[Federal Register Volume 81, Number 230 (Wednesday, November 30, 2016)]
[Rules and Regulations]
[Pages 86250-86256]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28699]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 34
[Docket No. OCC-2015-0021]
RIN 1557-AD99
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Docket No. R-1443]
RIN 7100-AD 90
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1026
[Docket No. CFPB-2016-0035]
RIN 3170-AA68
Appraisals for Higher-Priced Mortgage Loans Exemption Threshold
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 rules, official interpretations and commentary.
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SUMMARY: The OCC, the Board, and the Bureau are finalizing amendments
to the official 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
mortgages,'' termed ``higher-priced mortgage loans'' 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). If there is no annual percentage increase
in the CPI-W, the OCC, the Board and the Bureau will not adjust this
exemption threshold from the prior year. The final rule will
memorialize this as well as the agencies' calculation method for
determining the adjustment in years following a year in which there is
no annual percentage increase in the CPI-W. Based on the CPI-W in
effect as of June 1, 2016, the exemption threshold will remain at
$25,500 through 2017.
DATES: This final rule is effective January 1, 2017.
FOR FURTHER INFORMATION CONTACT: OCC: MaryAnn Nash, Counsel,
Legislative and Regulatory Activities Division, (202) 649-6287; for
persons who are deaf and hard of hearing TTY, (202) 649-5597. Board:
Lorna M. Neill, Senior 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: Jaclyn Maier, Counsel, Office of
Regulations, Consumer Financial Protection Bureau, 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 July 2013, the Agencies proposed additional exemptions
from the January 2013 Final Rule (the 2013 Supplemental Proposed
Rule).\3\ 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).\4\ Among other exemptions, the
Agencies adopted an exemption from the new HPML appraisal rules for
transactions of
[[Page 86251]]
$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 48548 (Aug. 8, 2013).
\4\ 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.\5\
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\5\ 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,\6\ 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. If there is no annual percentage increase in the
CPI-W, the OCC, the Board, and the Bureau will not adjust the threshold
amounts from the prior year.\7\
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\6\ 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).
\7\ See 78 FR 48548, 48565 (Aug. 8, 2013) (``Thus, under the
proposal, if the CPI-W decreases in an annual period, the percentage
increase would be zero, and the dollar amount threshold for the
exemption would not change.'').
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II. Commentary Revision
On August 4, 2016, the OCC, the Board and the Bureau published a
proposed rule in the Federal Register to memorialize the calculation
method used by the agencies each year to adjust the exemption
threshold. See 81 FR 51394 (Aug. 4, 2016). The proposed commentary
stated that if there is no annual percentage increase in the CPI-W, the
OCC, the Board and the Bureau will not adjust the exemption threshold
from the prior year. The proposed commentary further set forth the
calculation method the agencies would use in years following a year in
which the exemption threshold was not adjusted because there was no
increase in the CPI-W from the previous year. As the OCC, the Board and
the Bureau discussed in the proposal, the proposed calculation method
would ensure that the values for the exemption threshold keep pace with
the CPI-W as contemplated in the December 2013 Supplemental Final Rule.
The comment period closed on September 6, 2016. In response to the
proposal, the OCC, the Board and the Bureau received one comment from
an individual, one from a State bankers association, and one from a
community bank. The individual supported the proposal. The State
bankers association requested that the smaller dollar loan exemption be
raised to $50,000, and the community bank commenter requested an
exemption from the HPML rules for small institutions. Both of these
comments are beyond the scope of this rulemaking.
The OCC, the Board, and the Bureau are adopting the commentary
revisions as proposed, with some minor clarifying amendments. These
changes will be effective on January 1, 2017. The new commentary is
substantively identical for Sec. 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. For ease
of reference, this ``Commentary Revision'' discussion refers only to
the section numbers of the commentary that will be published in the
Bureau's Regulation Z at 12 CFR part 1026, supplement I.
