83322 Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations 

5. Agricultural purpose. Agricultural 

purpose means a purpose related to the 

production, harvest, exhibition, 

marketing, transportation, processing, or 

manufacture of agricultural products by 

a natural person who cultivates, plants, 

propagates, or nurtures those 

agricultural products, including but not 

limited to the acquisition of personal 

property and services used primarily in 

farming. Agricultural products include 

horticultural, viticultural, and dairy 

products, livestock, wildlife, poultry, 

bees, forest products, fish and shellfish, 

and any products thereof, including 

processed and manufactured products, 

and any and all products raised or 

produced on farms and any processed or 

manufactured products thereof. 

6. Organization or other entity. A 

consumer lease does not include a lease 

made to an organization such as a 

corporation or a government agency or 

instrumentality. Such a lease is not 

covered by the regulation even if the 

leased property is used (by an 

employee, for example) primarily for 

personal, family or household purposes, 

or is guaranteed by or subsequently 

assigned to a natural person. 

7. Leases of personal property 

incidental to a service. The following 

leases of personal property are deemed 

incidental to a service and thus are not 

subject to the regulation: 

i. Home entertainment systems 

requiring the consumer to lease 

equipment that enables a television to 

receive the transmitted programming. 

ii. Security alarm systems requiring 

the installation of leased equipment 

intended to monitor unlawful entries 

into a home and in some cases to 

provide fire protection. 

iii. Propane gas service where the 

consumer must lease a propane tank to 

receive the service. 

8. Safe deposit boxes. The lease of a 

safe deposit box is not a consumer lease 

under § 1013.2(e). 

9. Threshold amount. A consumer 

lease is exempt from the requirements of 

this part if the total contractual 

obligation exceeds the threshold amount 

in effect at the time of consummation. 

The threshold amount in effect during a 

particular time period is the amount 

stated in comment 2(e)–11 for that 

period. The threshold amount is 

adjusted effective January 1 of each year 

by any annual percentage increase in 

the Consumer Price Index for Urban 

Wage Earners and Clerical Workers 

(CPI–W) that was in effect on the 

preceding June 1. Comment 2(e)–11 will 

be amended to provide the threshold 

amount for the upcoming year after the 

annual percentage change in the CPI–W 

that was in effect on June 1 becomes 

available. Any increase in the threshold 

amount will be rounded to the nearest 

$100 increment. For example, if the 

annual percentage increase in the CPI– 

W would result in a $950 increase in the 

threshold amount, the threshold amount 

will be increased by $1,000. However, if 

the annual percentage increase in the 

CPI–W would result in a $949 increase 

in the threshold amount, the threshold 

amount will be increased by $900. If a 

consumer lease is exempt from the 

requirements of this part because the 

total contractual obligation exceeds the 

threshold amount in effect at the time of 

consummation, the lease remains 

exempt regardless of a subsequent 

increase in the threshold amount. 

10. No increase in the CPI–W. If the 

CPI–W in effect on June 1 does not 

increase from the CPI–W in effect on 

June 1 of the previous year, the 

threshold amount effective the 

following January 1 through December 

31 will not change from the previous 

year. When this occurs, for the years 

that follow, the threshold is calculated 

based on the annual percentage change 

in the CPI–W applied to the dollar 

amount that would have resulted, after 

rounding, if decreases and any 

subsequent increases in the CPI–W had 

been taken into account. 

i. Net increases. If the resulting 

amount calculated, after rounding, is 

greater than the current threshold, then 

the threshold effective January 1 the 

following year will increase 

accordingly. 

ii. Net decreases. If the resulting 

amount calculated, after rounding, is 

equal to or less than the current 

threshold, then the threshold effective 

January 1 the following year will not 

change, but future increases will be 

calculated based on the amount that 

would have resulted. 

11. Threshold. For purposes of 

§ 1013.2(e)(1), the threshold amount in 

effect during a particular period is the 

amount stated below for that period. 

i. Prior to July 21, 2011, the threshold 

amount is $25,000. 

ii. From July 21, 2011, through 

December 31, 2011, the threshold 

amount is $50,000. 

iii. From January 1, 2012, through 

December 31, 2012, the threshold 

amount is $51,800. 

iv. From January 1, 2013, through 

December 31, 2013, the threshold 

amount is $53,000. 

v. From January 1, 2014, through 

December 31, 2014, the threshold 

amount is $53,500. 

vi. From January 1, 2015, through 

December 31, 2015, the threshold 

amount is $54,600. 

vii. From January 1, 2016, through 

December 31, 2016, the threshold 

amount is $54,600. 

viii. From January 1, 2017, through 

December 31, 2017, the threshold 

amount is $54,600. 

ix. From January 1, 2018, through 

December 31, 2018, the threshold 

amount is $55,800. 

x. From January 1, 2019, through 

December 31, 2019, the threshold 

amount is $57,200. 

xi. From January 1, 2020, through 

December 31, 2020, the threshold 

amount is $58,300. 

xii. From January 1, 2021, through 

December 31, 2021, the threshold 

amount is $58,300. 

xiii. From January 1, 2022, through 

December 31, 2022, the threshold 

amount is $61,000. 

xiv. From January 1, 2023, through 

December 31, 2023, the threshold 

amount is $66,400. 

xv. From January 1, 2024, through 

December 31, 2024, the threshold 

amount is $69,500. 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, acting through the 

Secretary of the Board under delegated 

authority. 

Michele Taylor Fennell, 

Deputy Associate Secretary of the Board. 

Brian Shearer, 

Senior Advisor, Consumer Financial 

Protection Bureau. 

[FR Doc. 2023–25049 Filed 11–28–23; 8:45 am] 

BILLING CODE 4810–AM–P; 6210–01–P 

FEDERAL RESERVE SYSTEM 

12 CFR Part 226 

[Docket No. R–1820] 

RIN 7100–AG69 

CONSUMER FINANCIAL PROTECTION 

BUREAU 

12 CFR Part 1026 

Truth in Lending (Regulation Z) 

AGENCY: Board of Governors of the 

Federal Reserve System (Board) and 

Consumer Financial Protection Bureau 

(Bureau). 

ACTION: Final rules, official 

interpretations, and commentary. 

