[Federal Register Volume 80, Number 182 (Monday, September 21, 2015)]
[Rules and Regulations]
[Pages 56895-56898]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-22987]


=======================================================================
-----------------------------------------------------------------------

BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1026


Truth in Lending (Regulation Z) Annual Threshold Adjustments 
(CARD ACT, HOEPA and ATR/QM)

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Final rule; official interpretation.

-----------------------------------------------------------------------

SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is 
issuing this final rule amending the regulatory text and official 
interpretations for Regulation Z, which implements the Truth in Lending 
Act (TILA). The Bureau is required to calculate annually the dollar 
amounts for several provisions in Regulation Z; this final rule reviews 
the dollar amounts for provisions implementing amendments to TILA under 
the Credit Card Accountability Responsibility and Disclosure Act of 
2009 (CARD Act), the Home Ownership and Equity Protection Act of 1994 
(HOEPA), and the Dodd-Frank Wall Street Reform and Consumer Protection 
Act (Dodd-Frank Act). These amounts are adjusted, where

[[Page 56896]]

appropriate, based on the annual percentage change reflected in the 
Consumer Price Index in effect on June 1, 2015. The minimum interest 
charge disclosure thresholds will remain unchanged in 2016.

DATES: This final rule is effective January 1, 2016.

FOR FURTHER INFORMATION CONTACT: James Wylie, Counsel, Office of 
Regulations, Consumer Financial Protection Bureau, 1700 G Street NW., 
Washington, DC 20552 at (202) 435-7700.

SUPPLEMENTARY INFORMATION: The Bureau is amending the regulatory text 
and official interpretations for Regulation Z, which implements TILA, 
to update the dollar amounts of various thresholds that are adjusted 
annually based on the annual percentage change in the Consumer Price 
Index. The adjusted dollar amount for the penalty fees safe harbor in 
2016 is $27 for a first late payment and $37 for each subsequent 
violation within the following six months. For HOEPA loans, the 
adjusted total loan amount threshold is $20,350, effective January 1, 
2016. The adjusted statutory fee trigger for HOEPA loans is $1,017, 
effective January 1, 2016. Effective January 1, 2016, for the purpose 
of a creditor's determination of a consumer's ability to repay a 
transaction secured by a dwelling, a covered transaction is not a 
qualified mortgage unless the transaction's total points and fees do 
not exceed 3 percent of the total loan amount for a loan greater than 
or equal to $101,749; $3,052 for a loan amount greater than or equal to 
$61,050 but less than $101,749; 5 percent of the total loan amount for 
a loan greater than or equal to $20,350 but less than $61,050; $1,017 
for a loan amount greater than or equal to $12,719 but less than 
$20,350; and 8 percent of the total loan amount for a loan amount less 
than $12,719.

I. Background

A. CARD Act Annual Adjustments

    In 2010, the Board of Governors of the Federal Reserve System 
(Board) published amendments to Regulation Z implementing the CARD Act, 
which amended TILA. Pub. L. 111-24, 123 Stat. 1734 (2009). Pursuant to 
the CARD Act, the Board's Regulation Z amendments established new 
requirements with respect to open-end consumer credit plans, including 
requirements for the disclosure of minimum interest charge amounts and 
the establishment of a safe harbor provision allowing card issuers to 
impose penalty fees for violating account terms without violating the 
restrictions on penalty fees established by the CARD Act. See 75 FR 
7658, 7799 (Feb. 22, 2010) and 75 FR 37526, 37527 (June 29, 2010). The 
final rule issued by the Board required that these thresholds be 
calculated annually using the Consumer Price Index as published by the 
Bureau of Labor Statistics (BLS).\1\
---------------------------------------------------------------------------

    \1\ The responsibility for promulgating rules under TILA was 
generally transferred from the Board to the Bureau effective July 
21, 2011. The Bureau restated Regulation Z on December 22, 2011, and 
the Bureau's Regulation Z is located at 12 CFR part 1026. 76 FR 
79768 (Dec. 22, 2011). See sections 1061 and 1100A of the Dodd-Frank 
Act, Public Law 111-203, 124 Stat. 1376 (2010). Section 1029 of the 
Dodd-Frank Act excludes from this transfer of authority, subject to 
certain exceptions, any rulemaking 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.
---------------------------------------------------------------------------

