[Federal Register Volume 86, Number 105 (Thursday, June 3, 2021)]
[Rules and Regulations]
[Pages 29685-29687]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-11571]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1026
[Docket No. CFPB-2020-0023]
RIN 3170-AA83
Higher-Priced Mortgage Loan Escrow Exemption (Regulation Z);
Correcting Amendments
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Final rule; official interpretations; correcting amendments.
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SUMMARY: This document corrects the Official Interpretations
(Commentary) to Regulation Z. Specifically, the Bureau of Consumer
Financial Protection (Bureau) is adding a comment to its Commentary
that it included in a recent higher-priced mortgage loan escrow
exemption final rule but that was not incorporated into the Code of
Federal Regulations (CFR) due to an omission in an amendatory
instruction. The Bureau is also revising a comment that it included in
the same recent final rule, but that inadvertently did not appear in a
subsequently effective final rule.
DATES: The corrections are effective on June 3, 2021.
FOR FURTHER INFORMATION CONTACT: Joseph Devlin, Senior Counsel, Office
of Regulations, at 202-435-7700 or https://reginquiries.consumerfinance.gov/. If you require this document in an
alternative electronic format, please contact
[email protected].
SUPPLEMENTARY INFORMATION:
I. Background
The Bureau is issuing this document to correct two comments in the
Bureau's Commentary to Regulation Z, which implements the Truth in
Lending Act.\1\ In the final rule titled ``Higher-Priced Mortgage Loan
Escrow Exemption (Regulation Z)'' (Escrow Exemption Final Rule),
published in the Federal Register on February 17, 2021 (86 FR 9840),
the Bureau included Paragraph 35(b)(2)(vi)(B) in its commentary text
for the rule, but omitted the related amendatory instruction to add
that specific paragraph to the Commentary. This omission was a
scrivener's error. The Bureau is therefore issuing this correction to
ensure that Paragraph 35(b)(2)(vi)(B) is incorporated into the
Commentary published in the CFR.
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\1\ 15 U.S.C. 1601 et seq.
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Additionally, the Bureau is amending the CFR to revise a comment
that the Bureau amended in the Escrow Exemption Rule but that
inadvertently
[[Page 29686]]
did not appear in a subsequently effective final rule. In the Escrow
Exemption Rule, the Bureau amended preexisting Paragraph 43(f)(1)(vi).
This amended comment was incorporated into the CFR on the February 17,
2021 effective date of the Escrow Exemption Rule; however, an unamended
version of the preexisting comment was included in the Bureau's final
rule titled ``Qualified Mortgage Definition Under the Truth in Lending
Act (General QM Loan Definition)'' (General QM Rule) (85 FR 86308). The
General QM Rule was published in the Federal Register on December 29,
2020, but it did not take effect until March 1, 2021.\2\ The unamended
version of the preexisting comment therefore inadvertently replaced the
amended version when the General QM Rule was incorporated into the CFR.
The Bureau is therefore issuing this correction to ensure that the CFR
contains the intended version of this comment that the Bureau amended
in the Escrow Exemption Final Rule.
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\2\ When amending commentary, the Office of the Federal Register
requires reprinting of certain subsections being amended in their
entirety rather than providing more targeted amendatory instructions
and related text.
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Regulatory Requirements: The Bureau finds that public comment on
this correction is unnecessary because the Bureau is correcting
inadvertent, technical errors, about which there is minimal, if any,
basis for substantive disagreement. Because no notice of proposed
rulemaking is required, the Regulatory Flexibility Act does not require
an initial or final regulatory flexibility analysis.\3\ The Bureau has
determined that these corrections do not impose any new or revise any
existing recordkeeping, reporting, or disclosure requirements on
covered entities or members of the public that would be collections of
information requiring OMB approval under the Paperwork Reduction
Act.\4\
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\3\ 5 U.S.C. 603(a) and 604(a).
\4\ 44 U.S.C. 3501 et seq.
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List of Subjects in 12 CFR Part 1026
Advertising, Banks, banking, 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.
0
2. Amend supplement I to part 1026--Official Interpretations by:
0
a. Adding Paragraph 35(b)(2)(vi)(B); and
0
b. Revising Paragraph 43(f)(1)(vi).
The addition and revision read as follows:
Supplement I to Part 1026--Official Interpretations
* * * * *
Section 1026.35--Requirements for Higher-Priced Mortgage Loans
* * * * *
35(b) Escrow Accounts
* * * * *
35(b)(2) Exemptions
* * * * *
Paragraph 35(b)(2)(vi)(B).
1. The transaction threshold in Sec. 1026.35(b)(2)(vi)(B) differs
from the transaction threshold in Sec. 1026.35(b)(2)(iii)(B) in two
ways. First, the threshold in Sec. 1026.35(b)(2)(vi)(B) is 1,000 loans
secured by first liens on a principal dwelling, while the threshold in
Sec. 1026.35(b)(2)(iii)(B) is 2,000 loans secured by first liens on a
dwelling. Second, all loans made by the creditor and its affiliates
secured by a first lien on a principal dwelling count toward the 1,000-
loan threshold in Sec. 1026.35(b)(2)(vi)(B), whether or not such loans
are held in portfolio. By contrast, under Sec. 1026.35(b)(2)(iii)(B),
only loans secured by first liens on a dwelling that were sold,
assigned, or otherwise transferred to another person, or that were
subject at the time of consummation to a commitment to be acquired by
another person, are counted toward the 2,000-loan threshold.