SUMMARY: The Board and the Bureau 

(collectively, the Agencies) are 

publishing final rules amending the 

official interpretations and commentary 

for the Agencies’ regulations that 

implement the Truth in Lending Act 

(TILA). The Dodd-Frank Wall Street 


ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations 83323 

1Although consumer credit transactions above 

the threshold are generally exempt, loans secured 

by real property or by personal property used or 

expected to be used as the principal dwelling of a 

consumer and private education loans are covered 

by TILA regardless of the loan amount. See 12 CFR 

226.3(b)(1)(i) (Board) and 12 CFR 1026.3(b)(1)(i) 

(Bureau). 

2Public Law 111–203, section 1100E, 124 Stat. 

1376, 2111 (2010). 

3 Id. 

4 76 FR 18354 (Apr. 4, 2011); 76 FR 18349 (Apr. 

4, 2011). 

5See 76 FR 79768 (Dec. 22, 2011); 81 FR 25323 

(Apr. 28, 2016). 

6Section 1029(a) of the Dodd-Frank Act states: 

‘‘Except as permitted in subsection (b), the Bureau 

may not exercise any rulemaking, supervisory, 

enforcement, or any other 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.’’ 

12 U.S.C. 5519(a). Section 1029(b) of the DoddFrank Act provides that ‘‘[s]ubsection (a) shall not 

apply to any person, to the extent that such 

person—(1) provides consumers with any services 

related to residential or commercial mortgages or 

self-financing transactions involving real property; 

(2) operates a line of business—(A) that involves the 

extension of retail credit or retail leases involving 

motor vehicles; and (B) in which—(i) the extension 

of retail credit or retail leases are provided directly 

to consumers; and (ii) the contract governing such 

extension of retail credit or retail leases is not 

routinely assigned to an unaffiliated third party 

finance or leasing source; or (3) offers or provides 

a consumer financial product or service not 

involving or related to the sale, financing, leasing, 

rental, repair, refurbishment, maintenance, or other 

servicing of motor vehicles, motor vehicle parts, or 

any related or ancillary product or service.’’ 12 

U.S.C. 5519(b). 

7 12 CFR 226.3(b)(1)(ii) (Board) and 12 CFR 

1026.3(b)(1)(ii) (Bureau). 

8See comments 3(b)–1 in supplements I of 12 

CFR parts 226 and 1026. 

9See 81 FR 86260 (Nov. 30, 2016). 

Reform and Consumer Protection Act 

(Dodd-Frank Act) amended TILA by 

requiring that the dollar threshold for 

exempt consumer credit transactions be 

adjusted annually by the annual 

percentage increase in the Consumer 

Price Index for Urban Wage Earners and 

Clerical Workers (CPI–W). Under 

regulations adopted by the Agencies, if 

there is no annual percentage increase 

in the CPI–W, the Agencies will not 

adjust this exemption threshold from 

the prior year. Additionally, in years 

following a year in which the exemption 

threshold was not adjusted because the 

CPI–W decreased, the threshold is 

calculated by applying the annual 

percentage change in the CPI–W to the 

dollar amount that would have resulted, 

after rounding, if the decreases and any 

subsequent increases in the CPI–W had 

been taken into account. Based on the 

annual percentage increase in the CPI– 

W as of June 1, 2023, the exemption 

threshold will increase from $66,400 to 

$69,500 effective January 1, 2024. 

Because the Dodd-Frank Act also 

requires similar adjustments in the 

Consumer Leasing Act’s threshold for 

exempt consumer leases, the Agencies 

are making similar amendments to each 

of their respective regulations 

implementing the Consumer Leasing 

Act elsewhere in the Rules section of 

this issue of the Federal Register. 

DATES: This final rule is effective 

January 1, 2024. 

FOR FURTHER INFORMATION CONTACT: 

Board: Vivian W. Wong, Senior 

Counsel, Division of Consumer and 

Community Affairs, Board of Governors 

of the Federal Reserve System, at (202) 

452–3667. For users of TTY–TRS, please 

call 711 from any telephone, anywhere 

in the United States. 

Bureau: Anna Boadwee and Adrien 

Fernandez, Attorney-Advisors, Office of 

Regulations, Consumer Financial 

Protection Bureau, at (202) 435–7700. If 

you require this document in an 

alternative electronic format, please 

contact CFPB_Accessibility@cfpb.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Dodd-Frank Act increased the 

threshold in TILA for exempt consumer 

credit transactions,1 and the threshold 

in the Consumer Leasing Act (CLA) for 

exempt consumer leases, from $25,000 

to $50,000, effective July 21, 2011.2 In 

addition, the Dodd-Frank Act requires 

that, on and after December 31, 2011, 

these thresholds be adjusted annually 

for inflation by the annual percentage 

increase in the CPI–W, as published by 

the Bureau of Labor Statistics.3 In April 

2011, the Board issued a final rule 

amending Regulation Z (which 

implements TILA) consistent with these 

provisions of the Dodd-Frank Act, along 

with a similar final rule amending 

Regulation M (which implements the 

CLA) (collectively, the Board Final 

Threshold Rules).4

Title X of the Dodd-Frank Act 

transferred rulemaking authority for a 

number of consumer financial 

protection laws from the Board to the 

Bureau, effective July 21, 2011. In 

connection with this transfer of 

rulemaking authority, the Bureau issued 

its own Regulation Z implementing 

TILA, 12 CFR part 1026, substantially 

duplicating the Board’s Regulation Z.5

Although the Bureau has the authority 

to issue rules to implement TILA for 

most entities, the Board retains 

authority to issue rules under TILA for 

certain motor vehicle dealers covered by 

section 1029(a) of the Dodd-Frank Act, 

and the Board’s Regulation Z continues 

to apply to those entities.6

The Agencies’ regulations,7 and their 

accompanying commentaries, provide 

that the exemption threshold will be 

adjusted annually effective January 1 of 

each year based on any annual 

percentage increase in the CPI–W that 

was in effect on the preceding June 1. 

They further provide that any increase 

in the threshold amount will be 

rounded to the nearest $100 increment. 

For example, if the annual percentage 

increase in the CPI–W would result in 

a $950 increase in the threshold 

amount, the threshold amount will be 

increased by $1,000. However, if the 

annual percentage increase in the CPI– 

W would result in a $949 increase in the 

threshold amount, the threshold amount 

will be increased by $900.8 Since 2011, 

the Agencies have adjusted the 

Regulation Z exemption threshold 

annually, in accordance with these 

rules. 