Comment 35(c)(2)(ii)-1 to the Bureau's Regulation Z currently
provides the threshold amount in effect during a particular period and
details the rules the agencies use for rounding the threshold
calculation to the nearest $100 or $1,000 increment, as discussed above
in part I, ``Background.'' The OCC, the Board and the Bureau are
revising comment 35(c)(2)(ii)-1 by moving the text regarding the
threshold amount that is in effect during a particular period to a new
proposed comment 35(c)(2)(ii)-3. Consistent with the proposal, the
discussion of how the agencies round the threshold calculation will
remain in comment 35(c)(2)(ii)-1 of the final rule. Additionally,
current comments 35(c)(2)(ii)-2 and 35(c)(2)(ii)-3 are re-numbered as
comments 35(c)(2)(ii)-4 and 35(c)(2)(ii)-5, respectively.
As the Agencies have stated previously,\8\ if there is no annual
percentage increase in the CPI-W, the OCC, the Board, and the Bureau
will not adjust the exemption threshold from the prior year. This
position is consistent with the Board's and the Bureau's approach in
adjusting the coverage thresholds for the Consumer Leasing Act (CLA)
and TILA, based on section 1100E(b) of the Dodd-Frank Act, which states
that the threshold must be adjusted by the ``annual percentage
increase'' in the CPI-W (emphasis added).\9\ The Board and the Bureau
are publishing similar amendments to the commentaries to each of their
respective regulations implementing the CLA (Regulation M) and TILA
(Regulation Z) elsewhere in this issue of the Federal Register.
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\8\ See 78 FR 48548, 48565 (Aug. 8, 2013) and 80 FR 73943, 73944
(Nov. 27, 2015).
\9\ 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (``[A]n annual period
of deflation or no inflation would not require a change in the
threshold amount.'').
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For the HPML appraisal rule exemption for smaller loans, the OCC,
the Board, and the Bureau are memorializing this concept in comment
35(c)(2)(ii)-2, which provides that, if the CPI-W in effect on June 1
does not increase from the CPI-W in effect on June 1 of the previous
year, the threshold amount effective the following January 1 through
December 31 will not change from the previous year. For example, if the
threshold in effect from January 1, 2019, through December 31, 2019, is
$27,500 and the CPI-W in effect on June 1 of 2019, indicates a 1.1
percent decrease from the CPI-W in effect on June 1, 2018, the
threshold in effect for January 1, 2020, through December 31, 2020,
will remain $27,500.
In the final rule, comment 35(c)(2)(ii)-2 further sets forth the
calculation method the agencies would use in years following a year in
which the exemption threshold was not adjusted because there was no
increase in the CPI-W from the previous year. Specifically, comment
35(c)(2)(ii)-2 provides that, for the years after a year in which the
threshold did not change because the CPI-W in effect on June 1
decreased from the CPI-W in effect on June 1 of the previous year, the
threshold is calculated by applying the annual percentage change in the
CPI-W to the dollar amount that would have resulted, after rounding, if
the decreases and any subsequent increases in the CPI-W had been taken
into account. Comment 35(c)(2)(ii)-2.i further states that, if the
resulting amount, after rounding, is greater than the current
threshold, then
[[Page 86252]]
the threshold effective January 1 the following year will increase
accordingly.
For example, assume that the threshold in effect from January 1,
2019, through December 31, 2019, is $27,500 and that, due to a 1.1
percent decrease from the CPI-W in effect on June 1, 2018, to the CPI-W
in effect on June 1, 2019, the threshold in effect from January 1,
2020, through December 31, 2020, remains at $27,500. If, however, the
threshold had been adjusted downward to reflect the decrease in the
CPI-W over that time period, the threshold in effect from January 1,
2020, through December 31, 2020, would have been $27,200, after
rounding. Further assume that the CPI-W in effect on June 1, 2020,
increased by 1.6 percent from the CPI-W in effect on June 1, 2019. The
calculation for the threshold that will be in effect from January 1,
2021, through December 31, 2021, is based on the impact of a 1.6
percent increase in the CPI-W on $27,200, rather than $27,500,
resulting in a 2021 threshold of $27,600.
