This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

48015 

Vol. 79, No. 158 

Friday, August 15, 2014 

1The responsibility for promulgating rules under 

TILA was generally transferred from the Board to 

the Bureau effective July 21, 2011. The Bureau 

restated Regulation Z on December 22, 2011, and 

the Bureau’s Regulation Z is located at 12 CFR part 

1026. 76 FR 79768 (Dec. 22, 2011). See sections 

1061 and 1100A of the Dodd-Frank Act, Public Law 

111–203, 124 Stat. 1376 (2010). Section 1029 of the 

Dodd-Frank Act excludes from this transfer of 

authority, subject to certain exceptions, any 

rulemaking authority over a motor vehicle dealer 

that is predominantly engaged in the sale and 

servicing of motor vehicles, the leasing and 

servicing of motor vehicles, or both. 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1026 

Truth in Lending (Regulation Z) Annual 

Threshold Adjustments (CARD ACT, 

HOEPA and ATR/QM) 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Final rule; official 

interpretation. 

SUMMARY: The Bureau of Consumer 

Financial Protection (Bureau) is issuing 

this final rule amending the regulatory 

text and official interpretations for 

Regulation Z, which implements the 

Truth in Lending Act (TILA). The 

Bureau is required to calculate annually 

the dollar amounts for several 

provisions in Regulation Z; this final 

rule reviews the dollar amounts for 

provisions implementing amendments 

to TILA under the Credit Card 

Accountability Responsibility and 

Disclosure Act of 2009 (CARD Act), the 

Home Ownership and Equity Protection 

Act of 1994 (HOEPA), and the DoddFrank Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act). These 

amounts are adjusted, where 

appropriate, based on the annual 

percentage change reflected in the 

Consumer Price Index in effect on June 

1, 2014. The minimum interest charge 

disclosure thresholds will remain 

unchanged in 2015. The adjusted dollar 

amount for the penalty fees safe harbor 

in 2015 is $27 for a first late payment 

and $38 for each subsequent violation 

within the following six months. For 

HOEPA loans, the adjusted total loan 

amount threshold is $20,391, effective 

January 1, 2015. The adjusted statutory 

fee trigger for HOPEA loans is $1,020, 

effective January 1, 2015. Effective 

January 1, 2015, for the purpose of 

creditor’s determination of a consumer’s 

ability to repay a transaction secured by 

a dwelling, a covered transaction is not 

a qualified mortgage unless the 

transaction’s total points and fees do not 

exceed 3 percent of the total loan 

amount for a loan greater than or equal 

to $101,953; $3,059 for a loan amount 

greater than or equal to $61,172 but less 

than $101,953; 5 percent of the total 

loan amount for a loan greater than or 

equal to $20,391 but less than $61,172; 

$1,020 for a loan amount greater than or 

equal to $12,744 but less than $20,391; 

and 8 percent of the total loan amount 

for a loan amount less than $12,744. 

DATES: This final rule is effective 

January 1, 2015. 

FOR FURTHER INFORMATION CONTACT: 

David Friend, Counsel, Office of 

Regulations, Consumer Financial 

Protection Bureau, 1700 G Street NW., 

Washington, DC 20552 at (202) 435– 

7700. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. CARD Act Annual Adjustments 

In 2010, the Board of Governors of the 

Federal Reserve System (Board) 

