[Federal Register Volume 82, Number 216 (Thursday, November 9, 2017)]
[Rules and Regulations]
[Pages 51973-51975]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-24443]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 82, No. 216 / Thursday, November 9, 2017 /
Rules and Regulations
[[Page 51973]]
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 34
[Docket No. OCC-2017-0016]
RIN 1557-AE25
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Docket No. R-1580]
RIN 7100 AE-87
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1026
[Docket No. CFPB-2017-0029]
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. However, in years following a
year in which the exemption threshold was not adjusted, the threshold
is calculated by applying the annual percentage increase 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. Based on the CPI-W in effect as of June 1, 2017, the exemption
threshold will increase from $25,500 to $26,000 effective January 1,
2018.
DATES: This final rule is effective January 1, 2018.
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 $25,000 or less, to be adjusted annually for inflation.
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\1\ Public Law 111-203, section 1471, 124 Stat. 1376, 2185-87
(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 OCC's, the Board's, and the Bureau'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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The OCC's, Board's, and Bureau's regulations,\6\ and their
accompanying interpretations,\7\ 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.\8\
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\6\ 12 CFR 34.203(b)(2) (OCC); 12 CFR 226.43(b)(2) (Board); and
12 CFR 1026.35(c)(2)(ii) (Bureau).
\7\ 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).
\8\ 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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[[Page 51974]]
On November 30, 2016, the OCC, the Board, and the Bureau published
a final rule in the Federal Register to memorialize the calculation
method used by the agencies each year to adjust the exemption threshold
to ensure that the values for the exemption threshold keep pace with
the CPI-W as contemplated in the December 2013 Supplemental Final Rule
(HPML Small Dollar Adjustment Calculation Rule).\9\ The HPML Small
Dollar Adjustment Calculation Rule memorialized the policy that if
there is no annual percentage increase in the CPI-W, the OCC, the
Board, and Bureau will not adjust the exemption threshold from the
prior year. The HPML Small Dollar Adjustment Calculation Rule also
provided that in years following a year in which the exemption
threshold was not adjusted because there was a decrease in the CPI-W
from 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. 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; 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.
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\9\ See 81 FR 86250 (Nov. 30, 2016).
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II. 2018 Adjustment and Commentary Revision
Effective January 1, 2018, the exemption threshold amount is
increased from $25,500 to $26,000. This is based on the CPI-W in effect
on June 1, 2017, which was reported on May 12, 2017. 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 prior 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 12, 2017, reflects a 2.1
percent increase in the CPI-W from April 2016 to April 2017.
Accordingly, the 2.1 percent increase in the CPI-W from April 2016 to
April 2017 results in an exemption threshold amount of $26,000. 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.v to 12 CFR part 34, appendix C to
subpart G (OCC);
Comment 43(b)(2)-3.v to supplement I of 12 CFR part 226
(Board); and
Comment 35(c)(2)(ii)-3.v to supplement I of 12 CFR part
1026 (Bureau).
These new comments state that, from January 1, 2018, through
December 31, 2018, the threshold amount is $26,000. These revisions are
effective January 1, 2018.
III. Regulatory Analysis
Administrative Procedure Act
Under the Administrative Procedure Act, 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.\10\ The amendments in this rule are technical and
apply the method previously set forth in the 2013 Supplemental Proposed
Rule \11\ and the HPML Small Dollar Adjustment Calculation Rule. 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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\10\ 5 U.S.C. 553(b)(B).
\11\ 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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Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) does not apply to a rulemaking
where a general notice of proposed rulemaking is not required.\12\ 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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\12\ 5 U.S.C. 603 and 604.
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Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995,\13\ 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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\13\ 44 U.S.C. 3506; 5 CFR part 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.\14\ As discussed above, the OCC has determined that the
publication of a general notice of proposed rulemaking is unnecessary.
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\14\ 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, under Paragraph 34.203(b)(2), paragraph
3.v is added to read as follows:
[[Page 51975]]
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)
* * * * *
3. * * *
v. From January 1, 2018, through December 31, 2018, the
threshold amount is $26,000.
* * * * *
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, under Paragraph 43(b)(2), paragraph 3.v 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-Risk Mortgage Loans
* * * * *
43(b) Exemptions.
* * * * *
Paragraph 43(b)(2)
* * * * *
3. * * *
v. From January 1, 2018, through December 31, 2018, the
threshold amount is $26,000.
* * * * *
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, under Paragraph 35(c)(2)(ii),
paragraph 3.v 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)
* * * * *
3. * * *
v. From January 1, 2018, through December 31, 2018, the
threshold amount is $26,000.
* * * * *
Dated: September 26, 2017.
Keith A. Noreika,
Acting Comptroller of the Currency.
By order of the Board of Governors of the Federal Reserve
System, acting through the Secretary of the Board under delegated
authority, November 2, 2017.
Ann E. Misback,
Secretary of the Board.
Dated: September 7, 2017.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2017-24443 Filed 11-8-17; 8:45 am]
BILLING CODE 4810-33-P 6210-01-P 4810-AM-P