[Federal Register Volume 88, Number 244 (Thursday, December 21, 2023)]
[Rules and Regulations]
[Pages 88223-88227]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-28076]


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

CONSUMER FINANCIAL PROTECTION BUREAU

12 CFR Part 1026


Truth in Lending Act (Regulation Z) Adjustment to Asset-Size 
Exemption Threshold

AGENCY: Consumer Financial Protection Bureau.

ACTION: Final rule; official interpretation.

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

SUMMARY: The Consumer Financial Protection Bureau (CFPB) is amending 
the official commentary to its Regulation Z in order to make annual 
adjustments to the asset-size thresholds exempting certain creditors 
from the requirement to establish an escrow account for a higher-priced 
mortgage loan (HPML). These changes reflect updates to the exemption 
from the escrow requirement in the Truth in Lending Act (TILA) for 
creditors that, together with their affiliates that regularly extended 
covered transactions secured by first liens, had total assets of less 
than $2 billion (adjusted annually for inflation). They also reflect 
updates to the exemption the CFPB added, by implementing section 108 of 
the Economic Growth, Regulatory Relief, and Consumer Protection Act 
(EGRRCPA), for certain insured depository institutions and insured 
credit unions with assets of $10 billion or less (adjusted annually for 
inflation). These amendments are based on the annual percentage change 
in the average of the Consumer Price Index for Urban Wage Earners and 
Clerical Workers (CPI-W). Based on the 4.1 percent increase in the 
average of the CPI-W for the 12-month period ending in November 2023, 
the exemption threshold for creditors and their affiliates that 
regularly extended covered transactions secured by first liens is 
adjusted to $2.640 billion from $2.537 billion and the exemption 
threshold for certain insured depository institutions and insured 
credit unions with assets of $10 billion or less is adjusted to $11.835 
billion from $11.374 billion.

DATES: This rule is effective on January 1, 2024.

FOR FURTHER INFORMATION CONTACT: Anna Boadwee and Adrien Fernandez, 
Attorney-Advisors, Office of Regulations, at (202) 435-7700. If you 
require this document in an alternative electronic format, please 
contact [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    Section 129D of TILA generally requires creditors to establish 
escrow accounts for certain first-lien higher-priced mortgage loan 
transactions. However, TILA section 129D also permits the CFPB to 
exempt creditors from this higher-priced mortgage loan escrow 
requirement if they meet certain requirements, including any asset-size 
threshold that the CFPB may establish.
    In the 2013 Escrows Final Rule,\1\ the CFPB established an asset-
size threshold of $2 billion, which would adjust automatically each 
year, based on the year-to-year change in the average of the CPI-W for 
each 12-month period ending in November, with rounding to the nearest 
million dollars.\2\ In 2015, the CFPB revised the asset-size threshold 
for small creditors and how it applies. The CFPB included in the 
calculation of the asset-size threshold the assets of the creditor's 
affiliates that regularly extended covered transactions secured by 
first liens during the applicable period and added a grace period to 
allow an otherwise eligible creditor that exceeded the asset limit in 
the preceding calendar year (but not in the calendar year before the 
preceding year) to continue to operate as a small creditor with respect 
to transactions with applications received before April 1 of the 
current calendar year.\3\ For 2023, the threshold was $2.537 billion.
---------------------------------------------------------------------------

    \1\ 78 FR 4726 (Jan. 22, 2013).
    \2\ See 12 CFR 1026.35(b)(2)(iii)(C).
    \3\ See 80 FR 59943, 59951 (Oct. 2, 2015). The CFPB also issued 
an interim final rule in March 2016 to revise certain provisions in 
Regulation Z to effectuate the Helping Expand Lending Practices in 
Rural Communities Act's amendments to TILA (Pub. L. 114-94, sec. 
89003, 129 Stat. 1312, 1800-01 (2015)). The rule broadened the 
cohort of creditors that may be eligible under TILA for the special 
provisions allowing origination of balloon-payment qualified 
mortgages and balloon-payment high-cost mortgages, as well as for 
the escrow exemption. See 81 FR 16074 (Mar. 25, 2016).
---------------------------------------------------------------------------