published amendments to Regulation Z 

implementing the CARD Act, which 

amended TILA. Public Law 111–24, 123 

Stat. 1734 (2009). Pursuant to the CARD 

Act, the Board’s Regulation Z 

amendments established new 

requirements with respect to open-end 

consumer credit plans, including 

requirements for the disclosure of 

minimum interest charge amounts and 

the establishment of a safe harbor 

provision allowing card issuers to 

impose penalty fees for violating 

account terms without violating the 

restrictions on penalty fees established 

by the CARD Act. See 75 FR 7658, 7799 

(Feb. 22, 2010) and 75 FR 37526, 37527 

(June 29, 2010). The final rule issued by 

the Board required that these thresholds 

be calculated annually using the 

Consumer Price Index as published by 

the Bureau of Labor Statistics (BLS).1

Minimum Interest Charge Disclosure 

Thresholds 

Sections 1026.6(b)(2)(iii) and 

1026.60(b)(3) of the Bureau’s Regulation 

Z provide that the minimum interest 

charge thresholds will be re-calculated 

annually using the Consumer Price 

Index for Urban Wage Earners and 

Clerical Workers (CPI–W) that was in 

effect on the preceding June 1. When the 

cumulative change in the adjusted 

minimum value derived from applying 

the annual CPI–W level to the current 

amounts in §§ 1026.6(b)(2)(iii) and 

1026.60(b)(3) has risen by a whole 

dollar, the minimum interest charge 

amounts set forth in the regulation will 

be increased by $1.00. This adjustment 

is based on the CPI–W index in effect on 

June 1, 2014, which was reported on 

May 15, 2014. The BLS publishes 

consumer-based indices monthly, but 

does not report a CPI change on June 1; 

adjustments are reported in the middle 

of the month. The CPI–W is a subset of 

the CPI–U index (based on all urban 

consumers) and represents 

approximately 28 percent of the U.S. 

population. The adjustment reflects a 2 

percent increase in the CPI–W from 

April 2013 to April 2014 and is rounded 

to the nearest $1 increment. This 

increase in the CPI–W when applied to 

the current amounts in 

§§ 1026.6(b)(2)(iii) and 1026.60(b)(3) did 

not trigger an increase in the minimum 

interest charge threshold of at least 

$1.00, and therefore the Bureau is not 

amending §§ 1026.6(b)(2)(iii) and 

1026.60(b)(3). 

Penalty Fees Safe Harbor 

The Bureau’s Regulation Z provides 

that the safe harbor provision which 

establishes the permissible fee 

thresholds in § 1026.52(b)(1)(ii)(A) and 

(B) will be re-calculated annually using 

the CPI–W that was in effect on the 

preceding June 1. The BLS publishes 

consumer-based indices monthly, but 

does not report a CPI change on June 1; 

adjustments are reported in the middle 

of the month. This adjustment is based 

on the CPI–W index in effect on June 1, 

2014, which was reported on May 15, 

2014. The CPI–W is a subset of the CPI– 

U index (based on all urban consumers) 

and represents approximately 28 

percent of the U.S. population. When 


emcdonald on DSK67QTVN1PROD with RULES
48016 Federal Register / Vol. 79, No. 158 / Friday, August 15, 2014 / Rules and Regulations 

2Or $1,020, whichever is lesser. See the 

adjustment of the amount below for additional 

discussion. 

the cumulative change in the adjusted 

minimum value derived from applying 

the annual CPI–W level to the current 

amounts in § 1026.52(b)(1)(ii)(A) and (B) 

has risen by a whole dollar, those 

amounts will be increased by $1.00. 

Similarly, when the cumulative change 

in the adjusted minimum value derived 

from applying the annual CPI–W level 

to the current amounts in 

§ 1026.52(b)(1)(ii)(A) and (B) has 

decreased by a whole dollar, those 

amounts will be decreased by $1.00. See 

comment 52(b)(1)(ii)–2. The adjustment 

to the permissible fee thresholds being 

adopted here reflects a 2 percent 

increase in the CPI–W from April 2013 

to April 2014 and is rounded to the 

nearest $1 increment. 

B. HOEPA Annual Threshold 

Adjustments 

On January 10, 2013, the Bureau 

issued a final rule pursuant to, inter 

alia, section 1431 of the Dodd-Frank 

Act, which revised the loan amount 

threshold for HOEPA loans. 78 FR 6856 

(Jan. 31, 2013) (2013 HOEPA Final 

Rule). The 2013 HOEPA Final Rule 

adjusted the dollar amount threshold 

used in connection with calculating 

whether a transaction meets the 

percentage point thresholds in the 

points and fees coverage test to $20,000. 