Furthermore, comment 35(c)(2)(ii)-2.ii states that, if the
resulting amount calculated, after rounding, is equal to or less than
the current threshold, then the threshold effective January 1 the
following year will not change, but future increases will be calculated
based on the amount that would have resulted, after rounding. To
illustrate, assume in the example above that the CPI-W in effect on
June 1, 2020, increased by only 0.6 percent from the CPI-W in effect on
June 1, 2019. The calculation for the threshold that will be in effect
from January 1, 2021, through December 31, 2021, is based on the impact
of a 0.6 percent increase in the CPI-W on $27,200. The resulting
amount, after rounding, is $27,400, which is lower than $27,500, the
threshold in effect from January 1, 2020, through December 31, 2020.
Therefore, the threshold in effect from January 1, 2021, through
December 31, 2021, will remain $27,500. However, the calculation for
the threshold that will be in effect from January 1, 2022, through
December 31, 2022, will apply the percentage change in the CPI-W to
$27,400, the amount that would have resulted based on the 0.6 percent
change from the CPI-W in effect on June 1, 2019, after rounding, to the
CPI-W in effect on June 1, 2020.
III. 2017 Threshold
Based on the calculation method detailed above, the exemption
threshold amount for 2017 remains at $25,500. This is based on the CPI-
W in effect on June 1, 2016, which was reported on May 17, 2016. 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 CPI-W reported on May 17, 2016, reflects a
0.8 percent increase in the CPI-W from April 2015 to April 2016.
Because the CPI-W decreased by 0.8 percent from April 2014 to April
2015, the OCC, the Board and the Bureau are calculating the threshold
based on the amount that would have resulted had this decrease been
taken into account, which is $25,300. A 0.8 percent increase in the
CPI-W applied to $25,300 results in $25,500, which is the same
threshold amount for 2016. Thus, the exemption threshold amount that
will be in effect for 2017 remains at $25,500. The OCC, the Board and
the Bureau are revising the commentaries to their respective
regulations to add new comments as follows:
Comment 203(b)(2)-3.iv to 12 CFR part 34, appendix C to
subpart G (OCC);
Comment 43(b)(2)-3.iv to supplement I of 12 CFR part 226
(Board); and
Comment 35(c)(2)(ii)-3.iv in supplement I of 12 CFR part
1026 (Bureau).
These new comments state that, from January 1, 2017, through
December 31, 2017, the threshold amount is $25,500. These revisions are
effective January 1, 2017.
IV. Regulatory Analysis
Administrative Procedure Act
Under the Administrative Procedure Act, notice and opportunity for
public comment are not required if the OCC, the Board and the Bureau
find that notice and public comment are impracticable, unnecessary, or
contrary to the public interest.\10\ The 2017 threshold amount for
exempt transactions announced in this rule, $25,500, is technical and
applies the calculation method set forth elsewhere in this final rule,
for which notice and public comment were provided.\11\ 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 for purposes of the 2017 threshold adjustment are
unnecessary. Therefore, the amendments regarding the 2017 threshold
amount for exempt transactions are adopted in final form.
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\10\ 5 U.S.C. 553(b)(B).
\11\ See 81 FR 51394 (Aug. 4, 2016).
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Bureau's Dodd-Frank Act Section 1022(b)(2) Analysis
In developing the final rule, the Bureau has considered potential
benefits, costs, and impacts.\12\ In addition, the Bureau has
consulted, or offered to consult with, the prudential regulators, the
Securities and Exchange Commission, the Department of Housing and Urban
Development, the Federal Housing Finance Agency, the Federal Trade
Commission, and the Department of the Treasury, including regarding
consistency with any prudential, market, or systemic objectives
administered by such agencies.
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\12\ Specifically, section 1022(b)(2)(A) calls for the Bureau to
consider the potential benefits and costs of a regulation to
consumers and covered persons, including the potential reduction of
access by consumers to consumer financial products or services; the
impact on depository institutions and credit unions with $10 billion
or less in total assets as described in section 1026 of the Act; and
the impact on consumers in rural areas.
