving or newly formed the previously covered institution that definition of nondepository financial
institution meets the asset-size took place prior to the merger. After the institution under § 1003.2(g)(2).
threshold in § 1003.2(g)(1)(i) if its assets merger date, data collection is optional * * * * *
and the combined assets of A and B on for covered loans and applications
Dated: December 14, 2017.
December 31 of the preceding calendar handled in the offices of the institution
Mick Mulvaney,
year exceeded the threshold described that was previously covered. When an
in § 1003.2(g)(1)(i). Comment 2(g)–4 institution remains not covered after Acting Director, Bureau of Consumer
Financial Protection.
discusses a financial institution’s acquiring a branch office of a covered
responsibilities during the calendar year institution, data collection is required [FR Doc. 2017–27879 Filed 12–21–17; 4:15 pm]
of a merger. for transactions of the acquired branch BILLING CODE 4810–AM–P
4. Merger or acquisition—coverage for office that take place prior to the
calendar year of merger or acquisition. acquisition. Data collection by the
The scenarios described below illustrate acquired branch office is optional for BUREAU OF CONSUMER FINANCIAL
a financial institution’s responsibilities transactions taking place in the PROTECTION
for the calendar year of a merger or remainder of the calendar year after the 12 CFR Part 1026
acquisition. For purposes of these acquisition.
illustrations, a ‘‘covered institution’’ iv. Two covered institutions merge. Truth in Lending Act (Regulation Z)
means a financial institution, as defined The surviving or newly formed Adjustment to Asset-Size Exemption
in § 1003.2(g), that is not exempt from institution is a covered institution. Data Threshold
reporting under § 1003.3(a), and ‘‘an collection is required for the entire
institution that is not covered’’ means calendar year of the merger. The AGENCY: Bureau of Consumer Financial
either an institution that is not a surviving or newly formed institution Protection.
financial institution, as defined in files either a consolidated submission or ACTION: Final rule; official
§ 1003.2(g), or an institution that is separate submissions for that calendar interpretation.
exempt from reporting under year. When a covered institution
§ 1003.3(a). acquires a branch office of a covered SUMMARY: The Bureau is amending the
i. Two institutions that are not institution, data collection is required official commentary that interprets the
covered merge. The surviving or newly for the entire calendar year of the requirements of the Bureau’s Regulation
formed institution meets all of the merger. Data for the acquired branch Z (Truth in Lending) to reflect a change
requirements necessary to be a covered office may be submitted by either in the asset-size threshold for certain
institution. No data collection is institution. creditors to qualify for an exemption to
required for the calendar year of the 5. Originations. Whether an the requirement to establish an escrow
merger (even though the merger creates institution is a financial institution account for a higher-priced mortgage
an institution that meets all of the depends in part on whether the loan based on the annual percentage
requirements necessary to be a covered institution originated at least 25 closed- change in the average of the Consumer
institution). When a branch office of an end mortgage loans in each of the two Price Index for Urban Wage Earners and
institution that is not covered is preceding calendar years or at least 500 Clerical Workers (CPI–W) for the 12-
acquired by another institution that is open-end lines of credit in each of the month period ending in November. The
not covered, and the acquisition results two preceding calendar years. exemption threshold is adjusted to
in a covered institution, no data Comments 4(a)–2 through –4 discuss increase to $2.112 billion from $2.069
collection is required for the calendar whether activities with respect to a billion. The adjustment is based on the
year of the acquisition. particular closed-end mortgage loan or 2.1 percent increase in the average of
ii. A covered institution and an open-end line of credit constitute an the CPI–W for the 12-month period
institution that is not covered merge. origination for purposes of § 1003.2(g). ending in November 2017. Therefore,
The covered institution is the surviving 6. Branches of foreign banks—treated creditors with assets of less than $2.112
institution, or a new covered institution as banks. A Federal branch or a State- billion (including assets of certain
is formed. For the calendar year of the licensed or insured branch of a foreign affiliates) as of December 31, 2017, are
merger, data collection is required for bank that meets the definition of a exempt, if other requirements of
covered loans and applications handled ‘‘bank’’ under section 3(a)(1) of the Regulation Z also are met, from
in the offices of the merged institution Federal Deposit Insurance Act (12 establishing escrow accounts for higher-
that was previously covered and is U.S.C. 1813(a)) is a bank for the priced mortgage loans in 2018. This
optional for covered loans and purposes of § 1003.2(g). asset limit will also apply during a grace
applications handled in offices of the 7. Branches and offices of foreign period, in certain circumstances, with
merged institution that was previously banks and other entities—treated as respect to transactions with applications
not covered. When a covered institution nondepository financial institutions. A received before April 1 of 2019. The
daltland on DSKBBV9HB2PROD with RULES
acquires a branch office of an institution Federal agency, State-licensed agency, adjustment to the escrows asset-size
that is not covered, data collection is State-licensed uninsured branch of a exemption threshold will also increase
optional for covered loans and foreign bank, commercial lending a similar threshold for small-creditor
applications handled by the acquired company owned or controlled by a portfolio and balloon-payment qualified
branch office for the calendar year of the foreign bank, or entity operating under mortgages. Balloon-payment qualified
acquisition. section 25 or 25A of the Federal Reserve mortgages that satisfy all applicable
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provided in § 1026.35(b)(2)(iii)(D)(1) Rolls-Royce Corporation (RRC) AE apply to certain RRC AE 3007A and AE
and (2). Thus, the exemption applies, 3007A and AE 3007C model turbofan 3007C model turbofan engines. The
provided the other conditions of engines. This AD was prompted by an NPRM published in the Federal
§ 1026.35(b)(2)(iii) are satisfied, even if updated analysis that lowered the life Register on September 22, 2017 (82 FR
the creditor previously maintained limit of fan wheels installed on the 44357). The NPRM was prompted by an
escrow accounts for mortgage loans, affected engines. This AD requires updated stress analysis that showed
provided it no longer maintains any removal of the affected fan wheel at higher stress than previously calculated
such accounts except as provided in new, lower life limits. We are issuing in the aft retainer flange scallop of the
§ 1026.35(b)(2)(iii)(D)(1) and (2). Once a this AD to address the unsafe condition fan wheel, part number (P/N) 23061670.
