This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

27308 

Vol. 78, No. 91 

Friday, May 10, 2013 

1 78 FR 11279 (Feb. 15, 2013). 

2 Dodd-Frank Act section 1400(c), 15 U.S.C. 1601 

note. 

3Consumer Financial Protection Bureau Lays Out 

Implementation Plan for New Mortgage Rules. Press 

Release. Feb. 13, 2013. 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1026 

[Docket No. CFPB–2013–0013] 

RIN 3170–AA37 

Loan Originator Compensation 

Requirements Under the Truth In 

Lending Act (Regulation Z); Prohibition 

on Financing Credit Insurance 

Premiums; Delay of Effective Date 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Proposed rule with request for 

public comment. 

SUMMARY: The Bureau of Consumer 

Financial Protection (Bureau) is 

proposing to temporarily delay the June 

1, 2013, effective date of a prohibition 

on creditors financing credit insurance 

premiums in connection with certain 

consumer credit transactions secured by 

a dwelling. The prohibition was 

adopted in the Loan Originator 

Compensation Requirements under the 

Truth in Lending Act (Regulation Z) 

Final Rule, issued on January 20, 2013. 

Temporary delay of the effective date 

would permit the Bureau to clarify, 

before the provision takes effect, its 

applicability to transactions other than 

those in which a lump-sum premium is 

added to the loan amount at closing. 

DATES: Comments must be received on 

or before May 25, 2013. 

ADDRESSES: You may submit comments, 

identified by Docket No. CFPB–2013– 

0013 or RIN 3170–AA37, by any of the 

following methods: 

• Electronic: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail/Hand Delivery/Courier: 

Monica Jackson, Office of the Executive 

Secretary, Consumer Financial 

Protection Bureau, 1700 G Street NW., 

Washington, DC 20552. 

Instructions: All submissions should 

include the agency name and docket 

number or Regulatory Information 

Number (RIN) for this rulemaking. 

Because paper mail in the Washington, 

DC area and at the Bureau is subject to 

delay, commenters are encouraged to 

submit comments electronically. In 

general, all comments received will be 

posted without change to http:// 

www.regulations.gov. In addition, 

comments will be available for public 

inspection and copying at 1700 G Street 

NW., Washington, DC 20552, on official 

business days between the hours of 10 

a.m. and 5 p.m. Eastern Time. You can 

make an appointment to inspect the 

documents by telephoning (202) 435– 

7275. 

All comments, including attachments 

and other supporting materials, will 

become part of the public record and 

subject to public disclosure. Sensitive 

personal information, such as account 

numbers or social security numbers, 

should not be included. Comments will 

not be edited to remove any identifying 

or contact information. 

FOR FURTHER INFORMATION CONTACT: 

Richard Arculin or Daniel Brown, 

Counsels, Office of Regulations, at (202) 

435–7700. 

SUPPLEMENTARY INFORMATION: 

I. Background 

In January 2013, the Bureau issued 

several final rules concerning mortgage 

markets in the United States, pursuant 

to the Dodd-Frank Wall Street Reform 

and Consumer Protection Act (DoddFrank Act). Public Law 111–203, 124 

Stat. 1376 (2010). One of these final 

rules was the Loan Originator 

Compensation Requirements under the 

Truth in Lending Act (Regulation Z) 

Final Rule (‘‘Final Rule’’).1 The Final 

Rule implemented Dodd-Frank Act 

amendments to the Truth in Lending 

Act (TILA) addressing loan originator 

compensation; qualifications of, and 

registration or licensing of loan 

originators; compliance procedures for 

depository institutions; mandatory 

arbitration; and the financing of singlepremium credit insurance. With regard 

to the financing of single-premium 

credit insurance, the Final Rule 

included a provision implementing the 

Dodd-Frank Act section 1414 

amendment that added new TILA 

section 129C(d), 15 U.S.C. 1639c(d). 

That provision prohibits creditors from 

financing premiums or fees for certain 

credit insurance products in connection 

with certain consumer credit 

transactions secured by a dwelling. The 

Bureau implemented this provision by 

adopting § 1026.36(i). 