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The Bureau has chosen to evaluate the benefits, costs and impacts
of the final rule against the current state of the world, which takes
into account the current regulatory regime. The Bureau is not aware of
any significant benefits or costs to consumers or covered persons
associated with the final rule relative to the baseline. The OCC, the
Board, and the Bureau previously stated that if there is no annual
percentage increase in the CPI-W, then the agencies will not adjust the
exemption threshold from the prior year.\13\ The final rule
memorializes this in official commentary. The final rule also clarifies
how the threshold is calculated for years after a year in which the
threshold did not change. The Bureau believes that this clarification
memorializes the method that the Bureau would be expected to use: This
method holds the threshold fixed until a notional threshold calculated
using the Bureau's methodology, taking into account both decreases and
increases in the CPI-W, exceeds the actual threshold. The Bureau
requested, but did not receive, comment on this point. Thus, the Bureau
concludes that the final rule will not change the regulatory regime
relative to the baseline and will create no significant benefits,
costs, or impacts.
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\13\ 78 FR 48547, 48565 (Aug. 8, 2013) and 80 FR 73943, 73944
(Nov. 27, 2015).
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The final rule will have no unique impact on depository
institutions or credit unions with $10 billion or less in assets as
described in section 1026(a) of the Dodd-Frank Act or on rural
consumers. The Bureau does not expect this final rule to affect
consumers' access to credit.
[[Page 86253]]
Regulatory Flexibility Act
OCC: Pursuant to the Regulatory Flexibility Act (RFA), an agency
must prepare a regulatory flexibility analysis for all proposed and
final rules that describes the impact of the rule on small
entities.\14\ Under section 605(b) of the RFA, this analysis is not
required if the head of the agency certifies that the rule will not
have a significant economic impact on a substantial number of small
entities and publishes its certification and a short explanatory
statement in the Federal Register along with its rule. The OCC has
concluded that the final rule does not have a significant economic
impact on a substantial number of small entities supervised by the OCC.
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\14\ See 5 U.S.C. 601 et seq.
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As explained in the Commentary Revision section of the preamble,
this final rule memorializes the calculation method used by the OCC,
the Board, and the Bureau each year to adjust the threshold for
exemption from the special appraisal requirements for HPMLs and
clarifies the agencies' calculation method for determining the
adjustment in the years following a year in which there is no annual
percentage increase in the CPI-W. The economic impact of this final
rule on small national banks and Federal savings associations is not
expected to be significant. Accordingly, the OCC certifies that the
proposed rule would not have a significant economic impact on a
substantial number of small OCC-supervised entities. Therefore,
pursuant to section 605(b) of the RFA, the OCC hereby certifies that
this final rule will not have a significant economic impact on a
substantial number of small entities. Accordingly, a regulatory
flexibility analysis is not required.
Board: An initial regulatory flexibility analysis (IRFA) was
included in the proposal in accordance with section 3(a) of the
Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq. (RFA). In the
IRFA, the Board requested comments on any approaches, other than the
proposed alternatives, that would reduce the burden on small entities.
The RFA requires an agency to prepare a final regulatory flexibility
analysis (FRFA) unless the agency certifies that the rule will not, if
promulgated, have a significant economic impact on a substantial number
of small entities.\15\ In accordance with section 3(a) of the RFA, the
Board has reviewed the final regulation. Based on its analysis, and for
the reasons stated below, the Board believes that the rule will not
have a significant economic impact on a substantial number of small
entities.
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\15\ See 5 U.S.C. 601 et seq.
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1. Statement of the need for, and objectives of, the final rule.
The final rule memorializes the calculation method used by the Board
each year to adjust the exemption threshold in accordance with
Regulation Z, 12 CFR 226.43(b)(2). The final rule also adopts the
exemption threshold that will apply from January 1, 2017, through
December 31, 2017, based on the calculation method memorialized in the
final rule.
2. Summary of issues raised by comments in response to the IFRA.
The Board did not receive any comments on the IFRA.
3. Small entities affected by the final rule. For purposes of the
RFA, the Small Business Administration defines small entities to
include banking entities with total assets of $550 million or less. Of
Board supervised institutions with an asset size of $550 million or
less as of March 2016, 223 reported making 5,135 higher-priced mortgage
loans in 2015.\16\ The Board does not believe that the final rule will
have a significant economic impact on the entities that it affects.
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\16\ Board supervised institutions include State Member Banks,
uninsured State branches and agencies of foreign banks. The number
of institutions making higher-priced mortgage loans and the number
of higher-priced mortgage loans is based on data reported pursuant
to the Home Mortgage Disclosure Act (HMDA), 12 U.S.C. 2801 et seq.