On November 30, 2016, the Agencies 

published a final rule in the Federal 

Register to memorialize the calculation 

method used by the Agencies each year 

to adjust the exemption threshold to 

ensure that, as contemplated by section 

1100E(b) of the Dodd-Frank Act, the 

values for the exemption threshold keep 

pace with the CPI–W (Regulation Z 

Adjustment Calculation Rule).9 The 

Regulation Z Adjustment Calculation 

Rule memorialized the policy that, if 

there is no annual percentage increase 

in the CPI–W, the Agencies will not 

adjust the exemption threshold from the 

prior year. The Regulation Z Adjustment 

Calculation Rule also provided that, in 

years following a year in which the 

exemption threshold was not adjusted 

because there was a decrease in the CPI– 

W from the previous year, the threshold 

is calculated by applying the annual 

percentage change in the CPI–W to the 

dollar amount that would have resulted, 

after rounding, if the decreases and any 

subsequent increases in the CPI–W had 

been taken into account. If the resulting 

amount calculated, after rounding, is 

greater than the current threshold, then 

the threshold effective January 1 the 

following year will increase 

accordingly; if the resulting amount 

calculated, after rounding, is equal to or 

less than the current threshold, then the 

threshold effective January 1 the 

following year will not change, but 

future increases will be calculated based 

on the amount that would have resulted, 

after rounding. 

II. 2024 Adjustment and Commentary 

Revision 

Effective January 1, 2024, the 

exemption threshold amount is 

increased from $66,400 to $69,500. This 

amount is based on the CPI–W in effect 

on June 1, 2023, which was reported on 


ddrumheller on DSK120RN23PROD with RULES1
83324 Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations 

10The Bureau of Labor Statistics calculates 

consumer-based indices for each month but does 

not report those indices until the middle of the 

following month. As such, the most recently 

reported indices as of June 1, 2023, were reported 

on May 10, 2023, and reflect economic conditions 

in April 2023. 

11 5 U.S.C. 553(b)(B). 

12 5 U.S.C. 603(a), 604(a). 13 44 U.S.C. 3506; 5 CFR part 1320. 

May 10, 2023 (based on April 2023 

data).10 The CPI–W is a subset of the 

CPI–U index (based on all urban 

consumers) and represents 

approximately 30 percent of the U.S. 

population. The CPI–W reported on 

May 10, 2023, reflects a 4.6 percent 

increase in the CPI–W from April 2022 

to April 2023. Accordingly, the 4.6 

percent increase in the CPI–W from 

April 2022 to April 2023 results in an 

exemption threshold amount of $69,500, 

after rounding. The Agencies are 

revising the commentaries to their 

respective regulations to add new 

comment 3(b)–3.xv to state that, from 

January 1, 2024, through December 31, 

2024, the threshold amount is $69,500. 

These revisions are effective January 1, 

2024. 

III. Regulatory Analysis 

Administrative Procedure Act 

Under the Administrative Procedure 

Act, notice and opportunity for public 

comment are not required if the 

Agencies find that notice and public 

comment are impracticable, 

unnecessary, or contrary to the public 

interest.11 The amendments in this rule 

are technical and apply the method 

previously set forth in the Board Final 

Threshold Rules and the Regulation Z 

Adjustment Calculation Rule. For these 

reasons, the Agencies have determined 

that publishing a notice of proposed 

rulemaking and providing opportunity 

for public comment are unnecessary. 

Therefore, the amendments are adopted 

in final form. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

does not apply to a rulemaking where a 

general notice of proposed rulemaking 

is not required.12 As noted previously, 

the Agencies have determined that it is 

unnecessary to publish a general notice 

of proposed rulemaking for this joint 

final rule. Accordingly, the RFA’s 

requirements relating to an initial and 

final regulatory flexibility analysis do 

not apply. 

Paperwork Reduction Act 

The information collections contained 

in Regulation Z which implements TILA 

are approved by OMB under Control 

number 3170–0015. The current 

approval for this control number expires 

on May 31st, 2026. In accordance with 

the Paperwork Reduction Act of 1995,13

the Agencies reviewed this final rule. 

The Agencies have determined that this 

rule does not create any new 

information collections or substantially 

revise any existing collections. 

Bureau Congressional Review Act 

Statement 

Pursuant to the Congressional Review 

Act (5 U.S.C. 801 et seq.), the Bureau 

will submit a report containing this rule 

and other required information to the 

U.S. Senate, the U.S. House of 

Representatives, and the Comptroller 

General of the United States prior to the 

rule taking effect. The Office of 

Information and Regulatory Affairs has 

designated this rule as not a ‘‘major 

rule’’ as defined by 5 U.S.C. 804(2). 

List of Subjects 

12 CFR Part 226 

Advertising, Consumer protection, 

Federal Reserve System, Reporting and 

recordkeeping requirements, Truth in 

lending. 

12 CFR Part 1026 

Advertising, Banks, banking, 

Consumer protection, Credit, Credit 

unions, Mortgages, National banks, 

Reporting and recordkeeping 

requirements, Savings associations, 

Truth-in-lending. 

BOARD OF GOVERNORS OF THE 

FEDERAL RESERVE SYSTEM 

Authority and Issuance 

For the reasons set forth in the 

preamble, the Board amends Regulation 

Z, 12 CFR part 226, as set forth below: 

PART 226—TRUTH IN LENDING 

(REGULATION Z) 

■ 1. The authority citation for part 226 

continues to read as follows: 

Authority: 12 U.S.C. 3806; 15 U.S.C. 1604, 

1637(c)(5), 1639(l) and 1639h; Pub. L. 111– 

24, section 2, 123 Stat. 1734; Pub. L. 111– 

203, 124 Stat. 1376. 

■ 2. In Supplement I to part 226, under 

Section 226.3—Exempt Transactions, 

revise 3(b) Credit over applicable 

threshold amount, to read as follows: 

Supplement I to Part 226—Official Staff 

Interpretations 

* * * * * 

Subpart A—General 

* * * * * 

Section 226.3—Exempt Transactions 

* * * * * 

3(b) Credit over applicable threshold 

amount. 

