[Federal Register Volume 78, Number 250 (Monday, December 30, 2013)]
[Rules and Regulations]
[Pages 79286-79287]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-31225]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1026


Truth in Lending (Regulation Z): Adjustment to Asset-Size 
Exemption Threshold

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Final rule; official commentary.

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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 
$2.028 billion from $2 billion. The adjustment is based on the 1.4 
percent increase in the average of the CPI-W for the 12-month period 
ending in November 2013. Therefore, creditors with assets of $2.028 
billion or less as of December 31, 2013, are exempt, if other 
requirements of Regulation Z also are met, from establishing escrow 
accounts for higher-priced mortgage loans in 2014.

DATES: This final rule is effective January 1, 2014.

FOR FURTHER INFORMATION CONTACT: David Friend, 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 section 129D(a) to contain 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. Section 1461 of the Dodd-
Frank Act also generally permits an exemption from the higher-priced 
mortgage loan escrow requirement for a creditor that: (1) Operates 
predominantly in rural or underserved areas; (2) together with all 
affiliates, has total annual mortgage loan originations that do not 
exceed a limit set by the Bureau; (3) retains its mortgage obligations 
in portfolio; and (4) meets any asset-size threshold and any other 
criteria as the Bureau may establish.
    In the 2013 Escrows Final Rule, 78 FR 4726 (January 22, 2013), the 
Bureau established such an asset-size threshold of $2,000,000,000, 
which will 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. See 12 CFR 
1026.35(b)(2)(iii)(C). For 2013, the threshold was $2 billion. During 
the 12-month period ending in November 2013, the average CPI-W 
increased by 1.4 percent. As a result, the exemption threshold is 
increased to $2.028 billion for 2014. Thus, loans made by creditors 
with assets of $2.028 billion or less as of December 31, 2013, that 
meet the other requirements of 12 CFR 1026.35(b)(2)(iii) will be exempt 
in 2014 from the escrow-accounts requirement for higher-priced mortgage 
loans.

II. Procedural Requirements

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, supplement I and comment 35(b)(2)(iii)-1 in Regulation Z, 
are amended to update the exemption threshold. The amendment in this 
final rule is technical and nondiscretionary, and it merely applies the 
formulas established by Regulation X 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 and 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 for (1) a 
substantive rule which grants or recognizes an

[[Page 79287]]

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, 2014. The amendment in 
this notice is technical and non-discretionary, and it applies the 
method previously established in the agency's regulations for automatic 
adjustments to the threshold.

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).

List of Subjects in 12 CFR Part 1026

    Advertising, Consumer protection, Credit, Credit unions, Mortgages, 
National banks, Reporting and recordkeeping requirements, Savings 
associations, Truth in lending.

Authority and Issuance

    For the reasons set forth in the preamble, the Bureau amends 
Regulation Z, 12 CFR part 1026, as set forth below:

PART 1026--TRUTH IN LENDING (REGULATION Z)

0
1. The authority citation for part 1026 continues to read as follows:

    Authority: 12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 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), paragraph 1.iii is 
revised.
    The revision reads 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. Requirements for exemption. * * *
* * * * *
    iii. As of the end of the preceding calendar year, the creditor 
had total assets that are less than the asset threshold for the 
relevant calendar year. For calendar year 2014, the asset threshold 
is $2,028,000,000. Creditors that had total assets of less than 
$2,028,000,000 on December 31, 2013, satisfy this criterion for 
purposes of the exemption during 2014. This asset threshold shall 
adjust 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 historical purposes, the prior asset 
threshold was:
    A. 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.
* * * * *

    Dated: December 24, 2013.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2013-31225 Filed 12-26-13; 11:15 am]
BILLING CODE 4810-AM-P