    During the 12-month period ending in November 2023, the average of 
the CPI-W increased by 4.1 percent. As a result, the exemption 
threshold is increased to $2.640 billion for 2024.\4\ Thus, if the 
creditor's assets together with the assets of its affiliates that 
regularly extended first-lien covered transactions during calendar year 
2023 are less than $2.640 billion on December 31, 2023, and it meets 
the other requirements of Sec.  1026.35(b)(2)(iii), the creditor will 
be exempt from the escrow-accounts requirement for higher-priced 
mortgage loans in 2024 and will also be exempt from the escrow-accounts 
requirement for higher-priced mortgage loans for purposes of any loan 
consummated in 2025 with applications received before April 1, 2025. 
The adjustment to the escrows asset-size exemption threshold also will 
increase the threshold for small-creditor portfolio and balloon-payment 
qualified mortgages under Regulation Z. The requirements for small-
creditor portfolio qualified mortgages at Sec.  1026.43(e)(5)(i)(D) 
reference the asset threshold in Sec.  1026.35(b)(2)(iii)(C). Likewise, 
the requirements for balloon-payment qualified mortgages at Sec.  
1026.43(f)(1)(vi) reference the asset threshold in Sec.  
1026.35(b)(2)(iii)(C). Under Sec.  1026.32(d)(1)(ii)(C), balloon-
payment qualified mortgages that satisfy all applicable criteria in 
Sec.  1026.43(f)(1)(i) through (vi) and (f)(2), including being made by 
creditors that have (together with certain affiliates) total assets 
below the threshold in Sec.  1026.35(b)(2)(iii)(C), are also excepted 
from the prohibition on balloon payments for high-cost mortgages.
---------------------------------------------------------------------------

    \4\ Numbers may not multiply to totals shown because of 
rounding.
---------------------------------------------------------------------------

    In the 2018 Economic Growth, Regulatory Relief, and Consumer

[[Page 88224]]

Protection Act (EGRRCPA),\5\ Congress directed the CFPB to issue 
regulations to add a new exemption from TILA's escrow requirement that 
exempts transactions by certain insured depository institutions and 
insured credit unions.\6\ In 2021, the CFPB issued a final rule 
implementing this exemption in Sec.  1026.35(b)(2)(vi) (2021 Escrows 
Rule).\7\ The final rule exempted from the Regulation Z HPML escrow 
requirement any loan made by an insured depository institution or 
insured credit union and secured by a first lien on the principal 
dwelling of a consumer if: (1) the institution has assets of $10 
billion or less; (2) the institution and its affiliates originated 
1,000 or fewer loans secured by a first lien on a principal dwelling 
during the preceding calendar year; and (3) certain of the existing 
HPML escrow exemption criteria are met. In the 2021 Escrows Rule, the 
CFPB established an asset-size threshold of $10 billion or less in 
Sec.  1026.35(b)(2)(vi)(A), which will adjust automatically each year, 
based on the year-to-year change in the average of the CPI-W, not 
seasonally adjusted, for each 12-month period ending in November, with 
rounding to the nearest million dollars. Unlike the asset threshold in 
Sec.  1026.35(b)(2)(iii) and the other thresholds in Sec.  
1026.35(b)(2)(vi), affiliates are not considered in calculating 
compliance with this asset threshold. For calendar year 2023, the asset 
threshold was $11.374 billion.
---------------------------------------------------------------------------

    \5\ Public Law 115-174, 132 Stat. 1296 (2018).
    \6\ EGRRCPA sec. 108, 132 Stat. 1304-05; 15 U.S.C. 1639d(c)(2).
    \7\ 86 FR 9840 (Feb. 17, 2021).
---------------------------------------------------------------------------

    During the 12-month period ending in November 2023, the average of 
the CPI-W increased by 4.1 percent. As a result, the exemption 
threshold is increased to $11.835 billion for 2024.\8\ Thus, a creditor 
that is an insured depository institution or insured credit union that 
during calendar year 2023 had assets of $11.835 billion or less on 
December 31, 2023, satisfies this criterion for purposes of any loan 
consummated in 2024 and for purposes of any loan secured by a first 
lien on a principal dwelling of a consumer consummated in 2025 for 
which the application was received before April 1, 2025.
---------------------------------------------------------------------------

    \8\ Numbers may not multiply to totals shown because of 
rounding.
---------------------------------------------------------------------------