1. Threshold amount. For purposes of 

§ 226.3(b), the threshold amount in 

effect during a particular period is the 

amount stated in comment 3(b)–3 for 

that period. The threshold amount is 

adjusted effective January 1 of each year 

by any annual percentage increase in 

the Consumer Price Index for Urban 

Wage Earners and Clerical Workers 

(CPI–W) that was in effect on the 

preceding June 1. Comment 3(b)–3 will 

be amended to provide the threshold 

amount for the upcoming year after the 

annual percentage change in the CPI–W 

that was in effect on June 1 becomes 

available. Any increase in the threshold 

amount will be rounded to the nearest 

$100 increment. For example, if the 

annual percentage increase in the CPI– 

W would result in a $950 increase in the 

threshold amount, the threshold amount 

will be increased by $1,000. However, if 

the annual percentage increase in the 

CPI–W would result in a $949 increase 

in the threshold amount, the threshold 

amount will be increased by $900. 

2. No increase in the CPI–W. If the 

CPI–W in effect on June 1 does not 

increase from the CPI–W in effect on 

June 1 of the previous year, the 

threshold amount effective the 

following January 1 through December 

31 will not change from the previous 

year. When this occurs, for the years 

that follow, the threshold is calculated 

based on the annual percentage change 

in the CPI–W applied to the dollar 

amount that would have resulted, after 

rounding, if decreases and any 

subsequent increases in the CPI–W had 

been taken into account. 

i. Net increases. If the resulting 

amount calculated, after rounding, is 

greater than the current threshold, then 

the threshold effective January 1 the 

following year will increase 

accordingly. 

ii. Net decreases. If the resulting 

amount calculated, after rounding, is 

equal to or less than the current 

threshold, then the threshold effective 

January 1 the following year will not 

change, but future increases will be 

calculated based on the amount that 

would have resulted. 

3. Threshold. For purposes of 

§ 226.3(b), the threshold amount in 

effect during a particular period is the 

amount stated below for that period. 

i. Prior to July 21, 2011, the threshold 

amount is $25,000. 

ii. From July 21, 2011, through 

December 31, 2011, the threshold 

amount is $50,000. 

iii. From January 1, 2012, through 

December 31, 2012, the threshold 

amount is $51,800. 


ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations 83325 

iv. From January 1, 2013, through 

December 31, 2013, the threshold 

amount is $53,000. 

v. From January 1, 2014, through 

December 31, 2014, the threshold 

amount is $53,500. 

vi. From January 1, 2015, through 

December 31, 2015, the threshold 

amount is $54,600. 

vii. From January 1, 2016, through 

December 31, 2016, the threshold 

amount is $54,600. 

viii. From January 1, 2017, through 

December 31, 2017, the threshold 

amount is $54,600. 

ix. From January 1, 2018, through 

December 31, 2018, the threshold 

amount is $55,800. 

x. From January 1, 2019, through 

December 31, 2019, the threshold 

amount is $57,200. 

xi. From January 1, 2020, through 

December 31, 2020, the threshold 

amount is $58,300. 

xii. From January 1, 2021, through 

December 31, 2021, the threshold 

amount is $58,300. 

xiii. From January 1, 2022, through 

December 31, 2022, the threshold 

amount is $61,000. 

xiv. From January 1, 2023, through 

December 31, 2023, the threshold 

amount is $66,400. 

xv. From January 1, 2024, through 

December 31, 2024, the threshold 

amount is $69,500. 

4. Open-end credit. 

i. Qualifying for exemption. An openend account is exempt under § 226.3(b) 

(unless secured by any real property, or 

by personal property used or expected 

to be used as the consumer’s principal 

dwelling) if either of the following 

conditions is met: 

A. The creditor makes an initial 

extension of credit at or after account 

opening that exceeds the threshold 

amount in effect at the time the initial 

extension is made. If a creditor makes 

an initial extension of credit after 

account opening that does not exceed 

the threshold amount in effect at the 

time the extension is made, the creditor 

must have satisfied all of the applicable 

requirements of this part from the date 

the account was opened (or earlier, if 

applicable), including but not limited to 

the requirements of § 226.6 (accountopening disclosures), § 226.7 (periodic 

statements), § 226.52 (limitations on 

fees), and § 226.55 (limitations on 

increasing annual percentages rates, 

fees, and charges). For example: 

(1) Assume that the threshold amount 

in effect on January 1 is $50,000. On 

February 1, an account is opened but 

the creditor does not make an initial 

extension of credit at that time. On July 

1, the creditor makes an initial 

extension of credit of $60,000. In this 

circumstance, no requirements of this 

part apply to the account. 

(2) Assume that the threshold amount 

in effect on January 1 is $50,000. On 

February 1, an account is opened but 

the creditor does not make an initial 

extension of credit at that time. On July 

1, the creditor makes an initial 

extension of credit of $50,000 or less. In 

this circumstance, the account is not 

exempt, and the creditor must have 

satisfied all of the applicable 

requirements of this part from the date 

the account was opened (or earlier, if 

applicable). 

B. The creditor makes a firm written 

commitment at account opening to 

extend a total amount of credit in excess 

of the threshold amount in effect at the 

time the account is opened with no 

requirement of additional credit 

information for any advances on the 

account (except as permitted from time 

to time with respect to open-end 

accounts pursuant to § 226.2(a)(20)). 

ii. Subsequent changes generally. 

Subsequent changes to an open-end 

account or the threshold amount may 

result in the account no longer 

qualifying for the exemption in 

§ 226.3(b). In these circumstances, the 

creditor must begin to comply with all 

of the applicable requirements of this 

part within a reasonable period of time 

after the account ceases to be exempt. 

Once an account ceases to be exempt, 

the requirements of this part apply to 

any balances on the account. The 

creditor, however, is not required to 

comply with the requirements of this 

part with respect to the period of time 

during which the account was exempt. 

For example, if an open-end credit 

account ceases to be exempt, the 

creditor must within a reasonable 

period of time provide the disclosures 

required by § 226.6 reflecting the 

current terms of the account and begin 

to provide periodic statements 

consistent with § 226.7. However, the 

creditor is not required to disclose fees 

or charges imposed while the account 

was exempt. Furthermore, if the creditor 

provided disclosures consistent with the 

requirements of this part while the 

account was exempt, it is not required 

to provide disclosures required by 

§ 226.6 reflecting the current terms of 

the account. See also comment 3(b)–6. 

iii. Subsequent changes when 

exemption is based on initial extension 

of credit. If a creditor makes an initial 

extension of credit that exceeds the 

threshold amount in effect at that time, 

the open-end account remains exempt 

under § 226.3(b) regardless of a 

subsequent increase in the threshold 

amount, including an increase pursuant 

to § 226.3(b)(1)(ii) as a result of an 

increase in the CPI–W. Furthermore, in 

these circumstances, the account 

remains exempt even if there are no 

further extensions of credit, subsequent 

extensions of credit do not exceed the 

threshold amount, the account balance 

is subsequently reduced below the 

threshold amount (such as through 

repayment of the extension), or the 

credit limit for the account is 

subsequently reduced below the 

threshold amount. However, if the 

initial extension of credit on an account 

does not exceed the threshold amount 

in effect at the time of the extension, the 

account is not exempt under § 226.3(b) 

even if a subsequent extension exceeds 

the threshold amount or if the account 

balance later exceeds the threshold 

amount (for example, due to the 

subsequent accrual of interest). 

iv. Subsequent changes when 

exemption is based on firm 

commitment. 