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4. Recordkeeping, reporting, and compliance requirements. The final
rule would not impose any recordkeeping, reporting, or compliance
requirements.
5. Other Federal rules. The Board has not identified any likely
duplication, overlap and/or potential conflict between the final rule
and any Federal rule.
Bureau: The RFA generally requires an agency to conduct an initial
regulatory flexibility analysis (IRFA) and a final regulatory
flexibility analysis (FRFA) of any rule subject to notice-and-comment
rulemaking requirements.\17\ These analyses must describe the impact of
the proposed and final rules on small entities.\18\ An IRFA or FRFA is
not required if the agency certifies that the rule will not have a
significant economic impact on a substantial number of small
entities.\19\ The Bureau also is subject to certain additional
procedures under the RFA involving the convening of a panel to consult
with small business representatives prior to proposing a rule for which
an IRFA is required.\20\
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\17\ 5 U.S.C. 601 et seq.
\18\ Id. at 603(a) and 604(a). For purposes of assessing the
impacts of the rule on small entities, ``small entities'' is defined
in the RFA to include small businesses, small not-for-profit
organizations, and small government jurisdictions. Id. at 601(6). A
``small business'' is determined by application of Small Business
Administration regulations and reference to the North American
Industry Classification System (NAICS) classifications and size
standards. Id. at 601(3). A ``small organization'' is any ``not-for-
profit enterprise which is independently owned and operated and is
not dominant in its field.'' Id. at 601(4). A ``small governmental
jurisdiction'' is the government of a city, county, town, township,
village, school district, or special district with a population of
less than 50,000. Id. at 601(5).
\19\ Id. at 605(b).
\20\ Id. at 609.
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A FRFA is not required for this final rule because it will not have
a significant economic impact on a substantial number of small
entities. As discussed in the Bureau's Section 1022(b)(2) Analysis
above, this final rule does not introduce costs or benefits to covered
persons because it seeks only to clarify the method of threshold
adjustment which has already been established in previous Agency rules.
Therefore this final rule will not have a significant impact on small
entities.
Certification
Accordingly, the Bureau Director, by signing below, certifies that
this final rule will not have a significant economic impact on a
substantial number of small entities.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995,\21\ 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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\21\ 44 U.S.C. 3506; 5 CFR part 1320.
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Unfunded Mandates Reform Act
The OCC has analyzed the final rule under the factors set forth in
the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532). Under
this analysis, the OCC considered whether the final rule includes a
Federal mandate that may result in the expenditure by State, local, and
Tribal governments, in the aggregate, or by the private sector, of $100
million or more in any one year (adjusted annually for inflation).
The final rule memorializes the calculation method used by the OCC,
the Board, and the Bureau each year to adjust the threshold for
exemption from the special appraisal requirements for HPMLs and
clarifies the agencies' calculation method for determining the
adjustment in the years following a year in which there is no annual
percentage increase in the CPI-W. Because the final rule is designed to
clarify existing rules, and does not introduce any new requirements,
the OCC has determined
[[Page 86254]]
that it would not result in expenditures by State, local, and Tribal
governments or by the private sector, of $100 million or more.
Accordingly, the OCC has not prepared a written statement to accompany
its final rule.
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, the entry for Paragraph 34.203(b)(2) is
revised to read as follows:
Appendix C to Subpart G of Part 34--OCC Interpretations
* * * * *
Section 34.203--Appraisals for Higher-Priced Mortgage Loans
* * * * *
34.203(b) Exemptions
* * * * *
Paragraph 34.203(b)(2)
1. Threshold amount. For purposes of Sec. 34.203(b)(2), the
threshold amount in effect during a particular period is the amount
stated in comment 203(b)(2)-3 for that period. The threshold amount
is adjusted effective January 1 of each year by 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. Comment 203(b)(2)-3 will be amended to provide the
threshold amount for the upcoming year after the annual percentage
change in the CPI-W that was in effect on June 1 becomes available.
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.