Minimum Interest Charge Disclosure Thresholds
    Sections 1026.6(b)(2)(iii) and 1026.60(b)(3) of the Bureau's 
Regulation Z provide that the minimum interest charge thresholds will 
be re-calculated annually using the Consumer Price Index for Urban Wage 
Earners and Clerical Workers (CPI-W) that was in effect on the 
preceding June 1. When the cumulative change in the adjusted minimum 
value derived from applying the annual CPI-W level to the current 
amounts in Sec. Sec.  1026.6(b)(2)(iii) and 1026.60(b)(3) has decreased 
by a whole dollar, the minimum interest charge amounts set forth in the 
regulation will be decreased by $1.00. This adjustment is based on the 
CPI-W index in effect on June 1, 2015, which was reported on May 22, 
2015. The BLS 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 0.8 percent decrease in the CPI-W 
from April 2014 to April 2015 and is rounded to the nearest $1 
increment. This decrease in the CPI-W when applied to the current 
amounts in Sec. Sec.  1026.6(b)(2)(iii) and 1026.60(b)(3) did not 
trigger a decrease in the minimum interest charge threshold of at least 
$1.00, and therefore the Bureau is not amending Sec. Sec.  
1026.6(b)(2)(iii) and 1026.60(b)(3).
Penalty Fees Safe Harbor
    The Bureau's Regulation Z provides that the safe harbor provision 
which establishes the permissible fee thresholds in Sec.  
1026.52(b)(1)(ii)(A) and (B) will be re-calculated annually using the 
CPI-W that was in effect on the preceding June 1. The BLS publishes 
consumer-based indices monthly, but does not report a CPI change on 
June 1; adjustments are reported in the middle of the month. This 
adjustment is based on the CPI-W index in effect on June 1, 2015, which 
was reported on May 22, 2015. 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. When the cumulative change in the adjusted 
minimum value derived from applying the annual CPI-W level to the 
current amounts in Sec.  1026.52(b)(1)(ii)(A) and (B) has risen by a 
whole dollar, those amounts will be increased by $1.00. Similarly, when 
the cumulative change in the adjusted minimum value derived from 
applying the annual CPI-W level to the current amounts in Sec.  
1026.52(b)(1)(ii)(A) and (B) has decreased by a whole dollar, those 
amounts will be decreased by $1.00. See comment 52(b)(1)(ii)-2. The 
adjustment to the permissible fee thresholds being adopted here 
reflects a 0.8 percent decrease in the CPI-W from April 2014 to April 
2015 and is rounded to the nearest $1 increment.

B. HOEPA Annual Threshold Adjustments

    On January 10, 2013, the Bureau issued a final rule pursuant to, 
inter alia, section 1431 of the Dodd-Frank Act, which revised the loan 
amount threshold for HOEPA loans. 78 FR 6856 (Jan. 31, 2013) (2013 
HOEPA Final Rule). The 2013 HOEPA Final Rule adjusted the dollar amount 
threshold used in connection with calculating whether a transaction 
meets the percentage point thresholds in the points and fees coverage 
test to $20,000. Specifically, under Sec.  1026.32(a)(1)(ii)(A) and 
(B), when determining whether a transaction is a high cost mortgage, 
the determination of the applicable points and fees coverage test is 
based upon whether the total loan amount is for more or less than 
$20,000. The HOEPA 2013 Final Rule provides that this threshold amount 
be recalculated annually and the Bureau uses the Consumer Price Index 
for All Urban Consumers (CPI-U) index, as published by the BLS, as the 
index for adjusting the $20,000 figure. The CPI-U is based on all urban 
consumers and represents approximately 88 percent of the U.S. 
population. The BLS publishes consumer-based indices monthly, but does 
not report a CPI change on June 1; adjustments are reported in the 
middle of each month. The adjustment to the CPI-U index reported by BLS 
on May 22, 2015, was the CPI-U index in effect

[[Page 56897]]

on June 1, and reflects the percentage change from April 2014 to April 
2015. The adjustment to the $20,000 figure being adopted here reflects 
a 0.2 percent decrease in the CPI-U index for this period and is 
rounded to whole dollars for ease of compliance.
    Pursuant to section 1431 of the Dodd-Frank Act and Sec.  
1026.32(a)(1)(ii)(B) as amended by the 2013 HOEPA Final Rule, 
implementation of the 2013 HOEPA Final Rule also changed the HOEPA fee 
trigger to $1,000. The HOEPA 2013 Final Rule provides that this 
threshold amount will be recalculated annually and the Bureau uses the 
CPI-U index, as published by the BLS, as the index for adjusting the 
$1,000 figure. The adjustment to the CPI-U index reported by BLS on May 
22, 2015, was the CPI-U index in effect on June 1, and reflects the 
percentage change from April 2014 to April 2015. The adjustment to the 
$1,000 figure being adopted here reflects a 0.2 percent decrease in the 
CPI-U index for this period and is rounded to whole dollars for ease of 
compliance.