A. General. If a creditor makes a firm 

written commitment at account opening 

to extend a total amount of credit that 

exceeds the threshold amount in effect 

at that time, the open-end account 

remains exempt under § 226.3(b) 

regardless of a subsequent increase in 

the threshold amount pursuant to 

§ 226.3(b)(1)(ii) as a result of an increase 

in the CPI–W. However, see comment 

3(b)–8 with respect to the increase in 

the threshold amount from $25,000 to 

$50,000. If an open-end account is 

exempt under § 226.3(b) based on a firm 

commitment to extend credit, the 

account remains exempt even if the 

amount of credit actually extended does 

not exceed the threshold amount. In 

contrast, if the firm commitment does 

not exceed the threshold amount at 

account opening, the account is not 

exempt under § 226.3(b) even if the 

account balance later exceeds the 

threshold amount. In addition, if a 

creditor reduces a firm commitment, the 

account ceases to be exempt unless the 

reduced firm commitment exceeds the 

threshold amount in effect at the time of 

the reduction. For example: 

(1) Assume that, at account opening 

in year one, the threshold amount in 

effect is $50,000 and the account is 

exempt under § 226.3(b) based on the 

creditor’s firm commitment to extend 

$55,000 in credit. If during year one the 

creditor reduces its firm commitment to 

$53,000, the account remains exempt 

under § 226.3(b). However, if during 

year one the creditor reduces its firm 

commitment to $40,000, the account is 

no longer exempt under § 226.3(b). 

(2) Assume that, at account opening 

in year one, the threshold amount in 

effect is $50,000 and the account is 


ddrumheller on DSK120RN23PROD with RULES1
83326 Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations 

exempt under § 226.3(b) based on the 

creditor’s firm commitment to extend 

$55,000 in credit. If the threshold 

amount is $56,000 on January 1 of year 

six as a result of increases in the CPI– 

W, the account remains exempt. 

However, if the creditor reduces its firm 

commitment to $54,000 on July 1 of year 

six, the account ceases to be exempt 

under § 226.3(b). 

B. Initial extension of credit. If an 

open-end account qualifies for a 

§ 226.3(b) exemption at account opening 

based on a firm commitment, that 

account may also subsequently qualify 

for a § 226.3(b) exemption based on an 

initial extension of credit. However, that 

initial extension must be a single 

advance in excess of the threshold 

amount in effect at the time the 

extension is made. In addition, the 

account must continue to qualify for an 

exemption based on the firm 

commitment until the initial extension 

of credit is made. For example: 

(1) Assume that, at account opening 

in year one, the threshold amount in 

effect is $50,000 and the account is 

exempt under § 226.3(b) based on the 

creditor’s firm commitment to extend 

$55,000 in credit. The account is not 

used for an extension of credit during 

year one. On January 1 of year two, the 

threshold amount is increased to 

$51,000 pursuant to § 226.3(b)(1)(ii) as a 

result of an increase in the CPI–W. On 

July 1 of year two, the consumer uses 

the account for an initial extension of 

$52,000. As a result of this extension of 

credit, the account remains exempt 

under § 226.3(b) even if, after July 1 of 

year two, the creditor reduces the firm 

commitment to $51,000 or less. 

(2) Same facts as in paragraph 

4.iv.B(1) of this section except that the 

consumer uses the account for an initial 

extension of $30,000 on July 1 of year 

two and for an extension of $22,000 on 

July 15 of year two. In these 

circumstances, the account is not 

exempt under § 226.3(b) based on the 

$30,000 initial extension of credit 

because that extension did not exceed 

the applicable threshold amount 

($51,000), although the account remains 

exempt based on the firm commitment 

to extend $55,000 in credit. 

(3) Same facts as in paragraph 

4.iv.B(1) of this section except that, on 

April 1 of year two, the creditor reduces 

the firm commitment to $50,000, which 

is below the $51,000 threshold then in 

effect. Because the account ceases to 

qualify for a § 226.3(b) exemption on 

April 1 of year two, the account does 

not qualify for a § 226.3(b) exemption 

based on a $52,000 initial extension of 

credit on July 1 of year two. 

5. Closed-end credit. 

i. Qualifying for exemption. A closedend loan is exempt under § 226.3(b) 

(unless the extension of credit is 

secured by any real property, or by 

personal property used or expected to 

be used as the consumer’s principal 

dwelling; or is a private education loan 

as defined in § 226.46(b)(5)), if either of 

the following conditions is met. 

A. The creditor makes an extension of 

credit at consummation that exceeds the 

threshold amount in effect at the time of 

consummation. In these circumstances, 

the loan remains exempt under 

§ 226.3(b) even if the amount owed is 

subsequently reduced below the 

threshold amount (such as through 

repayment of the loan). 

B. The creditor makes a commitment 

at consummation to extend a total 

amount of credit in excess of the 

threshold amount in effect at the time of 

consummation. In these circumstances, 

the loan remains exempt under 

§ 226.3(b) even if the total amount of 

credit extended does not exceed the 

threshold amount. 

ii. Subsequent changes. If a creditor 

makes a closed-end extension of credit 

or commitment to extend closed-end 

credit that exceeds the threshold 

amount in effect at the time of 

consummation, the closed-end loan 

remains exempt under § 226.3(b) 

regardless of a subsequent increase in 

the threshold amount. However, a 

closed-end loan is not exempt under 

§ 226.3(b) merely because it is used to 

satisfy and replace an existing exempt 

loan, unless the new extension of credit 

is itself exempt under the applicable 

threshold amount. For example, assume 

a closed-end loan that qualified for a 

§ 226.3(b) exemption at consummation 

in year one is refinanced in year ten and 

that the new loan amount is less than 

the threshold amount in effect in year 

ten. In these circumstances, the creditor 

must comply with all of the applicable 

requirements of this part with respect to 

the year ten transaction if the original 

loan is satisfied and replaced by the 

new loan, which is not exempt under 

§ 226.3(b). See also comment 3(b)–6. 

