[Federal Register Volume 84, Number 210 (Wednesday, October 30, 2019)]
[Rules and Regulations]
[Pages 58013-58017]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21559]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 34

[Docket No. OCC-2019-0022]
RIN 1557-AE68

FEDERAL RESERVE SYSTEM

12 CFR Part 226

[Docket No. R-1678]
RIN 7100-AF-61

BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1026


Appraisals for Higher-Priced Mortgage Loans Exemption Threshold

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

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, 2019, the exemption 
threshold will increase from $26,700 to $27,200, effective January 1, 
2020.

DATES: This final rule is effective January 1, 2020.

FOR FURTHER INFORMATION CONTACT: 
    OCC: MaryAnn Nash, Counsel, Chief Counsel's Office, (202) 649-6287; 
for persons who are deaf or 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: Kristen Phinnessee, Counsel, Office of Regulations, Bureau 
of Consumer Financial Protection, at (202) 435-7700. If you require 
this document in an alternative electronic format, please contact 
[email protected].

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

[[Page 58014]]

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\ 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 12 CFR part 34, appendix C to subpart G, comment 
203(b)(2)-1 and -2 (OCC); 12 CFR part 226, Supplement I, comment 
43(b)(2)-1 and -2 (Board); and 12 CFR part 1026, Supplement I, 
comment 35(c)(2)(ii)-1 and -2 (Bureau).
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    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 (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. 2020 Adjustment and Commentary Revision

    Effective January 1, 2020, the exemption threshold amount is 
increased from $26,700 to $27,200. This increase is based on the CPI-W 
in effect on June 1, 2019, which was reported on May 10, 2019. The 
Bureau of Labor Statistics publishes consumer-based indices monthly, 
but does not report a CPI change on June 1; indices 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 29 percent 
of the U.S. population. The CPI-W reported on May 10, 2019, reflects a 
1.9 percent increase in the CPI-W from April 2018 to April 2019. 
Accordingly, the 1.9 percent increase in the CPI-W from April 2018 to 
April 2019 results in an exemption threshold amount of $27,200. 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.vii to 12 CFR part 34, appendix C to 
subpart G (OCC);
     Comment 43(b)(2)-3.vii to Supplement I of 12 CFR part 226 
(Board); and
     Comment 35(c)(2)(ii)-3.vii to Supplement I of 12 CFR part 
1026 (Bureau).

These new comments state that, from January 1, 2020, through December 
31, 2020, the threshold amount is $27,200. These revisions are 
effective January 1, 2020.\10\
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    \10\ The Office of the Federal Register requires the OCC, the 
Board, and the Bureau to reprint sections of commentary being 
amended in their entirety, rather than solely printing the amended 
portion. Therefore, sections of commentary included in this document 
show the language of those sections in their entirety.
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III. Regulatory Analysis

Administrative Procedure Act

    Under the Administrative Procedure Act, notice and opportunity for 
public comment are not required if the agency finds that notice and 
public comment are impracticable, unnecessary, or contrary to the 
public interest.\11\ The amendments in this rule are technical and 
apply the method previously memorialized in the December 2013 
Supplemental Final Rule 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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    \11\ 5 U.S.C. 553(b)(B).
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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(a), 604(a).
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Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995,\13\ the 
agencies

[[Page 58015]]

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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Bureau Congressional Review Act Statement

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Bureau will submit a report containing this rule and other required 
information to the U.S. Senate, the U.S. House of Representatives, and 
the Comptroller General of the United States prior to the rule taking 
effect. The Office of Information and Regulatory Affairs (OIRA) has 
designated this rule as not a ``major rule'' as defined by 5 U.S.C. 
804(2).

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, 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, 1462a, 1463, 
1464, 1465, 1701j-3, 1828(o), 3331 et seq., 5101 et seq., and 
5412(b)(2)(B) and 15 U.S.C. 1639h.


0
2. In appendix C to subpart G, under Section 34.203--Appraisals for 
Higher-Priced Mortgage Loans, revise Paragraph 34.203(b)(2) to read as 
follows:

Appendix C to Subpart G--OCC Interpretations

* * * * *

Section 34.203--Appraisals for Higher-Priced Mortgage Loans

* * * * *

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.
    v. From January 1, 2018, through December 31, 2018, the 
threshold amount is $26,000.
    vi. From January 1, 2019, through December 31, 2019, the 
threshold amount is $26,700.
    vii. From January 1, 2020, through December 31, 2020, the 
threshold amount is $27,200.
    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, revise Paragraph 43(b)(2) to read as 
follows:

[[Page 58016]]

Supplement I to Part 226--Official Staff Interpretations

* * * * *

Section 226.43--Appraisals for Higher-Risk Mortgage Loans

* * * * *

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 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.
    v. From January 1, 2018, through December 31, 2018, the 
threshold amount is $26,000.
    vi. From January 1, 2019, through December 31, 2019, the 
threshold amount is $26,700.
    vii. From January 1, 2020, through December 31, 2020, the 
threshold amount is $27,200.
    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, revise Paragraph 35(c)(2)(ii) to read 
as follows:

Supplement I to Part 1026--Official Interpretations

* * * * *

Section 1026.35--Requirements for Higher-Priced Mortgage Loans

* * * * *

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.
    v. From January 1, 2018, through December 31, 2018, the 
threshold amount is $26,000.
    vi. From January 1, 2019, through December 31, 2019, the 
threshold amount is $26,700.
    vii. From January 1, 2020, through December 31, 2020, the 
threshold amount is $27,200.
    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 
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

[[Page 58017]]

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: September 27, 2019.
Morris R. Morgan,
First Deputy Comptroller, 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, September 20, 2019.
Ann E. Misback,
Secretary of the Board.
    Dated: September 24, 2019.
Thomas Pahl,
Policy Associate Director, Bureau of Consumer Financial Protection.
[FR Doc. 2019-21559 Filed 10-29-19; 8:45 am]
BILLING CODE: 4810-33- 6210-01- 4810-AM-P