A. Title XIV Rulemaking Effective Dates 

In enacting the Dodd-Frank Act, 

Congress significantly amended the 

statutory requirements governing a 

number of mortgage practices, including 

loan originator compensation. Under the 

statute, most of these new requirements 

would have taken effect automatically 

on January 21, 2013, if the Bureau had 

not issued implementing regulations by 

that date.2 To avoid uncertainty and 

potential disruption in the national 

mortgage market at a time of economic 

vulnerability, the Bureau issued several 

final rules (‘‘the Title XIV 

Rulemakings’’) in January 2013, 

including the Final Rule issued on 

January 20, 2013, to implement these 

new statutory provisions and provide 

for an orderly transition. To allow the 

mortgage industry sufficient time to 

comply with the new rules, the Bureau 

established January 10, 2014—one year 

after issuance of the earliest of the Title 

XIV Rulemakings—as the baseline 

effective date for most of the Title XIV 

Rulemakings, including most provisions 

of the Final Rule. However, the Bureau 

identified certain provisions that it 

believed did not present significant 

implementation burdens for industry, 

including § 1026.36(h) on mandatory 

arbitration clauses and waivers of 

certain consumer rights and § 1026.36(i) 

on financing single-premium credit 

insurance, as adopted by the Final Rule. 

For these provisions, the Bureau set an 

earlier effective date of June 1, 2013. 

B. Implementation Initiative for New 

Mortgage Rules 

On February 13, 2013, the Bureau 

announced an initiative to support 

implementation of its new mortgage 

rules (Implementation Plan),3 under 

which the Bureau would work with the 

mortgage industry to ensure that the 

new rules can be implemented 

accurately and expeditiously. The 

Implementation Plan included (1) 

coordination with other agencies; (2) 

publication of plain-language guides to 


rmajette on DSK2TPTVN1PROD with PROPOSALS-1
Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / Proposed Rules 27309 

4 15 U.S.C. 1639(d). 

5 77 FR 55272 (Sept. 7, 2012). 

the new rules; (3) publication of 

additional corrections, adjustments, and 

clarifications of the new rules, as 

needed; (4) publication of readiness 

guides for the new rules; and (5) 

education of consumers on the new 

rules. This proposal is a proposed 

adjustment to the new rules. The 

purpose of these updates is to address 

important questions raised by industry, 

consumer groups, or other agencies. 

II. Legal Authority 

On July 21, 2011, section 1061 of the 

Dodd-Frank Act transferred to the 

Bureau the ‘‘consumer financial 

protection functions’’ previously vested 

in certain other Federal agencies, 

including the Board of Governors of the 

Federal Reserve System. The term 

‘‘consumer financial protection 

function’’ is defined to include ‘‘all 

authority to prescribe rules or issue 

orders or guidelines pursuant to any 

Federal consumer financial law, 

including performing appropriate 

functions to promulgate and review 

such rules, orders, and guidelines.’’ 12 

U.S.C. 5581(a)(1). TILA is a Federal 

consumer financial law. Dodd-Frank 

Act section 1002(14), 12 U.S.C. 5481(14) 

(defining ‘‘Federal consumer financial 

law’’ to include the ‘‘enumerated 

consumer laws’’ and the provisions of 

title X of the Dodd-Frank Act); DoddFrank Act section 1002(12), 12 U.S.C. 

5481(12) (defining ‘‘enumerated 

consumer laws’’ to include TILA). 

Accordingly, the Bureau has authority 

to issue regulations pursuant to TILA. 