II. Procedural Requirements

A. Administrative Procedure Act

    Under the Administrative Procedure Act (APA), notice and 
opportunity for public comment are not required if the CFPB finds that 
notice and public comment are impracticable, unnecessary, or contrary 
to the public interest. 5 U.S.C. 553(b)(B). Pursuant to this final 
rule, comment 35(b)(2)(iii)-1 in Regulation Z is amended to update the 
exemption threshold in Sec.  1026.35(b)(2)(iii) and comment 
35(b)(2)(vi)(A)-1 in Regulation Z is amended to update the exemption 
threshold in Sec.  1026.35(b)(2)(vi). The amendments in this final rule 
are technical and merely apply the formulae previously established in 
Regulation Z for determining any adjustments to the exemption 
thresholds. For these reasons, the CFPB has determined that publishing 
a notice of proposed rulemaking and providing opportunity for public 
comment are unnecessary. Therefore, the amendments are adopted in final 
form.
    Section 553(d) of the APA generally requires publication of a final 
rule not less than 30 days before its effective date, except (1) a 
substantive rule which grants or recognizes an exemption or relieves a 
restriction; (2) interpretive rules and statements of policy; or (3) as 
otherwise provided by the agency for good cause found and published 
with the rule. 5 U.S.C. 553(d). At a minimum, the CFPB has determined 
the amendments fall under the third exception to section 553(d). The 
CFPB finds that there is good cause to make the amendments effective on 
January 1, 2024. The amendment in this final rule is technical and non-
discretionary, and it merely applies the method previously established 
in the agency's regulations for automatic adjustments to the threshold.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) does not apply to a rulemaking 
where a general notice of proposed rulemaking is not required.\9\ As 
noted previously, the CFPB has determined that it is unnecessary to 
publish a general notice of proposed rulemaking for this final rule. 
Accordingly, the RFA's requirement relating to an initial and final 
regulatory flexibility analysis does not apply.
---------------------------------------------------------------------------

    \9\ 5 U.S.C. 603(a), 604(a).
---------------------------------------------------------------------------

C. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995,\10\ the 
CFPB reviewed this final rule. The CFPB has determined that this rule 
does not create any new information collections or substantially revise 
any existing collections.
---------------------------------------------------------------------------

    \10\ 44 U.S.C. 3506; 5 CFR part 1320.
---------------------------------------------------------------------------

D. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the CFPB will submit a report containing this rule and other required 
information to the United States Senate, the United States 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 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 above, the CFPB 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. In supplement I to part 1026, under Sec.  1026.35--Requirements for 
Higher-Priced Mortgage Loans, 35(b)(2) Exemptions, paragraphs 
35(b)(2)(iii) and (b)(2)(vi)(A) are 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(b)(2) Exemptions.
* * * * *
    Paragraph 35(b)(2)(iii).
    1. Requirements for exemption. Under Sec.  1026.35(b)(2)(iii), 
except as provided in Sec.  1026.35(b)(2)(v), a creditor need not 
establish an escrow account for taxes and insurance for a higher-priced 
mortgage loan, provided the following four conditions are satisfied 
when the higher-priced mortgage loan is consummated:
    i. During the preceding calendar year, or during either of the two 
preceding calendar years if the application for the

[[Page 88225]]

