[Federal Register Volume 79, Number 249 (Tuesday, December 30, 2014)]
[Rules and Regulations]
[Pages 78296-78299]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-30419]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 34

[Docket No. OCC-2014-0027]
RIN 1557-AD90

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

12 CFR Part 226

[Docket No. R-1443]
RIN 7100-AD 90

BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1026

RIN 3170-AA11


Appraisals for Higher-Priced Mortgage Loans Exemption Threshold 
Adjustment--Final Rule

AGENCY: Board of Governors of the Federal Reserve System (Board); 
Bureau of Consumer Financial Protection (Bureau); and Office of the 
Comptroller of the Currency, Treasury (OCC).

ACTION: Final rule; official staff interpretations; technical 
amendment.

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SUMMARY: The OCC, the Board and the Bureau are publishing final rules 
amending the official staff interpretations for their regulations that 
implement section 129H of the Truth in Lending Act (TILA). Section 129H 
of TILA establishes special appraisal requirements for ``higher-risk

[[Page 78297]]

mortgages,'' termed ``higher-priced mortgages'' or ``HPMLs'' in the 
agencies' regulations. The OCC, the Board, the Bureau, the Federal 
Deposit Insurance Corporation (FDIC), the National Credit Union 
Administration (NCUA) and the Federal Housing Finance Agency (FHFA) 
(collectively, the Agencies) issued joint final rules implementing 
these requirements, effective January 18, 2014. The Agencies' rules 
exempted, among other loan types, transactions of $25,000 or less, and 
required that this loan amount be adjusted annually based on any annual 
percentage increase in the Consumer Price Index for Urban Wage Earners 
and Clerical Workers (CPI-W). Based on the annual percentage increase 
in the CPI-W as of June 1, 2014, the OCC, the Board and the Bureau are 
adjusting the exemption threshold to $25,500, effective January 1, 
2015.

DATES: This final rule is effective January 1, 2015.

FOR FURTHER INFORMATION CONTACT: 
    OCC: Beth Knickerbocker, Counsel, Legislative & Regulatory 
Activities Division, at (202) 649-5490; for persons who are deaf and 
hard of hearing, TTY, (202) 649-5597.
    Board: Lorna M. Neill, 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: James Wylie, Counsel, Office of Regulations, Bureau of 
Consumer Financial Protection, at (202) 435-7700.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Dodd-Frank Wall Street Reform and Consumer Protection Act of 
2010 (Dodd-Frank Act) amended the Truth in Lending Act (TILA) to add 
special appraisal requirements for ``higher-risk mortgages.'' \1\ In 
January 2013, the Agencies issued a joint final rule implementing these 
requirements and adopted the term ``higher-priced mortgage loan'' 
(HPML) instead of ``higher-risk mortgage'' (the January 2013 Final 
Rule).\2\ In December 2013, the Agencies issued a supplemental final 
rule with additional exemptions from the January 2013 Final Rule (the 
December 2013 Supplemental Final Rule).\3\ Among other exemptions, the 
Agencies adopted an exemption from the new HPML appraisal rules for 
transactions of $25,000 or less, to be adjusted annually for inflation.
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    \1\ Public Law 111-203 section 1471, 124 Stat. 1376 (2010), 
codified at TILA section 129H, 15 U.S.C. 1639h.
    \2\ 78 FR 10368 (Feb. 13, 2013).
    \3\ 78 FR 78520 (Dec. 26, 2013)
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    The Bureau's, the OCC's, and the Board's versions of the January 
2013 Final Rule and December 2013 Supplemental Final Rule and 
corresponding official interpretations are substantively identical. The 
FDIC, NCUA, and FHFA adopted the Bureau's version of the regulations 
under the January 2013 Final Rule and December 2013 Supplemental Final 
Rule.\4\
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    \4\ See NCUA: 12 CFR 722.3; FHFA: 12 CFR part 1222. Although the 
FDIC adopted the Bureau's version of the regulation, the FDIC did 
not issue its own regulation containing a cross-reference to the 
Bureau's version. See 78 FR 10368, 10370 (Feb. 13, 2013).
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    Section 34.203(b)(2) of Subpart G of part 34 of the OCC's 
regulations, Sec.  226.43(b)(2) of the Board's Regulation Z, and Sec.  
1026.35(c)(2)(ii) of the Bureau's Regulation Z, and their accompanying 
interpretations, provide that the exemption threshold for smaller loans 
will be adjusted effective January 1 of each year based on any annual 
percentage increase in the Consumer Price Index for Urban Wage Earners 
and Clerical Workers (CPI-W) that was in effect on the preceding June 
1. Any increase in the threshold amount will be rounded to the nearest 
$100 increment. For example, if the annual percentage increase in the 
CPI-W would result in a $950 increase in the threshold amount, the 
threshold amount will be increased by $1,000. However, if the annual 
percentage increase in the CPI-W would result in a $949 increase in the 
threshold amount, the threshold amount will be increased by $900.\5\
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    \5\ See 12 CFR part 34, Appendix C to Subpart G, comment 
203(b)(2)-1 (OCC); 12 CFR part 226, Supplement I, comment 43(b)(2)-1 
(Board); and 12 CFR part 1026, Supplement I, comment 35(c)(2)(ii)-1 
(Bureau).
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II. Adjustment and Commentary Revision