C. Ability To Repay and Qualified Mortgages Annual Threshold 
Adjustments

    On January 10, 2013, the Bureau issued a final rule pursuant to, 
inter alia, sections 1411 and 1412 of the Dodd-Frank Act, which 
implemented laws requiring mortgage lenders to consider a consumer's 
ability to repay home loans before extending them credit. 78 FR 6407 
(Jan. 31, 2013) (2013 ATR/QM Final Rule). The 2013 ATR/QM Final Rule 
established the points and fees limits that a loan must not exceed in 
order to satisfy the requirements for a qualified mortgage. 
Specifically, a covered transaction is not a qualified mortgage unless 
the transaction's points and fees do not exceed 3 percent of the total 
loan amount for a loan amount greater than or equal to $100,000; $3,000 
for a loan amount greater than or equal to $60,000 but less than 
$100,000; 5 percent of the total loan amount for loans greater than or 
equal to $20,000 but less than $60,000; $1,000 for a loan amount 
greater than or equal to $12,500 but less than $20,000; and 8 percent 
of the total loan amount for loans less than $12,500. The 2013 ATR/QM 
Final Rule provides that the limits and loan amounts in 
1026.43(e)(3)(i) be recalculated annually for inflation and the Bureau 
uses the Consumer Price Index for All Urban Consumers (CPI-U) index, as 
published by the BLS, as the index for adjusting the figures. The CPI-U 
is based on all urban consumers and represents approximately 88 percent 
of the U.S. population. The BLS publishes consumer-based indices 
monthly, but does not report a CPI change on June 1; adjustments are 
reported in the middle of each month. The adjustment to the CPI-U index 
reported by BLS on May 22, 2015, was the CPI-U index in effect on June 
1, and reflects the percentage change from April 2014 to April 2015. 
The adjustment to the figures being adopted here reflects a 0.2 percent 
decrease in the CPI-U index for this period and is rounded to whole 
dollars for ease of compliance.

II. Adjustment and Commentary Revision

A. CARD Act Annual Adjustments

Minimum Interest Charge Disclosure Thresholds--Sec. Sec.  
1026.6(b)(2)(iii) and 1026.60(b)(3)
    The minimum interest charge amounts for Sec. Sec.  
1026.6(b)(2)(iii) and 1026.60(b)(3) will remain unchanged for the year 
2016. Accordingly, the Bureau is not amending these sections.
Penalty Fees Safe Harbor--Sec.  1026.52(b)(1)(ii)(A) and (B)
    Effective January 1, 2016, the permissible fee threshold amounts 
are $27 for Sec.  1026.52(b)(1)(ii)(A) and $37 for Sec.  
1026.52(b)(1)(ii)(B). The $27 amount provided for in Sec.  
1026.52(b)(1)(ii)(A) did not change based on the decrease in CPI-W, but 
the amount provided for in Sec.  1026.52(b)(1)(ii)(B) did decrease by 
one dollar. Accordingly, the Bureau is revising Sec.  
1026.52(b)(1)(ii)(B) to state that the fee imposed for violating the 
terms or other requirements of an account shall not exceed $37. The 
Bureau is also amending comment 52(b)(1)(ii)-2.i to preserve a list of 
the historical thresholds for this provision.

B. HOEPA Annual Threshold Adjustment--Comments 32(a)(1)(ii)-1 and -3

    Effective January 1, 2016, for purposes of determining the total 
loan amount threshold that determines whether a transaction is a high 
cost mortgage when the points and fees are either 5 percent or 8 
percent \2\ is $20,350. Comment 32(a)(1)(ii)-3, which lists the 
adjustments for each year, is amended to reflect the new dollar 
threshold amount for 2016.
---------------------------------------------------------------------------

    \2\ Or $1,017, whichever is lesser. See the adjustment of the 
amount below for additional discussion.
---------------------------------------------------------------------------

    Effective January 1, 2016, for purposes of determining whether a 
consumer credit transaction that is secured by a consumer's principal 
dwelling and is not otherwise exempt is covered by Sec.  1026.32 (based 
on the total points and fees payable by the consumer at consummation), 
a loan is covered if the points and fees exceed $1,017 or 8 percent of 
the total loan amount, whichever is lower. Comment 32(a)(1)(ii)-1, 
which lists the adjustments for each year, is amended to reflect the 
new dollar threshold amount for 2016.

C. Ability To Repay and Qualified Mortgages Annual Threshold 
Adjustments

    Effective January 1, 2016, for purposes of determining whether a 
covered transaction is a qualified mortgage, a covered transaction is 
not a qualified mortgage unless the transaction's total points and fees 
do not exceed 3 percent of the total loan amount for a loan amount 
greater than or equal to $101,749; $3,052 for a loan amount greater 
than or equal to $61,050 but less than $101,749; 5 percent of the total 
loan amount for loans greater than or equal to $20,350 but less than 
$61,050; $1,017 for a loan amount greater than or equal to $12,719 but 
less than $20,350, and 8 percent of the total loan amount for loans 
less than $12,719. Comment 43(e)(3)(ii)-1, which lists the adjustments 
for each year, is amended to reflect the new dollar threshold amounts 
for 2016.