loan was received before April 1 of the current calendar year, a 
creditor extended a first-lien covered transaction, as defined in Sec.  
1026.43(b)(1), secured by a property located in an area that is either 
``rural'' or ``underserved,'' as set forth in Sec.  1026.35(b)(2)(iv).
    A. In general, whether the rural-or-underserved test is satisfied 
depends on the creditor's activity during the preceding calendar year. 
However, if the application for the loan in question was received 
before April 1 of the current calendar year, the creditor may instead 
meet the rural-or-underserved test based on its activity during the 
next-to-last calendar year. This provides creditors with a grace period 
if their activity meets the rural-or-underserved test (in Sec.  
1026.35(b)(2)(iii)(A)) in one calendar year but fails to meet it in the 
next calendar year.
    B. A creditor meets the rural-or-underserved test for any higher-
priced mortgage loan consummated during a calendar year if it extended 
a first-lien covered transaction in the preceding calendar year secured 
by a property located in a rural-or-underserved area. If the creditor 
does not meet the rural-or-underserved test in the preceding calendar 
year, the creditor meets this condition for a higher-priced mortgage 
loan consummated during the current calendar year only if the 
application for the loan was received before April 1 of the current 
calendar year and the creditor extended a first-lien covered 
transaction during the next-to-last calendar year that is secured by a 
property located in a rural or underserved area. The following examples 
are illustrative:
    1. Assume that a creditor extended during 2016 a first-lien covered 
transaction that is secured by a property located in a rural or 
underserved area. Because the creditor extended a first-lien covered 
transaction during 2016 that is secured by a property located in a 
rural or underserved area, the creditor can meet this condition for 
exemption for any higher-priced mortgage loan consummated during 2017.
    2. Assume that a creditor did not extend during 2016 a first-lien 
covered transaction secured by a property that is located in a rural or 
underserved area. Assume further that the same creditor extended during 
2015 a first-lien covered transaction that is located in a rural or 
underserved area. Assume further that the creditor consummates a 
higher-priced mortgage loan in 2017 for which the application was 
received in November 2017. Because the creditor did not extend during 
2016 a first-lien covered transaction secured by a property that is 
located in a rural or underserved area, and the application was 
received on or after April 1, 2017, the creditor does not meet this 
condition for exemption. However, assume instead that the creditor 
consummates a higher-priced mortgage loan in 2017 based on an 
application received in February 2017. The creditor meets this 
condition for exemption for this loan because the application was 
received before April 1, 2017, and the creditor extended during 2015 a 
first-lien covered transaction that is located in a rural or 
underserved area.
    ii. The creditor and its affiliates together extended no more than 
2,000 covered transactions, as defined in Sec.  1026.43(b)(1), secured 
by first liens, that were sold, assigned, or otherwise transferred by 
the creditor or its affiliates to another person, or that were subject 
at the time of consummation to a commitment to be acquired by another 
person, during the preceding calendar year or during either of the two 
preceding calendar years if the application for the loan was received 
before April 1 of the current calendar year. For purposes of Sec.  
1026.35(b)(2)(iii)(B), a transfer of a first-lien covered transaction 
to ``another person'' includes a transfer by a creditor to its 
affiliate.
    A. In general, whether this condition is satisfied depends on the 
creditor's activity during the preceding calendar year. However, if the 
application for the loan in question is received before April 1 of the 
current calendar year, the creditor may instead meet this condition 
based on activity during the next-to-last calendar year. This provides 
creditors with a grace period if their activity falls at or below the 
threshold in one calendar year but exceeds it in the next calendar 
year.
    B. For example, assume that in 2015 a creditor and its affiliates 
together extended 1,500 loans that were sold, assigned, or otherwise 
transferred by the creditor or its affiliates to another person, or 
that were subject at the time of consummation to a commitment to be 
acquired by another person, and 2,500 such loans in 2016. Because the 
2016 transaction activity exceeds the threshold but the 2015 
transaction activity does not, the creditor satisfies this condition 
for exemption for a higher-priced mortgage loan consummated during 2017 
if the creditor received the application for the loan before April 1, 
2017, but does not satisfy this condition for a higher-priced mortgage 
loan consummated during 2017 if the application for the loan was 
received on or after April 1, 2017.
    C. For purposes of Sec.  1026.35(b)(2)(iii)(B), extensions of 
first-lien covered transactions, during the applicable time period, by 
all of a creditor's affiliates, as ``affiliate'' is defined in Sec.  
1026.32(b)(5), are counted toward the threshold in this section. 
``Affiliate'' is defined in Sec.  1026.32(b)(5) as ``any company that 
controls, is controlled by, or is under common control with another 
company, as set forth in the Bank Holding Company Act of 1956 (12 
U.S.C. 1841 et seq.).'' Under the Bank Holding Company Act, a company 
has control over a bank or another company if it directly or indirectly 
or acting through one or more persons owns, controls, or has power to 
vote 25 per centum or more of any class of voting securities of the 
bank or company; it controls in any manner the election of a majority 
of the directors or trustees of the bank or company; or the Federal 
Reserve Board determines, after notice and opportunity for hearing, 
that the company directly or indirectly exercises a controlling 
influence over the management or policies of the bank or company. 12 
U.S.C. 1841(a)(2).
    iii. As of the end of the preceding calendar year, or as of the end 
of either of the two preceding calendar years if the application for 
the loan was received before April 1 of the current calendar year, the 
creditor and its affiliates that regularly extended covered 
transactions secured by first liens, together, had total assets that 
are less than the applicable annual asset threshold.
    A. For purposes of Sec.  1026.35(b)(2)(iii)(C), in addition to the 
creditor's assets, only the assets of a creditor's ``affiliate'' (as 
defined by Sec.  1026.32(b)(5)) that regularly extended covered 
transactions (as defined by Sec.  1026.43(b)(1)) secured by first 
liens, are counted toward the applicable annual asset threshold. See 
comment 35(b)(2)(iii)-1.ii.C for discussion of definition of 
``affiliate.''
    B. Only the assets of a creditor's affiliate that regularly 
extended first-lien covered transactions during the applicable period 
are included in calculating the creditor's assets. The meaning of 
``regularly extended'' is based on the number of times a person extends 
consumer credit for purposes of the definition of ``creditor'' in Sec.  
1026.2(a)(17). Because covered transactions are ``transactions secured 
by a dwelling,'' consistent with Sec.  1026.2(a)(17)(v), an affiliate 
regularly extended covered transactions if it extended more than five 
covered transactions in a calendar year. Also consistent with Sec.  
1026.2(a)(17)(v), because a covered transaction may be a