As amended by the Dodd-Frank Act, 

TILA section 105(a), 15 U.S.C. 1604(a), 

directs the Bureau to prescribe 

regulations to carry out the purposes of 

TILA, and provides that such 

regulations may contain additional 

requirements, classifications, 

differentiations, or other provisions, and 

may provide for such adjustments and 

exceptions for all or any class of 

transactions, that the Bureau judges are 

necessary or proper to effectuate the 

purposes of TILA, to prevent 

circumvention or evasion thereof, or to 

facilitate compliance. Further, under 

Dodd-Frank Act section 1022(b)(1), 15 

U.S.C. 5512(b)(1), the Bureau has 

general authority to prescribe rules as 

may be necessary or appropriate to 

enable the Bureau to administer and 

carry out the purposes and objectives of 

the Federal consumer financial laws, 

and to prevent evasions thereof. The 

Bureau is proposing to temporarily 

delay the effective date pursuant to its 

TILA section 105(a) and Dodd-Frank 

Act section 1022(b)(1) authority. The 

Bureau believes such a delay will 

facilitate compliance and help ensure 

that the Final Rule does not have 

adverse unintended consequences. 

III. Effective Date 

As discussed above, Dodd-Frank Act 

section 1414 added TILA section 

129C(d), which generally prohibits a 

creditor from financing any premiums 

or fees for credit insurance in 

connection with any residential 

mortgage loan or with any extension of 

credit under an open end consumer 

credit plan secured by the consumer’s 

principal dwelling.4 The prohibition 

applies to credit life, credit disability, 

credit unemployment, credit property 

insurance, and other similar products. 

The same provision states, however, 

that the prohibition does not apply to 

credit insurance for which premiums or 

fees are calculated and paid in full on 

a monthly basis or to credit 

unemployment insurance for which the 

premiums are reasonable, the creditor 

receives no compensation, and the 

premiums are paid pursuant to a 

separate insurance contract and are not 

paid to the creditor’s affiliate. 

The Bureau proposed to implement 

this provision through § 1026.36(i), 

which generally tracks the statutory 

language. In the proposal, the Bureau 

stated its belief that the provisions were 

generally straightforward, but sought 

comment on whether any issues raised 

by the provision required clarification. 

Anticipating that few, if any, 

clarifications would be necessary and 

that accordingly industry would not 

require significant time to accommodate 

any clarifications of the final rule, the 

Bureau also sought comment on 

whether the provision should become 

effective sooner than January 2014.5

The Bureau received very few public 

comments on the substance of the 

proposed prohibition or the earlier 

effective date. Consumer groups sought 

clarification on the provision’s 

applicability to certain factual scenarios 

where credit insurance premiums are 

charged periodically, rather than as a 

lump-sum added to the loan amount at 

closing. They also urged the Bureau to 

provide an early effective date for the 

provision. The Bureau did not receive 

any public comments from the credit 

insurance industry. The Bureau 

received some limited comments from 

creditors concerning the general 

prohibition, but these comments did not 

address the applicability of the 

provision to transactions in which 

premiums are charged periodically. In 

the preamble to the Final Rule, the 

Bureau provided some explanation 

concerning the provision’s applicability 

to credit insurance premiums charged 

periodically, rather than as a lump-sum 

added to the loan amount at closing. 

Since publication of the final rule, 

industry stakeholders have expressed 

concern that the regulation text and 

preamble left substantial uncertainty 

about whether, and under what 

circumstances, premiums for certain 

credit insurance products can be 

charged on a periodic basis in 

connection with a covered consumer 

credit transaction secured by a dwelling. 

These stakeholders have requested 

clarification on § 1026.36(i)’s 

applicability to these credit insurance 

products and also have expressed 

concern regarding their ability to 

comply timely, given that the Final Rule 

provided an effective date for 

§ 1026.36(i) of June 1, 2013. In light of 

the interpretive questions that have 

arisen since publication of the Final 

Rule, the Bureau intends to publish a 

new proposal to seek further notice and 

comment on the provision in June 2013. 

In that proposal, among other things, the 

Bureau plans to (1) seek public 

comment, including from industry 

stakeholders and consumers, regarding 

the applicability of the prohibition to 

transactions in which credit insurance 

premiums are charged periodically; and 

(2) propose a new effective date for 

§ 1026.36(i), under which the provision 

would take effect some time after 

finalization of that proposal. 

In the interim, the Bureau is 

proposing to temporarily delay the June 

1, 2013, effective date of § 1026.36(i). 