Specifically, under § 1026.32(a)(1)(ii)(A) 

and (B), when determining whether a 

transaction is a high cost mortgage, the 

determination of the applicable points 

and fees coverage test is based upon 

whether the total loan amount is for 

more or less than $20,000. The HOEPA 

2013 Final Rule provides that this 

threshold amount be recalculated 

annually and the Bureau uses the 

Consumer Price Index for All Urban 

Consumers (CPI–U) index, as published 

by the BLS, as the index for adjusting 

the $20,000 figure. The CPI–U is based 

on all urban consumers and represents 

approximately 88 percent of the U.S. 

population. The BLS publishes 

consumer-based indices monthly, but 

does not report a CPI change on June 1; 

adjustments are reported in the middle 

of each month. The adjustment to the 

CPI–U index reported by BLS on May 

15, 2014, was the CPI–U index in effect 

on June 1, and reflects the percentage 

change from April 2013 to April 2014. 

The adjustment to the $20,000 figure 

being adopted here reflects a 2 percent 

increase in the CPI–U index for this 

period and is rounded to whole dollars 

for ease of compliance. 

Pursuant to section 1431 of the Dodd 

Frank Act and § 1026.32(a)(1)(ii)(B) as 

amended by the 2013 HOEPA Final 

Rule, implementation of the 2013 

HOEPA Final Rule also changed the 

HOEPA fee trigger to $1,000. The 

HOEPA 2013 Final Rule provides that 

this threshold amount will be 

recalculated annually and the Bureau 

uses the CPI–U index, as published by 

the BLS, as the index for adjusting the 

$1,000 figure. The adjustment to the 

CPI–U index reported by BLS on May 

15, 2014, was the CPI–U index in effect 

on June 1, and reflects the percentage 

change from April 2013 to April 2014. 

The adjustment to the $1,000 figure 

being adopted here reflects a 2 percent 

increase in the CPI–U index for this 

period and is rounded to whole dollars 

for ease of compliance. 

C. Ability To Repay and Qualified 

Mortgages Annual Threshold 

Adjustments 

On January 10, 2013, the Bureau 

issued a final rule pursuant to, inter 

alia, sections 1411 and 1412 of the 

Dodd-Frank Act, which implemented 

laws requiring mortgage lenders to 

consider a consumer’s ability to repay 

home loans before extending them 

credit. 78 FR 6407 (Jan. 31, 2013) (2013 

ATR/QM Final Rule). The 2013 ATR/

QM Final Rule established the points 

and fees limits that a loan must not 

exceed in order to satisfy the 

requirements for a qualified mortgage. 

Specifically, a covered transaction is not 

a qualified mortgage unless the 

transactions points and fees do not 

exceed 3 percent of the total loan 

amount for a loan amount greater than 

or equal to $100,000; $3,000 for a loan 

amount greater than or equal to $60,000 

but less than $100,000; 5 percent of the 

total loan amount for loans greater than 

or equal to $20,000 but less than 

$60,000; $1,000 for a loan amount 

greater than or equal to $12,500 but less 

than $20,000; and 8 percent of the total 

loan amount for loans less than $12,500. 

The 2013 ATR/QM Final Rule provides 

that the limits and loan amounts in 

1026.43(e)(3)(i) be recalculated annually 

for inflation and the Bureau uses the 

Consumer Price Index for All Urban 

Consumers (CPI–U) index, as published 

by the BLS, as the index for adjusting 

the figures. The CPI–U is based on all 

urban consumers and represents 

approximately 88 percent of the U.S. 

population. The BLS publishes 

consumer-based indices monthly, but 

does not report a CPI change on June 1; 

adjustments are reported in the middle 

of each month. The adjustment to the 

CPI–U index reported by BLS on May 

15, 2014, was the CPI–U index in effect 

on June 1, and reflects the percentage 

change from April 2013 to April 2014. 

The adjustment to the figures being 

adopted here reflects a 2 percent 

increase in the CPI–U index for this 

period and is rounded to whole dollars 

for ease of compliance. 

II. Adjustment and Commentary 

Revision 

A. CARD Act Annual Adjustments 

Minimum Interest Charge Disclosure 

Thresholds—§§ 1026.6(b)(2)(iii) and 

1026.60(b)(3) 

The minimum interest charge 

amounts for §§ 1026.6(b)(2)(iii) and 

1026.60(b)(3) will remain unchanged for 

the year 2015. Accordingly, the Bureau 

is not amending these sections. 

