[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]
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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.
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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.
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\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).
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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.
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\4\ Numbers may not multiply to totals shown because of
rounding.
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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.
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\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).
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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.
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\8\ Numbers may not multiply to totals shown because of
rounding.
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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.
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\9\ 5 U.S.C. 603(a), 604(a).
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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.
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\10\ 44 U.S.C. 3506; 5 CFR part 1320.
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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