III. 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 in Regulation Z, Sec.  1026.52(b)(1)(ii)(B) in subpart E is 
amended and comments 32(a)(1)(ii)-3.ii, 43(e)(3)(ii)-1.ii, 
52(b)(1)(ii)-2.i.C in supplement I are added to update the exemption 
thresholds. The amendments in this final rule are technical and non-
discretionary, and they merely apply the method previously established 
in Regulation Z for determining adjustments to the thresholds. For 
these reasons, the Bureau has determined that publishing a notice of 
proposed rulemaking and providing opportunity for public comment are 
unnecessary. Therefore, the amendments are adopted in final form.

B. Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required, the 
Regulatory Flexibility Act does not require an

[[Page 56898]]

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 Bureau 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, 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, 3353, 
5511, 5512, 5532, 5581; 15 U.S.C. 1601 et seq.

Subpart G--Special Rules Applicable to Credit Card Accounts and 
Open End Credit Offered to College Students

0
2. Section 1026.52(b)(1)(ii)(B) is revised to read as follows:


Sec.  1026.52  Limitations on fees.

* * * * *
    (b) * * *
    (1) * * *
    (ii) * * *
    (B) $37 if the card issuer previously imposed a fee pursuant to 
paragraph (b)(1)(ii)(A) of this section for a violation of the same 
type that occurred during the same billing cycle or one of the next six 
billing cycles; or
* * * * *

0
3. In Supplement I to part 1026--Official Interpretations:
0
A. Under subpart E, Under Section 1026.32--Requirements for Certain 
Closed-End Home Mortgages, 32(a) Coverage, Paragraph 32(a)(1)(ii), 
paragraph 1.ii is added.
0
B. Under subpart E, Under Section 1026.32--Requirements for Certain 
Closed-End Home Mortgages, 32(a) Coverage, Paragraph 32(a)(1)(ii), 
paragraph 3.ii is added.
0
C. Under subpart E, Under Section 1026.43--Minimum Standards for 
Transactions Secured by a Dwelling, 43(e) Qualified Mortgages, 
Paragraph 43(e)(3)(ii), paragraph 1.ii is added.
0
D. Under subpart G, Under Section 1026.52--Limitations on Fees, 52(b) 
Limitations on Penalty Fees, 52(b)(1)(ii) Safe Harbors, subheading i, 
paragraph 2.i.C is added.
    The additions read as follows:

SUPPLEMENT I TO PART 1026--OFFICIAL INTERPRETATIONS

* * * * *

Subpart E--Special Rules for Certain Home Mortgage Transactions

* * * * *
    Section 1026.32--Requirements for Certain Closed-End Home 
Mortgages
    32(a) Coverage.
    Paragraph 32(a)(1)(ii).
    1. * * *
    ii. For 2016, $1,017, reflecting a .2 percent decrease in the 
CPI-U from June 2014 to June 2015, rounded to the nearest whole 
dollar.
* * * * *
    3. * * *
    ii. For 2016, $20,350, reflecting a .2 percent decrease in the 
CPI-U from June 2014 to June 2015, rounded to the nearest whole 
dollar.
* * * * *
    Section 1026.43--Minimum Standards for Transactions Secured by a 
Dwelling
* * * * *
    43(e)(3) Limits on Points and Fees for Qualified Mortgages
* * * * *
    Paragraph 43(e)(3)(ii)
    1. * * *
    ii. For 2016, reflecting a .2 percent decrease in the CPI-U that 
was reported on the preceding June 1, a covered transaction is not a 
qualified mortgage unless the transactions total points and fees do 
not exceed;
    A. For a loan amount greater than or equal to $101,749: 3 
percent of the total loan amount;
    B. For a loan amount greater than or equal to $61,050 but less 
than $101,749: $3,052;
    C. For a loan amount greater than or equal to $20,350 but less 
than $61,050: 5 percent of the total loan amount;
    D. For a loan amount greater than or equal to $12,719 but less 
than $20,350; $1,017;
    E. For a loan amount less than $12,719: 8 percent of the total 
loan amount.
* * * * *

Subpart G--Special Rules Applicable to Credit Card Accounts and Open-
End Credit Offered to College Students

    Section 1026.52--Limitations on Fees
* * * * *
    52(b)(1)(ii) Safe harbors
* * * * *
    2. * * *
    i. * * *
    C. Card issuers were permitted to impose a fee for violating the 
terms of an agreement if the fee did not exceed $27 under Sec.  
1026.52(b)(1)(ii)(A) and $38 under Sec.  1026.52(b)(1)(ii)(B), 
through December 31, 2015.
* * * * *


    Dated: August 17, 2015.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2015-22987 Filed 9-18-15; 8:45 am]
BILLING CODE 4810-AM-P