creditor or its affiliate begins escrowing on these products. As a result, RRC reduced the published
for loans currently serviced other than DATES: This AD is effective January 31, life of the affected fan wheel. The NPRM
those addressed in 2018. proposed to require removal of the
§ 1026.35(b)(2)(iii)(D)(1) and (2), The Director of the Federal Register affected fan wheel at new, lower life
however, the creditor and its affiliate approved the incorporation by reference limits. We are issuing this AD to correct
become ineligible for the exemption in of a certain publication listed in this AD the unsafe condition on these products.
§ 1026.35(b)(2)(iii) on higher-priced as of January 31, 2018.
mortgage loans they make while such ADDRESSES: For service information Comments
escrowing continues. Thus, as long as a identified in this final rule, contact
creditor (or its affiliate) services and Rolls-Royce Corporation, 450 South We gave the public the opportunity to
maintains escrow accounts for any Meridian Street, Mail Code NB–02–05, participate in developing this final rule.
mortgage loans, other than as provided Indianapolis, IN 46225; phone: 317– We have considered the comment
in § 1026.35(b)(2)(iii)(D)(1) and (2), the 230–3774; email: indy.pubs.services@ received. The Air Line Pilots
creditor will not be eligible for the rolls-royce.com; internet: www.rolls- Association supported the NPRM.
exemption for any higher-priced royce.com. You may view this service Conclusion
mortgage loan it may make. For information at the FAA, Engine and
purposes of § 1026.35(b)(2)(iii), a Propeller Standards Branch, 1200 We reviewed the relevant data,
creditor or its affiliate ‘‘maintains’’ an District Avenue, Burlington, MA. For considered the comment received, and
escrow account only if it services a information on the availability of this determined that air safety and the
mortgage loan for which an escrow material at the FAA, call 781–238–7125. public interest require adopting this
account has been established at least final rule as proposed except for minor
through the due date of the second Examining the AD Docket
editorial changes. We have determined
periodic payment under the terms of the You may examine the AD docket on that these minor changes:
legal obligation. the internet at http://
www.regulations.gov by searching for • Are consistent with the intent that
* * * * *
and locating Docket No. FAA–2017– was proposed in the NPRM for
Dated: December 14, 2017. correcting the unsafe condition; and
Mick Mulvaney,
0750; or in person at the Docket
Management Facility between 9 a.m. • Do not add any additional burden
Acting Director, Bureau of Consumer
Financial Protection. and 5 p.m., Monday through Friday, upon the public than was already
except Federal holidays. The AD docket proposed in the NPRM.
[FR Doc. 2017–27897 Filed 12–21–17; 4:15 pm]
contains this final rule, the regulatory
BILLING CODE 4810–AM–P
evaluation, any comments received, and Related Service Information Under 1
other information. The address for the CFR Part 51
Docket Office (phone: 800–647–5527) is We reviewed RRC Alert Service
DEPARTMENT OF TRANSPORTATION Document Management Facility, U.S. Bulletin (ASB) AE 3007A–A–72–424/
Federal Aviation Administration Department of Transportation, Docket ASB AE 3007C–A–72–327 (one
Operations, M–30, West Building document), Revision 1, dated April 20,
14 CFR Part 39 Ground Floor, Room W12–140, 1200 2017. The ASB provides updated life
New Jersey Avenue SE, Washington, DC limits for the affected fan wheels. This
[Docket No. FAA–2017–0750; Product 20590.
Identifier 2017–NE–24–AD; Amendment 39– service information is reasonably
FOR FURTHER INFORMATION CONTACT: Kyri available because the interested parties
19137; AD 2017–26–06]
Zaroyiannis, Aerospace Engineer, have access to it through their normal
RIN 2120–AA64 Chicago ACO Branch, FAA, 2300 E. course of business or by the means
Devon Ave., Des Plaines, IL 60018; identified in the ADDRESSES section.
Airworthiness Directives; Rolls-Royce phone: 847–294–7836; fax: 847–294–
Corporation Turbofan Engines 7834; email: kyri.zaroyiannis@faa.gov. Costs of Compliance
AGENCY: Federal Aviation SUPPLEMENTARY INFORMATION:
We estimate that this AD affects 341
Administration (FAA), DOT. Discussion engines installed on airplanes of U.S.
ACTION: Final rule. registry.
We issued a notice of proposed
SUMMARY: We are adopting a new rulemaking (NPRM) to amend 14 CFR We estimate the following costs to
airworthiness directive (AD) for certain part 39 by adding an AD that would comply with this AD:
daltland on DSKBBV9HB2PROD with RULES
VerDate Sep<11>2014 18:49 Dec 26, 2017 Jkt 244001 PO 00000 Frm 00023 Fmt 4700 Sfmt 4700 E:\FR\FM\27DER1.SGM 27DER1](https://thefederalregister.org/doc/82_FR_61394/page/5.svg)
Document Created: 2017-12-27 02:23:36
Document Modified: 2017-12-27 02:23:36
| 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, 2018. | |
| Contact | Monique Chenault, Paralegal Specialist, Office of Regulations, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552, at (202) 435-7700. | |
| FR Citation | 82 FR 61147 | |
| 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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