Penalty Fees Safe Harbor— 

§ 1026.52(b)(1)(ii)(A) and (B) 

Effective January 1, 2015, the 

permissible fee threshold amounts are 

$27 for § 1026.52(b)(1)(ii)(A) and $38 for 

§ 1026.52(b)(1)(ii)(B). Accordingly, the 

Bureau is revising § 1026.52(b)(1)(ii)(A) 

and (B) to state that the fee imposed for 

violating the terms or other 

requirements of an account shall not 

exceed $27 and $38 respectively. The 

Bureau is also amending comment 

52(b)(1)(ii)–2.i to preserve a list of the 

historical thresholds for this provision. 

B. HOEPA Annual Threshold 

Adjustment—Comments 32(a)(1)(ii)–1 

and –3 

Effective January 1, 2015, for purposes 

of determining the total loan amount 

threshold that determines whether a 

transaction is a high cost mortgage when 

the points and fees are either 5 percent 

or 8 percent 2 is $20,391. Comment 

32(a)(1)(ii)–3, which lists the 

adjustments for each year, is amended 

to reflect the new dollar threshold 

amount for 2015. 

Effective January 1, 2015, for purposes 

of determining whether a consumer 

credit transaction that is secured by a 

consumer’s principal dwelling and is 

not otherwise exempt is covered by 

§ 1026.32 (based on the total points and 

fees payable by the consumer at 

consummation), a loan is covered if the 

points and fees exceed $1,020 or 8 

percent of the total loan amount, 

whichever is lower. Comment 

32(a)(1)(ii)–1, which lists the 

adjustments for each year, is amended 

to reflect the new dollar threshold 

amount for 2015. 

C. Ability To Repay and Qualified 

Mortgages Annual Threshold 

Adjustments 

Effective January 1, 2015, for purposes 

of determining whether a covered 

transaction is a qualified mortgage, a 


emcdonald on DSK67QTVN1PROD with RULES
Federal Register / Vol. 79, No. 158 / Friday, August 15, 2014 / Rules and Regulations 48017 

covered transaction is not a qualified 

mortgage unless the transaction’s total 

points and fees do not exceed 3 percent 

of the total loan amount for a loan 

amount greater than or equal to 

$101,953; $3,059 for a loan amount 

greater than or equal to $61,172 but less 

than $101,953; 5 percent of the total 

loan amount for loans greater than or 

equal to $20,391 but less than $61,172; 

$1,020 for a loan amount greater than or 

equal to $12,744 but less than $20,391, 

and 8 percent of the total loan amount 

for loans less than $12,744. Comment 

43(e)(3)(ii)–1, which lists the 

adjustments for each year, is amended 

to reflect the new dollar threshold 

amounts for 2015. 

III. Procedural Requirements 

A. Administrative Procedure Act 

Under the Administrative Procedure 

Act (APA), notice and opportunity for 

public comment are not required if the 

Bureau 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 in Regulation Z, 

§ 1026.52(b)(1)(ii)(A) and (B) in subpart 

E is amended and comments 

1026.32(a)(1)(ii)–3.i, 1026.43(e)(3)(ii)– 

1.i, 1026.52(b)(1)(ii)–2.i.b in supplement 

I are added to update the exemption 

thresholds. The amendments in this 

final rule are technical and nondiscretionary, and they merely apply the 

method previously established in 

Regulation Z for determining 

adjustments to the thresholds. For these 

reasons, the Bureau 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. 

B. Regulatory Flexibility Act 

Because no notice of proposed 

rulemaking is required, the Regulatory 

Flexibility Act does not require an 

initial or final regulatory flexibility 

analysis. 5 U.S.C. 603(a), 604(a). 

C. Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3506; 

5 CFR 1320), the Bureau reviewed this 

final rule. No collections of information 

pursuant to the Paperwork Reduction 

Act are contained in the final rule. 