[[Page 88226]]

high-cost mortgage subject to Sec.  1026.32, an affiliate regularly 
extends covered transactions if, in any 12-month period, it extends 
more than one covered transaction that is subject to the requirements 
of Sec.  1026.32 or one or more such transactions through a mortgage 
broker. Thus, if a creditor's affiliate regularly extended first-lien 
covered transactions during the preceding calendar year, the creditor's 
assets as of the end of the preceding calendar year, for purposes of 
the asset limit, take into account the assets of that affiliate. If the 
creditor, together with its affiliates that regularly extended first-
lien covered transactions, exceeded the asset limit in the preceding 
calendar year--to be eligible to operate as a small creditor for 
transactions with applications received before April 1 of the current 
calendar year--the assets of the creditor's affiliates that regularly 
extended covered transactions in the year before the preceding calendar 
year are included in calculating the creditor's assets.
    C. If multiple creditors share ownership of a company that 
regularly extended first-lien covered transactions, the assets of the 
company count toward the asset limit for a co-owner creditor if the 
company is an ``affiliate,'' as defined in Sec.  1026.32(b)(5), of the 
co-owner creditor. Assuming the company is not an affiliate of the co-
owner creditor by virtue of any other aspect of the definition (such as 
by the company and co-owner creditor being under common control), the 
company's assets are included toward the asset limit of the co-owner 
creditor only if the company is controlled by the co-owner creditor, 
``as set forth in the Bank Holding Company Act.'' If the co-owner 
creditor and the company are affiliates (by virtue of any aspect of the 
definition), the co-owner creditor counts all of the company's assets 
toward the asset limit, regardless of the co-owner creditor's ownership 
share. Further, because the co-owner and the company are mutual 
affiliates the company also would count all of the co-owner's assets 
towards its own asset limit. See comment 35(b)(2)(iii)-1.ii.C for 
discussion of the definition of ``affiliate.''
    D. A creditor satisfies the criterion in Sec.  
1026.35(b)(2)(iii)(C) for purposes of any higher-priced mortgage loan 
consummated during 2016, for example, if the creditor (together with 
its affiliates that regularly extended first-lien covered transactions) 
had total assets of less than the applicable asset threshold on 
December 31, 2015. A creditor that (together with its affiliates that 
regularly extended first-lien covered transactions) did not meet the 
applicable asset threshold on December 31, 2015, satisfies this 
criterion for a higher-priced mortgage loan consummated during 2016 if 
the application for the loan was received before April 1, 2016, and the 
creditor (together with its affiliates that regularly extended first-
lien covered transactions) had total assets of less than the applicable 
asset threshold on December 31, 2014.
    E. Under Sec.  1026.35(b)(2)(iii)(C), the $2,000,000,000 asset 
threshold adjusts automatically each year based on the year-to-year 
change in the average of the Consumer Price Index for Urban Wage 
Earners and Clerical Workers, not seasonally adjusted, for each 12-
month period ending in November, with rounding to the nearest million 
dollars. The Bureau will publish notice of the asset threshold each 
year by amending this comment. For calendar year 2024, the asset 
threshold is $2,640,000,000. A creditor that together with the assets 
of its affiliates that regularly extended first-lien covered 
transactions during calendar year 2023 has total assets of less than 
$2,640,000,000 on December 31, 2023, satisfies this criterion for 
purposes of any loan consummated in 2024 and for purposes of any loan 