6. Addition of a security interest in 

real property or a dwelling after account 

opening or consummation. 

i. Open-end credit. For open-end 

accounts, if, after account opening, a 

security interest is taken in real 

property, or in personal property used 

or expected to be used as the 

consumer’s principal dwelling, a 

previously exempt account ceases to be 

exempt under § 226.3(b) and the 

creditor must begin to comply with all 

of the applicable requirements of this 

part within a reasonable period of time. 

See comment 3(b)–4.ii. If a security 

interest is taken in the consumer’s 

principal dwelling, the creditor must 

also give the consumer the right to 

rescind the security interest consistent 

with § 226.15. 

ii. Closed-end credit. For closed-end 

loans, if, after consummation, a security 

interest is taken in any real property, or 

in personal property used or expected to 

be used as the consumer’s principal 

dwelling, an exempt loan remains 

exempt under § 226.3(b). However, the 

addition of a security interest in the 

consumer’s principal dwelling is a 

transaction for purposes of § 226.23, and 

the creditor must give the consumer the 

right to rescind the security interest 

consistent with that section. See 

§ 226.23(a)(1) and the accompanying 

commentary. In contrast, if a closed-end 

loan that is exempt under § 226.3(b) is 

satisfied and replaced by a loan that is 

secured by any real property, or by 

personal property used or expected to 

be used as the consumer’s principal 

dwelling, the new loan is not exempt 

under § 226.3(b) and the creditor must 

comply with all of the applicable 

requirements of this part. See comment 

3(b)–5. 

7. Application to extensions secured 

by mobile homes. Because a mobile 

home can be a dwelling under 

§ 226.2(a)(19), the exemption in 

§ 226.3(b) does not apply to a credit 

extension secured by a mobile home 

that is used or expected to be used as 

the principal dwelling of the consumer. 

See comment 3(b)–6. 

8. Transition rule for open-end 

accounts exempt prior to July 21, 2011. 

Section 226.3(b)(2) applies only to openend accounts opened prior to July 21, 

2011. Section 226.3(b)(2) does not apply 

if a security interest is taken by the 

creditor in any real property, or in 

personal property used or expected to 

be used as the consumer’s principal 

dwelling. If, on July 20, 2011, an openend account is exempt under § 226.3(b) 

based on a firm commitment to extend 

credit in excess of $25,000, the account 

remains exempt under § 226.3(b)(2) 

until December 31, 2011 (unless the 

firm commitment is reduced to $25,000 

or less). If the firm commitment is 

increased on or before December 31, 

2011, to an amount in excess of $50,000, 

the account remains exempt under 

§ 226.3(b)(1) regardless of subsequent 

increases in the threshold amount as a 

result of increases in the CPI–W. If the 

firm commitment is not increased on or 

before December 31, 2011, to an amount 

in excess of $50,000, the account ceases 

to be exempt under § 226.3(b) based on 

a firm commitment to extend credit. For 

example: 


ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations 83327 

i. Assume that, on July 20, 2011, the 

account is exempt under § 226.3(b) 

based on the creditor’s firm 

commitment to extend $30,000 in 

credit. On November 1, 2011, the 

creditor increases the firm commitment 

on the account to $55,000. In these 

circumstances, the account remains 

exempt under § 226.3(b)(1) regardless of 

subsequent increases in the threshold 

amount as a result of increases in the 

CPI–W. 

ii. Same facts as paragraph 8.i. of this 

section except, on November 1, 2011, 

the creditor increases the firm 

commitment on the account to $40,000. 

In these circumstances, the account 

ceases to be exempt under § 226.3(b)(2) 

after December 31, 2011, and the 

creditor must begin to comply with the 

applicable requirements of this part. 

* * * * * 

CONSUMER FINANCIAL 

PROTECTION BUREAU 

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) 

■ 3. 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. 

■ 4. In Supplement I to part 1026, under 

Section 1026.3—Exempt Transactions, 

revise 3(b)—Credit Over Applicable 

Threshold Amount to read as follows: 

Supplement I to Part 1026—Official 

Interpretations 

* * * * * 

Section 1026.3—Exempt Transactions 

* * * * * 

3(b) Credit Over Applicable Threshold 

Amount 

1. Threshold amount. For purposes of 

§ 1026.3(b), the threshold amount in 

effect during a particular period is the 

amount stated in comment 3(b)–3 below 

for that period. The threshold amount is 

adjusted effective January 1 of each year 

by any annual percentage increase in 

the Consumer Price Index for Urban 

Wage Earners and Clerical Workers 

(CPI–W) that was in effect on the 

preceding June 1. Comment 3(b)–3 will 

be amended to provide the threshold 

amount for the upcoming year after the 

annual percentage change in the CPI–W 

that was in effect on June 1 becomes 

available. Any increase in the threshold 

amount will be rounded to the nearest 

$100 increment. For example, if the 

annual percentage increase in the CPI– 

W would result in a $950 increase in the 

threshold amount, the threshold amount 

will be increased by $1,000. However, if 

the annual percentage increase in the 

CPI–W would result in a $949 increase 

in the threshold amount, the threshold 

amount will be increased by $900. 

2. No increase in the CPI–W. If the 

CPI–W in effect on June 1 does not 

increase from the CPI–W in effect on 

June 1 of the previous year, the 

threshold amount effective the 

following January 1 through December 

31 will not change from the previous 

year. When this occurs, for the years 

that follow, the threshold is calculated 

based on the annual percentage change 

in the CPI–W applied to the dollar 

amount that would have resulted, after 

rounding, if decreases and any 

subsequent increases in the CPI–W had 

been taken into account. 

i. Net increases. If the resulting 

amount calculated, after rounding, is 

greater than the current threshold, then 

the threshold effective January 1 the 

following year will increase 

accordingly. 

ii. Net decreases. If the resulting 

amount calculated, after rounding, is 

equal to or less than the current 

threshold, then the threshold effective 

January 1 the following year will not 

change, but future increases will be 

calculated based on the amount that 

would have resulted. 