List of Subjects in 12 CFR Part 1026 

Advertising, 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) 

■ 1. The authority citation for part 1026 

continues to read as follows: 

Authority: 12 U.S.C. 2601, 2603–2605, 

2607, 2609, 2617, 5511, 5512, 5532, 5581; 15 

U.S.C. 1601 et seq. 

Subpart G—Special Rules Applicable 

to Credit Card Accounts and Open End 

Credit Offered to College Students 

■ 2. In § 1026.52, paragraphs 

(b)(1)(ii)(A) and (B) are revised to read 

as follows: 

§ 1026.52 Limitations on fees. 

* * * * * 

(b) * * * 

(1) * * * 

(ii) * * * 

(A) $27 

(B) $38 if the card issuer previously 

imposed a fee pursuant to paragraph 

(b)(1)(ii)(A) of this section for a violation 

of the same type that occurred during 

the same billing cycle or one of the next 

six billing cycles; or 

* * * * * 

■ 3. In Supplement I to part 1026— 

Official Interpretations: 

■ A. Under subpart E, Section 1026.32— 

Requirements for Certain Closed-End 

Home Mortgages, 32(a) Coverage, 

Paragraph 32(a)(1)(ii), paragraphs 1.i 

and 3.i are added. 

■ B. Under subpart E, Section 1026.43— 

Minimum Standards for Transactions 

Secured by a Dwelling, 43(e) Qualified 

Mortgages, Paragraph 43(e)(3)(ii), 

paragraph 1.i is added. 

■ C. Under subpart G, Section 1026.52— 

Limitations on Fees, 52(b) Limitations 

on Penalty Fees, 52(b)(1)(ii) Safe 

Harbors, subheading i, paragraph 2.i.B 

is added. 

The additions read as follows: 

SUPPLEMENT I TO PART 1026— 

OFFICIAL INTERPRETATIONS 

* * * * * 

Subpart E—Special Rules for Certain 

Home Mortgage Transactions 

* * * * * 

Section 1026.32—Requirements for 

High-Cost Mortgages 

32(a) Coverage. 

Paragraph 32(a)(1)(ii). 

1. * * * 

i. For 2015, $1,020, reflecting a 2 percent 

increase in the CPI–U from June 2013 to June 

2014, rounded to the nearest whole dollar. 

* * * * * 

3. * * * 

i. For 2015, $20,391, reflecting a 2 percent 

increase in the CPI–U from June 2013 to June 

2014, rounded to the nearest whole dollar. 

* * * * * 

Section 1026.43—Minimum Standards for 

Transactions Secured by a Dwelling 

* * * * * 

43(e)(3) Limits on Points and Fees for 

Qualified Mortgages 

* * * * * 

Paragraph 43(e)(3)(ii) 

1. * * * 

i. For 2015, reflecting a 2 percent increase 

in the CPI–U that was reported on the 

preceding June 1, a covered transaction is not 

a qualified mortgage unless the transactions 

total points and fees do not exceed; 

A. For a loan amount greater than or equal 

to $101,953: 3 percent of the total loan 

amount; 

B. For a loan amount greater than or equal 

to $61,172 but less than $101,953: $3,059; 

C. For a loan amount greater than or equal 

to $20,391 but less than $61,172: 5 percent 

of the total loan amount; 

D. For a loan amount greater than or equal 

to $12,744 but less than $20,391; $1,020; 

E. For a loan amount less than $12,744: 8 

percent of the total loan amount. 

* * * * * 

Subpart G—Special Rules Applicable 

to Credit Card Accounts and Open-End 

Credit Offered to College Students 

Section 1026.52—Limitations on Fees 

* * * * * 

52(b)(1)(ii) Safe harbors 

* * * * * 

2. * * * 

i. * * * 

B. Card issuers were permitted to impose 

a fee for violating the terms of an agreement 

if the fee did not exceed $26 under 

§ 1026.52(b)(1)(ii)(A) and $37 under 

§ 1026.52(b)(1)(ii)(B), through December 31, 

2014. 

* * * * * 

Dated: July 29, 2014. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2014–18838 Filed 8–14–14; 8:45 am] 

BILLING CODE 4810–AM–P 


emcdonald on DSK67QTVN1PROD with RULES