consummated in 2025 for which the application was received before April 
1, 2025. For historical purposes:
    1. For calendar year 2013, the asset threshold was $2,000,000,000. 
Creditors that had total assets of less than $2,000,000,000 on December 
31, 2012, satisfied this criterion for purposes of the exemption during 
2013.
    2. For calendar year 2014, the asset threshold was $2,028,000,000. 
Creditors that had total assets of less than $2,028,000,000 on December 
31, 2013, satisfied this criterion for purposes of the exemption during 
2014.
    3. For calendar year 2015, the asset threshold was $2,060,000,000. 
Creditors that had total assets of less than $2,060,000,000 on December 
31, 2014, satisfied this criterion for purposes of any loan consummated 
in 2015 and, if the creditor's assets together with the assets of its 
affiliates that regularly extended first-lien covered transactions 
during calendar year 2014 were less than that amount, for purposes of 
any loan consummated in 2016 for which the application was received 
before April 1, 2016.
    4. For calendar year 2016, the asset threshold was $2,052,000,000. 
A creditor that together with the assets of its affiliates that 
regularly extended first-lien covered transactions during calendar year 
2015 had total assets of less than $2,052,000,000 on December 31, 2015, 
satisfied this criterion for purposes of any loan consummated in 2016 
and for purposes of any loan consummated in 2017 for which the 
application was received before April 1, 2017.
    5. For calendar year 2017, the asset threshold was $2,069,000,000. 
A creditor that together with the assets of its affiliates that 
regularly extended first-lien covered transactions during calendar year 
2016 had total assets of less than $2,069,000,000 on December 31, 2016, 
satisfied this criterion for purposes of any loan consummated in 2017 
and for purposes of any loan consummated in 2018 for which the 
application was received before April 1, 2018.
    6. For calendar year 2018, the asset threshold was $2,112,000,000. 
A creditor that together with the assets of its affiliates that 
regularly extended first-lien covered transactions during calendar year 
2017 had total assets of less than $2,112,000,000 on December 31, 2017, 
satisfied this criterion for purposes of any loan consummated in 2018 
and for purposes of any loan consummated in 2019 for which the 
application was received before April 1, 2019.
    7. For calendar year 2019, the asset threshold was $2,167,000,000. 
A creditor that together with the assets of its affiliates that 
regularly extended first-lien covered transactions during calendar year 
2018 had total assets of less than $2,167,000,000 on December 31, 2018, 
satisfied this criterion for purposes of any loan consummated in 2019 
and for purposes of any loan consummated in 2020 for which the 
application was received before April 1, 2020.
    8. For calendar year 2020, the asset threshold was $2,202,000,000. 
A creditor that together with the assets of its affiliates that 
regularly extended first-lien covered transactions during calendar year 
2019 had total assets of less than $2,202,000,000 on December 31, 2019, 
satisfied this criterion for purposes of any loan consummated in 2020 
and for purposes of any loan consummated in 2021 for which the 
application was received before April 1, 2021.
    9. For calendar year 2021, the asset threshold was $2,230,000,000. 
A creditor that together with the assets of its affiliates that 
regularly extended first-lien covered transactions during calendar year 
2020 had total assets of less than $2,230,000,000 on December 31, 2020, 
satisfied this criterion for purposes of any loan consummated in 2021 
and for purposes of any loan consummated in 2022 for which the 
application was received before April 1, 2022.