2. No increase in the CPI-W. If the CPI-W in effect on June 1
does not increase from the CPI-W in effect on June 1 of the previous
year, the threshold amount effective the following January 1 through
December 31 will not change from the previous year. When this
occurs, for the years that follow, the threshold is calculated based
on the annual percentage change in the CPI-W applied to the dollar
amount that would have resulted, after rounding, if decreases and
any subsequent increases in the CPI-W had been taken into account.
i. Net increases. If the resulting amount calculated, after
rounding, is greater than the current threshold, then the threshold
effective January 1 the following year will increase accordingly.
ii. Net decreases. If the resulting amount calculated, after
rounding, is equal to or less than the current threshold, then the
threshold effective January 1 the following year will not change,
but future increases will be calculated based on the amount that
would have resulted.
3. Threshold. For purposes of Sec. 34.203(b)(2), the threshold
amount in effect during a particular period is the amount stated
below for that period.
i. From January 18, 2014, through December 31, 2014, the
threshold amount is $25,000.
ii. From January 1, 2015, through December 31, 2015, the
threshold amount is $25,500.
iii. From January 1, 2016, through December 31, 2016, the
threshold amount is $25,500.
iv. From January 1, 2017, through December 31, 2017, the
threshold amount is $25,500.
4. Qualifying for exemption--in general. A transaction is exempt
under Sec. 34.203(b)(2) if the creditor makes an extension of
credit at consummation that is equal to or below the threshold
amount in effect at the time of consummation.
5. Qualifying for exemption--subsequent changes. A transaction
does not meet the condition for an exemption under Sec.
34.203(b)(2) merely because it is used to satisfy and replace an
existing exempt loan, unless the amount of the new extension of
credit is equal to or less than the applicable threshold amount. For
example, assume a closed-end loan that qualified for a Sec.
34.203(b)(2) exemption at consummation in year one is refinanced in
year ten and that the new loan amount is greater than the threshold
amount in effect in year ten. In these circumstances, the creditor
must comply with all of the applicable requirements of Sec. 34.203
with respect to the year ten transaction if the original loan is
satisfied and replaced by the new loan, unless another exemption
from the requirements of Sec. 34.203 applies. See Sec. 34.203(b)
and (d)(7).
* * * * *
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, section 2, 123 Stat. 1734; Pub. L. 111-
203, 124 Stat. 1376.
0
4. In supplement I to part 226, under Section 226.43--Appraisals for
Higher-Risk Mortgage Loans, the entry for Paragraph 43(b)(2) is revised
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-Risk Mortgage Loans
* * * * *
43(b) Exemptions
* * * * *
Paragraph 43(b)(2)
1. Threshold amount. For purposes of Sec. 226.43(b)(2), the
threshold amount in effect during a particular period is the amount
stated in comment 43(b)(2)-3 for that period. The threshold amount is
adjusted effective January 1 of each year by 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.
Comment 43(b)(2)-3 will be amended to provide the threshold amount for
the upcoming year after the annual percentage change in the CPI-W that
was in effect on June 1 becomes available. Any increase in the
[[Page 86255]]
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.
2. No increase in the CPI-W. If the CPI-W in effect on June 1 does
not increase from the CPI-W in effect on June 1 of the previous year,
the threshold amount effective the following January 1 through December
31 will not change from the previous year. When this occurs, for the
years that follow, the threshold is calculated based on the annual
percentage change in the CPI-W applied to the dollar amount that would
have resulted, after rounding, if decreases and any subsequent
increases in the CPI-W had been taken into account.
i. Net increases. If the resulting amount calculated, after
rounding, is greater than the current threshold, then the threshold
effective January 1 the following year will increase accordingly.
ii. Net decreases. If the resulting amount calculated, after
rounding, is equal to or less than the current threshold, then the
threshold effective January 1 the following year will not change, but
future increases will be calculated based on the amount that would have
resulted.
3. Threshold. For purposes of Sec. 226.43(b)(2), the threshold
amount in effect during a particular period is the amount stated below
for that period.
i. From January 18, 2014, through December 31, 2014, the threshold
amount is $25,000.
ii. From January 1, 2015, through December 31, 2015, the threshold
amount is $25,500.
iii. From January 1, 2016, through December 31, 2016, the threshold
amount is $25,500.
iv. From January 1, 2017, through December 31, 2017, the threshold
amount is $25,500.