    Effective January 1, 2015, the adjusted exemption threshold amount 
is $25,500. This adjustment is based on the CPI-W index in effect on 
June 1, 2014, which was reported on May 15, 2014. 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 adjustment reflects a 2 percent increase in the CPI-W 
from April 2013 to April 2014. Accordingly, the OCC, the Board, and the 
Bureau are revising the interpretations to their respective regulations 
to add new comments as follows:
     Comment 203(b)(2)-1.ii to 12 CFR part 34, Appendix C to 
Subpart G (OCC);
     Comment 43(b)(2)-1.ii to Supplement I of 12 CFR part 226 
(Board); and
     Comment 35(c)(2)(ii)-1.ii in Supplement I of 12 CFR part 
1026 (Bureau).
    These new comments state that, from January 1, 2015 through 
December 31, 2015, the threshold amount is $25,500. These revisions are 
effective January 1, 2015.

III. Administrative Law Matters

Administrative Procedure Act

    Under the Administrative Procedure Act (APA), notice and 
opportunity for public comment are not required if an agency finds that 
notice and public comment are impracticable, unnecessary, or contrary 
to the public interest.\6\ This annual adjustment is required by the 
December 2013 Supplemental Final Rule. The amendment in this notice is 
technical and non-discretionary, and it applies the method previously 
established, through notice and comment, in the Agencies' regulations 
for determining adjustments to the exemption threshold. For these 
reasons, the OCC, the Board and the Bureau have determined that 
publishing a notice of proposed rulemaking and providing opportunity 
for public comment are unnecessary. Therefore, the amendments are 
adopted in final form.
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    \6\ 5 U.S.C. 553(b)(B).
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    The effective date of this final rule is January 1, 2015. Under the 
APA, the required publication or service of a substantive rule shall be 
made not less than 30 days before its effective date, except, among 
other things, as provided by the agency for good cause found and 
published with the rule.\7\ Because this rule adjusts the exemption 
threshold consistent with the procedural requirements of the official 
staff interpretations, the OCC, the Board and the Bureau conclude that 
it is not substantive within the meaning of the APA's delayed effective 
date provision. Moreover, the agencies find that there is good cause 
for dispensing with the delayed effective date requirement, even if it 
applied, because their current rules already provide notice that the 
exemption threshold will be adjusted effective January 1 based on any 
annual percentage increase in the CPI-W that was in effect on the 
preceding June 1.
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    \7\ 5 U.S.C. 553(d)(3).

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[[Page 78298]]

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) does not apply to a rulemaking 
where a general notice of proposed rulemaking is not required.\8\ As 
noted previously, the agencies have determined that it is unnecessary 
to publish a general notice of proposed rulemaking for this joint final 
rule. Accordingly, the RFA's requirements relating to an initial and 
final regulatory flexibility analysis do not apply.
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    \8\ 5 U.S.C. 603 and 604.
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Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995,\9\ the 
agencies reviewed this final rule. No collections of information 
pursuant to the Paperwork Reduction Act are contained in the final 
rule.
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    \9\ 44 U.S.C. 3506; 5 CFR 1320.
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Unfunded Mandates Reform Act

    The OCC analyzes proposed rules for the factors listed in Section 
202 of the Unfunded Mandates Reform Act of 1995, before promulgating a 
final rule for which a general notice of proposed rulemaking was 
published.\10\ As discussed above, the OCC had determined that the 
publication of a general notice of proposed rulemaking is unnecessary.
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    \10\ 2 U.S.C. 1532.
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List of Subjects

12 CFR Part 34

    Appraisal, Appraiser, Banks, Banking, Consumer protection, Credit, 
Mortgages, National banks, Reporting and recordkeeping requirements, 
Savings associations, Truth in lending.