The Bureau is concerned that, if the 

effective date is not delayed, creditors 

could face uncertainty about whether 

and under what circumstances credit 

insurance premiums may be charged 

periodically in connection with covered 

consumer credit transactions secured by 

a dwelling. The Bureau believes this 

could result in a substantial compliance 

burden to industry. The Bureau thus 

proposes that the effective date for 

§ 1026.36(i) be temporarily delayed. The 

Bureau contemplates delaying the 

effective date only as long as necessary 

for any clarifications to be proposed, 

finalized, and implemented. The Bureau 

solicits comment on what that new date 

should be. Further, whatever new 

effective date the Bureau may announce 

as a result of this proposal, the Bureau 

also intends to propose and again seek 

comment on the effective date for any 

clarifications to § 1026.36(i) as part of 

the forthcoming June proposal. The 

Bureau believes that the temporary 

delay would balance the need for 

consumers to receive the protections 


rmajette on DSK2TPTVN1PROD with PROPOSALS-1
27310 Federal Register / Vol. 78, No. 91 / Friday, May 10, 2013 / Proposed Rules 

6Section 1022(b)(2)(A) of the Dodd-Frank Act, 12 

U.S.C. 5521(b)(2), directs the Bureau, when 

prescribing a rule under the Federal consumer 

financial laws, to consider the potential benefits 

and costs of regulation to consumers and covered 

persons, including the potential reduction of access 

by consumers to consumer financial products or 

services; the impact on insured depository 

institutions and credit unions with $10 billion or 

less in total assets as described in section 1026 of 

the Dodd-Frank Act; and the impact on consumers 

in rural areas. Section 1022(b)(2)(B) of the DoddFrank Act directs the Bureau to consult with 

appropriate prudential regulators or other Federal 

agencies regarding consistency with prudential, 

market, or systemic objectives that those agencies 

administer. 

7The Bureau has discretion in any rulemaking to 

choose an appropriate scope of analysis with 

respect to potential benefits and costs and an 

appropriate baseline. 

8 5 U.S.C. 601 et seq. 

9 5 U.S.C. 603(a). For purposes of assessing the 

impacts of the proposed rule on small entities, 

‘‘small entities’’ is defined in the RFA to include 

small businesses, small not-for-profit organizations, 

and small government jurisdictions. 5 U.S.C. 601(6). 

A ‘‘small business’’ is determined by application of 

Small Business Administration regulations and 

reference to the North American Industry 

Classification System (NAICS) classifications and 

size standards. 5 U.S.C. 601(3). A ‘‘small 

organization’’ is any ‘‘not-for-profit enterprise 

which is independently owned and operated and is 

not dominant in its field.’’ 5 U.S.C. 601(4). A ‘‘small 

governmental jurisdiction’’ is the government of a 

city, county, town, township, village, school 

district, or special district with a population of less 

than 50,000. 5 U.S.C. 601(5). 

10 5 U.S.C. 605(b). 

11 5 U.S.C. 605(c). 

12 5 U.S.C. 609. 

afforded by the rule as quickly as 

possible with industry’s need to make 

adjustments to comply with the 

provisions of the rule. 

IV. Section 1022(b)(2) of the DoddFrank Act 

The Bureau is considering the 

potential benefits, costs, and impacts of 

the proposed rule.6 The Bureau requests 

comment on the preliminary analysis 

presented below as well as submissions 

of additional data that could inform the 

Bureau’s analysis of the benefits, costs, 

and impacts of the proposed rule. The 

Bureau has consulted, or offered to 

consult with, the prudential regulators, 

SEC, HUD, VA, USDA, FHFA, the 

Federal Trade Commission, and the 

Department of the Treasury, including 

regarding consistency with any 

prudential, market, or systemic 

objectives administered by such 

agencies. 