* * * * *
Section 1026.43--Minimum Standards for Transactions Secured by a
Dwelling
* * * * *
43(f) Balloon-Payment Qualified Mortgages Made by Certain Creditors
43(f)(1) Exemption
* * * * *
Paragraph 43(f)(1)(vi).
1. Creditor qualifications. Under Sec. 1026.43(f)(1)(vi), to make
a qualified mortgage that provides for a balloon payment, the creditor
must satisfy three criteria that are also required under Sec.
1026.35(b)(2)(iii)(A), (B) and (C), which require:
i. During the preceding calendar year or during either of the two
preceding calendar years if the application for the transaction was
received before April 1 of the current calendar year, the creditor
extended a first-lien covered transaction, as defined in Sec.
1026.43(b)(1), on a property that is located in an area that is
designated either ``rural'' or ``underserved,'' as defined in Sec.
1026.35(b)(2)(iv), to satisfy the requirement of Sec.
1026.35(b)(2)(iii)(A) (the rural-or-underserved test). Pursuant to
Sec. 1026.35(b)(2)(iv), an area is considered to be rural if it is: A
county that is neither in a metropolitan statistical area, nor a
micropolitan statistical area adjacent to a metropolitan statistical
area, as those terms are defined by the U.S. Office of Management and
Budget; or a census block that is not in an urban area, as defined by
the U.S. Census Bureau using the latest decennial census of the United
States. An area is considered to be underserved during a calendar year
if, according to HMDA data for the preceding calendar year, it is a
county in which no more than two creditors extended covered
transactions secured by first liens on properties in the county five or
more times.
A. The Bureau determines annually which counties in the United
States are rural or underserved as defined by Sec.
1026.35(b)(2)(iv)(A)(1) or Sec. 1026.35(b)(2)(iv)(B) and publishes on
its public website lists of those counties to assist creditors in
determining whether they meet the criterion at Sec.
1026.35(b)(2)(iii)(A). Creditors may also use an automated tool
provided on the Bureau's public website to determine whether specific
properties are located in areas that qualify as ``rural'' or
``underserved'' according to the definitions in Sec. 1026.35(b)(2)(iv)
for a particular calendar year. In addition, the U.S. Census Bureau may
also provide on its public website an automated address search tool
that specifically indicates if a property address is located in an
urban area for purposes of the Census Bureau's most recent delineation
of urban areas. For any calendar year that begins after the date on
which the Census Bureau announced its most recent delineation of urban
areas, a property is located in an area that qualifies as ``rural''
according to the definitions in Sec. 1026.35(b)(2)(iv) if the search
results provided for the property by any such automated address search
tool available on the Census Bureau's public website
[[Page 29687]]
do not identify the property as being in an urban area.
B. For example, if a creditor extended during 2017 a first-lien
covered transaction that is secured by a property that is located in an
area that meets the definition of rural or underserved under Sec.
1026.35(b)(2)(iv), the creditor meets this element of the exception for
any transaction consummated during 2018.
C. Alternatively, if the creditor did not extend in 2017 a
transaction that meets the definition of rural or underserved test
under Sec. 1026.35(b)(2)(iv), the creditor satisfies this criterion
for any transaction consummated during 2018 for which it received the
application before April 1, 2018, if it extended during 2016 a first-
lien covered transaction that is secured by a property that is located
in an area that meets the definition of rural or underserved under
Sec. 1026.35(b)(2)(iv).
ii. During the preceding calendar year, or, if the application for
the transaction was received before April 1 of the current calendar
year, during either of the two preceding calendar years, the creditor
together with its affiliates extended no more than 2,000 covered
transactions, as defined by Sec. 1026.43(b)(1), secured by first
liens, that were sold, assigned, or otherwise transferred to another
person, or that were subject at the time of consummation to a
commitment to be acquired by another person, to satisfy the requirement
of Sec. 1026.35(b)(2)(iii)(B).
iii. As of the preceding December 31st, or, if the application for
the transaction was received before April 1 of the current calendar
year, as of either of the two preceding December 31sts, the creditor
and its affiliates that regularly extended covered transactions secured
by first liens, together, had total assets that do not exceed the
applicable asset threshold established by the Bureau, to satisfy the
requirement of Sec. 1026.35(b)(2)(iii)(C). The Bureau publishes notice
of the asset threshold each year by amending comment 35(b)(2)(iii)-
1.iii.
* * * * *
Dated: May 26, 2021.
David Uejio,
Acting Director, Bureau of Consumer Financial Protection.
[FR Doc. 2021-11571 Filed 6-2-21; 8:45 am]
BILLING CODE 4810-AM-P