4. Qualifying for exemption--in general. A transaction is exempt
under Sec. 226.43(b)(2) if the creditor makes an extension of credit
at consummation that is equal to or below the threshold amount in
effect at the time of consummation.
5. Qualifying for exemption--subsequent changes. A transaction does
not meet the condition for an exemption under Sec. 226.43(b)(2) merely
because it is used to satisfy and replace an existing exempt loan,
unless the amount of the new extension of credit is equal to or less
than the applicable threshold amount. For example, assume a closed-end
loan that qualified for a Sec. 226.43(b)(2) exemption at consummation
in year one is refinanced in year ten and that the new loan amount is
greater than the threshold amount in effect in year ten. In these
circumstances, the creditor must comply with all of the applicable
requirements of Sec. 226.43 with respect to the year ten transaction
if the original loan is satisfied and replaced by the new loan, unless
another exemption from the requirements of Sec. 226.43 applies. See
Sec. 226.43(b) and (d)(7).
* * * * *
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, 3353,
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, the entry for Paragraph 35(c)(2)(ii)
is revised 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. For purposes of Sec. 1026.35(c)(2)(ii), the
threshold amount in effect during a particular period is the amount
stated in comment 35(c)(2)(ii)-3 for that period. The threshold amount
is adjusted effective January 1 of each year by 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.
Comment 35(c)(2)(ii)-3 will be amended to provide the threshold amount
for the upcoming year after the annual percentage change in the CPI-W
that was in effect on June 1 becomes available. 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.
2. No increase in the CPI-W. If the CPI-W in effect on June 1 does
not increase from the CPI-W in effect on June 1 of the previous year,
the threshold amount effective the following January 1 through December
31 will not change from the previous year. When this occurs, for the
years that follow, the threshold is calculated based on the annual
percentage change in the CPI-W applied to the dollar amount that would
have resulted, after rounding, if decreases and any subsequent
increases in the CPI-W had been taken into account.
i. Net increases. If the resulting amount calculated, after
rounding, is greater than the current threshold, then the threshold
effective January 1 the following year will increase accordingly.
ii. Net decreases. If the resulting amount calculated, after
rounding, is equal to or less than the current threshold, then the
threshold effective January 1 the following year will not change, but
future increases will be calculated based on the amount that would have
resulted.
3. Threshold. For purposes of Sec. 1026.35(c)(2)(ii), the
threshold amount in effect during a particular period is the amount
stated below for that period.
i. From January 18, 2014, through December 31, 2014, the threshold
amount is $25,000.
ii. From January 1, 2015, through December 31, 2015, the threshold
amount is $25,500.
iii. From January 1, 2016, through December 31, 2016, the threshold
amount is $25,500.
iv. From January 1, 2017, through December 31, 2017, the threshold
amount is $25,500.
4. Qualifying for exemption--in general. A transaction is exempt
under Sec. 1026.35(c)(2)(ii) if the creditor makes an extension of
credit at consummation that is equal to or below the threshold
[[Page 86256]]
amount in effect at the time of consummation.
5. Qualifying for exemption--subsequent changes. A transaction does
not meet the condition for an exemption under Sec. 1026.35(c)(2)(ii)
merely because it is used to satisfy and replace an existing exempt
loan, unless the amount of the new extension of credit is equal to or
less than the applicable threshold amount. For example, assume a
closed-end loan that qualified for a Sec. 1026.35(c)(2)(ii) exemption
at consummation in year one is refinanced in year ten and that the new
loan amount is greater than the threshold amount in effect in year ten.
In these circumstances, the creditor must comply with all of the
applicable requirements of Sec. 1026.35(c) with respect to the year
ten transaction if the original loan is satisfied and replaced by the
new loan, unless another exemption from the requirements of Sec.
1026.35(c) applies. See Sec. 1026.35(c)(2) and (c)(4)(vii).
* * * * *
Dated: November 22, 2016.
Thomas J. Curry,
Comptroller of the Currency.
By order of the Board of Governors of the Federal Reserve
System, November 21, 2016.
Robert deV. Frierson,
Secretary of the Board.
Dated: November 7, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2016-28699 Filed 11-29-16; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 4810-AM-P