In part VII of the Final Rule, the 

Bureau previously considered the costs, 

benefits, and impact of § 1026.36(i) as 

adopted by the Final Rule. The Bureau 

believes that, compared to the baseline 

established by the Final Rule,7 the 

proposed delay of § 1026.36(i)’s 

effective date would generally benefit 

creditors and the credit insurance 

industry by delaying the start of ongoing 

compliance costs, and allowing time for 

a process to clarify the scope and 

compliance requirements of the 

regulation. Creditors and the credit 

insurance industry would benefit to the 

extent that the changes eliminate any 

disruptions in the provision of credit 

insurance products to consumers while 

interpretive questions concerning 

§ 1026.36(i) are addressed. The Bureau 

believes that delaying the effective date 

of § 1026.36(i) would also delay the 

consumer benefit that would result from 

allowing the rule to take effect. 

Specifically, delaying the effective date 

would delay the prohibition on lumpsum credit insurance premiums added 

to the loan amount at closing, which 

Congress sought to prohibit through 

TILA section 129C. 

In addition, the proposed rule is not 

expected to have a differential impact 

on depository institutions and credit 

unions with $10 billion or less in total 

assets as described in section 1026 of 

the Dodd-Frank Act or on consumers in 

rural areas. The Bureau does not believe 

that the proposed rule would 

meaningfully reduce consumers’ access 

to consumer products and services. 

V. Regulatory Flexibility Act Analysis 

The Regulatory Flexibility Act (RFA) 

generally requires an agency to conduct 

an initial regulatory flexibility analysis 

(IRFA) and a final regulatory flexibility 

analysis (FRFA) of any rule subject to 

notice-and-comment rulemaking 

requirements.8 These analyses must 

‘‘describe the impact of the proposed 

rule on small entities.’’ 9 An IRFA or 

FRFA is not required if the agency 

certifies that the rule will not have a 

significant economic impact on a 

substantial number of small entities,10

or if the agency considers a series of 

closely related rules as one rule for 

purposes of complying with the IRFA or 

FRFA requirements.11 The Bureau also 

is subject to certain additional 

procedures under the RFA involving the 

convening of a panel to consult with 

small business representatives prior to 

proposing a rule for which an IRFA is 

required.12

The Bureau concludes that an IRFA is 

not required for this proposed rule 

because the proposed rule, if adopted, 

would not have a significant impact on 

a substantial number of small entities. 

As discussed above, the proposal would 

temporarily delay the June 1, 2013 

effective date of § 1026.36(i), as adopted 

by the Final Rule, pending the 

finalization of a forthcoming proposal 

that will address certain interpretive 

questions that have arisen regarding the 

application of the provision to nonlump sum credit insurance products. 

The Bureau will determine the new 

effective date when it finalizes that 

proposal. The delay in effective date 

will benefit small creditors by delaying 

the start of any ongoing compliance 

costs. Accordingly, the undersigned 

hereby certifies that the final rule will 

not have a significant economic impact 

on a substantial number of small 

entities. 

VI. Paperwork Reduction Act Analysis 

The Bureau may not conduct or 

sponsor, and, notwithstanding any other 

provision of law, a respondent is not 

required to respond to, an information 

collection unless it displays a currently 

valid OMB control number. Regulation 

Z currently contains collections of 

information approved by OMB. The 

Bureau’s OMB control number for 

Regulation Z is 3170–0015. However, 

the Bureau has determined that this 

proposed rule would not materially alter 

these collections of information or 

impose any new recordkeeping, 

reporting, or disclosure requirements on 

the public that would constitute 

collections of information requiring 

approval under the Paperwork 

Reduction Act, 44 U.S.C. 3501 et seq. 

Comments on this determination may be 

submitted to the Bureau as instructed in 

the ADDRESSES section of this notice and 

to the attention of the Paperwork 

Reduction Act Officer. 

Dated: May 7, 2013. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2013–11223 Filed 5–8–13; 11:15 am] 

BILLING CODE P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2013–0368; Directorate 

Identifier 2012–NM–058–AD] 

RIN 2120–AA64 

Airworthiness Directives; the Boeing 

Company Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: We propose to adopt a new 

airworthiness directive (AD) for certain 

The Boeing Company Model 777–200 

and –300 series airplanes. This 

proposed AD was prompted by reports 


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