3. Threshold. For purposes of 

§ 1026.3(b), the threshold amount in 

effect during a particular period is the 

amount stated below for that period. 

i. Prior to July 21, 2011, the threshold 

amount is $25,000. 

ii. From July 21, 2011, through 

December 31, 2011, the threshold 

amount is $50,000. 

iii. From January 1, 2012, through 

December 31, 2012, the threshold 

amount is $51,800. 

iv. From January 1, 2013, through 

December 31, 2013, the threshold 

amount is $53,000. 

v. From January 1, 2014, through 

December 31, 2014, the threshold 

amount is $53,500. 

vi. From January 1, 2015, through 

December 31, 2015, the threshold 

amount is $54,600. 

vii. From January 1, 2016, through 

December 31, 2016, the threshold 

amount is $54,600. 

viii. From January 1, 2017, through 

December 31, 2017, the threshold 

amount is $54,600. 

ix. From January 1, 2018, through 

December 31, 2018, the threshold 

amount is $55,800. 

x. From January 1, 2019, through 

December 31, 2019, the threshold 

amount is $57,200. 

xi. From January 1, 2020, through 

December 31, 2020, the threshold 

amount is $58,300. 

xii. From January 1, 2021, through 

December 31, 2021, the threshold 

amount is $58,300. 

xiii. From January 1, 2022, through 

December 31, 2022, the threshold 

amount is $61,000. 

xiv. From January 1, 2023, through 

December 31, 2023, the threshold 

amount is $66,400. 

xv. From January 1, 2024, through 

December 31, 2024, the threshold 

amount is $69,500. 

4. Open-end credit. i. Qualifying for 

exemption. An open-end account is 

exempt under § 1026.3(b) (unless 

secured by real property, or by personal 

property used or expected to be used as 

the consumer’s principal dwelling) if 

either of the following conditions is 

met: 

A. The creditor makes an initial 

extension of credit at or after account 

opening that exceeds the threshold 

amount in effect at the time the initial 

extension is made. If a creditor makes 

an initial extension of credit after 

account opening that does not exceed 

the threshold amount in effect at the 

time the extension is made, the creditor 

must have satisfied all of the applicable 

requirements of this part from the date 

the account was opened (or earlier, if 

applicable), including but not limited to 

the requirements of § 1026.6 (accountopening disclosures), § 1026.7 (periodic 

statements), § 1026.52 (limitations on 

fees), and § 1026.55 (limitations on 

increasing annual percentage rates, fees, 

and charges). For example: 

1. Assume that the threshold amount 

in effect on January 1 is $50,000. On 

February 1, an account is opened but 

the creditor does not make an initial 

extension of credit at that time. On July 

1, the creditor makes an initial 

extension of credit of $60,000. In this 

circumstance, no requirements of this 

part apply to the account. 

2. Assume that the threshold amount 

in effect on January 1 is $50,000. On 

February 1, an account is opened but 

the creditor does not make an initial 

extension of credit at that time. On July 

1, the creditor makes an initial 

extension of credit of $50,000 or less. In 

this circumstance, the account is not 

exempt, and the creditor must have 

satisfied all of the applicable 

requirements of this part from the date 

the account was opened (or earlier, if 

applicable). 

B. The creditor makes a firm written 

commitment at account opening to 


ddrumheller on DSK120RN23PROD with RULES1
83328 Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations 

extend a total amount of credit in excess 

of the threshold amount in effect at the 

time the account is opened with no 

requirement of additional credit 

information for any advances on the 

account (except as permitted from time 

to time with respect to open-end 

accounts pursuant to § 1026.2(a)(20)). 

ii. Subsequent changes generally. 

Subsequent changes to an open-end 

account or the threshold amount may 

result in the account no longer 

qualifying for the exemption in 

§ 1026.3(b). In these circumstances, the 

creditor must begin to comply with all 

of the applicable requirements of this 

part within a reasonable period of time 

after the account ceases to be exempt. 

Once an account ceases to be exempt, 

the requirements of this part apply to 

any balances on the account. The 

creditor, however, is not required to 

comply with the requirements of this 

part with respect to the period of time 

during which the account was exempt. 

For example, if an open-end credit 

account ceases to be exempt, the 

creditor must within a reasonable 

period of time provide the disclosures 

required by § 1026.6 reflecting the 

current terms of the account and begin 

to provide periodic statements 

consistent with § 1026.7. However, the 

creditor is not required to disclose fees 

or charges imposed while the account 

was exempt. Furthermore, if the creditor 

provided disclosures consistent with the 

requirements of this part while the 

account was exempt, it is not required 

to provide disclosures required by 

§ 1026.6 reflecting the current terms of 

the account. See also comment 3(b)–6. 

iii. Subsequent changes when 

exemption is based on initial extension 

of credit. If a creditor makes an initial 

extension of credit that exceeds the 

threshold amount in effect at that time, 

the open-end account remains exempt 

under § 1026.3(b) regardless of a 

subsequent increase in the threshold 

amount, including an increase pursuant 

to § 1026.3(b)(1)(ii) as a result of an 

increase in the CPI–W. Furthermore, in 

these circumstances, the account 

remains exempt even if there are no 

further extensions of credit, subsequent 

extensions of credit do not exceed the 

threshold amount, the account balance 

is subsequently reduced below the 

threshold amount (such as through 

repayment of the extension), or the 

credit limit for the account is 

subsequently reduced below the 

threshold amount. However, if the 

initial extension of credit on an account 

does not exceed the threshold amount 

in effect at the time of the extension, the 

account is not exempt under § 1026.3(b) 

even if a subsequent extension exceeds 

the threshold amount or if the account 

balance later exceeds the threshold 

amount (for example, due to the 

subsequent accrual of interest). 

iv. Subsequent changes when 

exemption is based on firm 

commitment. 