[[Page 88227]]

    10. For calendar year 2022, the asset threshold was $2,336,000,000. 
A creditor that together with the assets of its affiliates that 
regularly extended first-lien covered transactions during calendar year 
2021 had total assets of less than $2,336,000,000 on December 31, 2021, 
satisfied this criterion for purposes of any loan consummated in 2022 
and for purposes of any loan consummated in 2023 for which the 
application was received before April 1, 2023.
    11. For calendar year 2023, the asset threshold was $2,537,000,000. 
A creditor that together with the assets of its affiliates that 
regularly extended first-lien covered transactions during calendar year 
2022 had total assets of less than $2,537,000,000 on December 31, 2022, 
satisfied this criterion for purposes of any loan consummated in 2023 
and for purposes of any loan consummated in 2024 for which the 
application was received before April 1, 2024.
    iv. The creditor and its affiliates do not maintain an escrow 
account for any mortgage transaction being serviced by the creditor or 
its affiliate at the time the transaction is consummated, except as 
provided in Sec.  1026.35(b)(2)(iii)(D)(1) and (2). Thus, the exemption 
applies, provided the other conditions of Sec.  1026.35(b)(2)(iii) (or, 
if applicable, the conditions for the exemption in Sec.  
1026.35(b)(2)(vi)) are satisfied, even if the creditor previously 
maintained escrow accounts for mortgage loans, provided it no longer 
maintains any such accounts except as provided in Sec.  
1026.35(b)(2)(iii)(D)(1) and (2). Once a creditor or its affiliate 
begins escrowing for loans currently serviced other than those 
addressed in Sec.  1026.35(b)(2)(iii)(D)(1) and (2), however, the 
creditor and its affiliate become ineligible for the exemption in Sec.  
1026.35(b)(2)(iii) and (vi) on higher-priced mortgage loans they make 
while such escrowing continues. Thus, as long as a creditor (or its 
affiliate) services and maintains escrow accounts for any mortgage 
loans, other than as provided in Sec.  1026.35(b)(2)(iii)(D)(1) and 
(2), the creditor will not be eligible for the exemption for any 
higher-priced mortgage loan it may make. For purposes of Sec.  
1026.35(b)(2)(iii) and (vi), a creditor or its affiliate ``maintains'' 
an escrow account only if it services a mortgage loan for which an 
escrow account has been established at least through the due date of 
the second periodic payment under the terms of the legal obligation.
* * * * *
    Paragraph 35(b)(2)(vi)(A).
    1. The asset threshold in Sec.  1026.35(b)(2)(vi)(A) will adjust 
automatically each year, based on the year-to-year change in the 
average of the Consumer Price Index for Urban Wage Earners and Clerical 
Workers, not seasonally adjusted, for each 12-month period ending in 
November, with rounding to the nearest million dollars. Unlike the 
asset threshold in Sec.  1026.35(b)(2)(iii) and the other thresholds in 
Sec.  1026.35(b)(2)(vi), affiliates are not considered in calculating 
compliance with this threshold. The Bureau will publish notice of the 
asset threshold each year by amending this comment. For calendar year 
2024, the asset threshold is $11,835,000,000. A creditor that is an 
insured depository institution or insured credit union that during 
calendar year 2023 had assets of $11,835,000,000 or less on December 
31, 2023, satisfies this criterion for purposes of any loan consummated 
in 2024 and for purposes of any loan secured by a first lien on a 
principal dwelling of a consumer consummated in 2025 for which the 
application was received before April 1, 2025. For historical purposes:
    1. For calendar year 2021, the asset threshold was $10,000,000,000. 
Creditors that had total assets of 10,000,000,000 or less on December 
31, 2020, satisfied this criterion for purposes of any loan consummated 
in 2021 and for purposes of any loan secured by a first lien on a 
principal dwelling of a consumer consummated in 2022 for which the 
application was received before April 1, 2022.
    2. For calendar year 2022, the asset threshold was $10,473,000,000. 
Creditors that had total assets of $10,473,000,000 or less on December 
31, 2021, satisfied this criterion for purposes of any loan consummated 
in 2022 and for purposes of any loan secured by a first lien on a 
principal dwelling of a consumer consummated in 2023 for which the 
application was received before April 1, 2023.
    3. For calendar year 2023, the asset threshold is $11,374,000,000. 
A creditor that is an insured depository institution or insured credit 
union that during calendar year 2022 had assets of $11,374,000,000 or 
less on December 31, 2022, satisfied this criterion for purposes of any 
loan consummated in 2023 and for purposes of any loan secured by a 
first lien on a principal dwelling of a consumer consummated in 2024 
for which the application was received before April 1, 2024.
* * * * *

Brian Shearer,
Senior Advisor, Consumer Financial Protection Bureau.
[FR Doc. 2023-28076 Filed 12-20-23; 8:45 am]
BILLING CODE 4810-AM-P