12 CFR Part 226

    Advertising, Appraisal, Appraiser, Consumer protection, Credit, 
Federal Reserve System, Mortgages, Reporting and recordkeeping 
requirements, Truth in lending.

12 CFR Part 1026

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

Department of the Treasury

Office of the Comptroller of the Currency

Authority and Issuance

    For the reasons set forth in the preamble, the OCC amends 12 CFR 
part 34 as set forth below:

PART 34--REAL ESTATE LENDING AND APPRAISALS

0
1. The authority citation for part 34 continues to read as follows:

    Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a, 371, 1463, 1464, 
1465,1701j-3, 1828(o), 3331 et seq., 5101 et seq., 5412(b)(2)(B) and 
15 U.S.C. 1639h.

Subpart G--Appraisals for Higher-Priced Mortgage Loans

0
2. In Appendix C to Subpart G, under Section 34.203--Appraisals for 
Higher-Priced Mortgage Loans, paragraph 34.203(b)(2)-1.ii is added to 
read as follows:

Appendix C to Subpart G--OCC Interpretations

* * * * *

Section 34.203--Appraisals for Higher-Priced Mortgage Loans

* * * * *

34.203(b) Exemptions

* * * * *

Paragraph 34.203(b)(2)

    1. Threshold amount. * * *
    ii. From January 1, 2015 through December 31, 2015, the 
threshold amount is $25,500.
* * * * *

Board of Governors of the Federal Reserve System

Authority and Issuance

    For the reasons set forth in the preamble, the Board amends 
Regulation Z, 12 CFR part 226, as set forth below:

PART 226--TRUTH IN LENDING (REGULATION Z)

0
3. The authority citation for part 226 continues to read as follows:

    Authority:  12 U.S.C. 3806; 15 U.S.C. 1604, 1637(c)(5), 1639(l), 
and 1639h; Pub. L. 111-24 Sec.  2, 123 Stat. 1734; Pub. L. 111-203, 
124 Stat. 1376.

Subpart A--General

0
4. In Supplement I to part 226, under Section 226.43--Appraisals for 
Higher-Priced Mortgage Loans, under Paragraph 43(b)(2), paragraph 
43(b)(2)-1.ii is added to read as follows:

Supplement I to Part 226--Official Staff Interpretations

* * * * *

Subpart E--Special Rules for Certain Home Mortgage Transactions

* * * * *

Section 226.43--Appraisals for Higher-Priced Mortgage Loans

* * * * *

43(b) Exemptions

* * * * *

Paragraph 43(b)(2)

    1. Threshold amount. * * *
    ii. From January 1, 2015 through December 31, 2015, the 
threshold amount is $25,500.
* * * * *

Bureau of Consumer Financial Protection

Authority and Issuance

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

PART 1026--TRUTH IN LENDING (REGULATION Z)

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

    Authority:  12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 5511, 
5512, 5532, 5581; 15 U.S.C. 1601 et seq.


0
6. In Supplement I to part 1026, under Section 1026.35--Requirements 
for Higher-Priced Mortgage Loans, under Paragraph 35(c)(2)(ii), 
paragraph 35(c)(2)(ii)-1.ii 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(c) Appraisals

* * * * *

35(c)(2) Exemptions

* * * * *

Paragraph 35(c)(2)(ii)

    1. Threshold amount. * * *
    ii. From January 1, 2015 through December 31, 2015, the 
threshold amount is $25,500.
* * * * *

    Dated: December 11, 2014.
Amy Friend,
Senior Deputy Comptroller and Chief Counsel.

    By order of the Board of Governors of the Federal Reserve 
System, acting through the

[[Page 78299]]

Secretary of the Board under delegated authority, December 19, 2014.
Robert deV. Frierson,
Secretary of the Board.
    Dated: December 18, 2014.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2014-30419 Filed 12-29-14; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 4810-AM-P