A. General. If a creditor makes a firm 

written commitment at account opening 

to extend a total amount of credit that 

exceeds the threshold amount in effect 

at that time, the open-end account 

remains exempt under § 1026.3(b) 

regardless of a subsequent increase in 

the threshold amount pursuant to 

§ 1026.3(b)(1)(ii) as a result of an 

increase in the CPI–W. However, see 

comment 3(b)–8 with respect to the 

increase in the threshold amount from 

$25,000 to $50,000. If an open-end 

account is exempt under § 1026.3(b) 

based on a firm commitment to extend 

credit, the account remains exempt even 

if the amount of credit actually 

extended does not exceed the threshold 

amount. In contrast, if the firm 

commitment does not exceed the 

threshold amount at account opening, 

the account is not exempt under 

§ 1026.3(b) even if the account balance 

later exceeds the threshold amount. In 

addition, if a creditor reduces a firm 

commitment, the account ceases to be 

exempt unless the reduced firm 

commitment exceeds the threshold 

amount in effect at the time of the 

reduction. For example: 

1. Assume that, at account opening in 

year one, the threshold amount in effect 

is $50,000 and the account is exempt 

under § 1026.3(b) based on the creditor’s 

firm commitment to extend $55,000 in 

credit. If during year one the creditor 

reduces its firm commitment to $53,000, 

the account remains exempt under 

§ 1026.3(b). However, if during year one 

the creditor reduces its firm 

commitment to $40,000, the account is 

no longer exempt under § 1026.3(b). 

2. Assume that, at account opening in 

year one, the threshold amount in effect 

is $50,000 and the account is exempt 

under § 1026.3(b) based on the creditor’s 

firm commitment to extend $55,000 in 

credit. If the threshold amount is 

$56,000 on January 1 of year six as a 

result of increases in the CPI–W, the 

account remains exempt. However, if 

the creditor reduces its firm 

commitment to $54,000 on July 1 of year 

six, the account ceases to be exempt 

under § 1026.3(b). 

B. Initial extension of credit. If an 

open-end account qualifies for a 

§ 1026.3(b) exemption at account 

opening based on a firm commitment, 

that account may also subsequently 

qualify for a § 1026.3(b) exemption 

based on an initial extension of credit. 

However, that initial extension must be 

a single advance in excess of the 

threshold amount in effect at the time 

the extension is made. In addition, the 

account must continue to qualify for an 

exemption based on the firm 

commitment until the initial extension 

of credit is made. For example: 

1. Assume that, at account opening in 

year one, the threshold amount in effect 

is $50,000 and the account is exempt 

under § 1026.3(b) based on the creditor’s 

firm commitment to extend $55,000 in 

credit. The account is not used for an 

extension of credit during year one. On 

January 1 of year two, the threshold 

amount is increased to $51,000 pursuant 

to § 1026.3(b)(1)(ii) as a result of an 

increase in the CPI–W. On July 1 of year 

two, the consumer uses the account for 

an initial extension of $52,000. As a 

result of this extension of credit, the 

account remains exempt under 

§ 1026.3(b) even if, after July 1 of year 

two, the creditor reduces the firm 

commitment to $51,000 or less. 

2. Same facts as in paragraph 4.iv.B.1 

of this section except that the consumer 

uses the account for an initial extension 

of $30,000 on July 1 of year two and for 

an extension of $22,000 on July 15 of 

year two. In these circumstances, the 

account is not exempt under § 1026.3(b) 

based on the $30,000 initial extension of 

credit because that extension did not 

exceed the applicable threshold amount 

($51,000), although the account remains 

exempt based on the firm commitment 

to extend $55,000 in credit. 

3. Same facts as in paragraph 4.iv.B.1 

of this section except that, on April 1 of 

year two, the creditor reduces the firm 

commitment to $50,000, which is below 

the $51,000 threshold then in effect. 

Because the account ceases to qualify 

for a § 1026.3(b) exemption on April 1 

of year two, the account does not qualify 

for a § 1026.3(b) exemption based on a 

$52,000 initial extension of credit on 

July 1 of year two. 

5. Closed-end credit. i. Qualifying for 

exemption. A closed-end loan is exempt 

under § 1026.3(b) (unless the extension 

of credit is secured by real property, or 

by personal property used or expected 

to be used as the consumer’s principal 

dwelling; or is a private education loan 

as defined in § 1026.46(b)(5)), if either of 

the following conditions is met: 

A. The creditor makes an extension of 

credit at consummation that exceeds the 

threshold amount in effect at the time of 

consummation. In these circumstances, 

the loan remains exempt under 

§ 1026.3(b) even if the amount owed is 

subsequently reduced below the 

threshold amount (such as through 

repayment of the loan). 


ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 88, No. 228 / Wednesday, November 29, 2023 / Rules and Regulations 83329 

B. The creditor makes a commitment 

at consummation to extend a total 

amount of credit in excess of the 

threshold amount in effect at the time of 

consummation. In these circumstances, 

the loan remains exempt under 

§ 1026.3(b) even if the total amount of 

credit extended does not exceed the 

threshold amount. 

ii. Subsequent changes. If a creditor 

makes a closed-end extension of credit 

or commitment to extend closed-end 

credit that exceeds the threshold 

amount in effect at the time of 

consummation, the closed-end loan 

remains exempt under § 1026.3(b) 

regardless of a subsequent increase in 

the threshold amount. However, a 

closed-end loan is not exempt under 

§ 1026.3(b) merely because it is used to 

satisfy and replace an existing exempt 

loan, unless the new extension of credit 

is itself exempt under the applicable 

threshold amount. For example, assume 

a closed-end loan that qualified for a 

§ 1026.3(b) exemption at consummation 

in year one is refinanced in year ten and 

that the new loan amount is less than 

the threshold amount in effect in year 

ten. In these circumstances, the creditor 

must comply with all of the applicable 

requirements of this part with respect to 

the year ten transaction if the original 

loan is satisfied and replaced by the 

new loan, which is not exempt under 

§ 1026.3(b). See also comment 3(b)–6. 

6. Addition of a security interest in 

real property or a dwelling after account 

opening or consummation. i. Open-end 

credit. For open-end accounts, if after 

account opening a security interest is 

taken in real property, or in personal 

property used or expected to be used as 

the consumer’s principal dwelling, a 

previously exempt account ceases to be 

exempt under § 1026.3(b) and the 

creditor must begin to comply with all 

of the applicable requirements of this 

part within a reasonable period of time. 

See comment 3(b)–4.ii. If a security 

interest is taken in the consumer’s 

principal dwelling, the creditor must 

also give the consumer the right to 

rescind the security interest consistent 

with § 1026.15. 

ii. Closed-end credit. For closed-end 

loans, if after consummation a security 

interest is taken in real property, or in 

personal property used or expected to 

be used as the consumer’s principal 

dwelling, an exempt loan remains 

exempt under § 1026.3(b). However, the 

addition of a security interest in the 

consumer’s principal dwelling is a 

transaction for purposes of § 1026.23, 

and the creditor must give the consumer 

the right to rescind the security interest 

consistent with that section. See 

§ 1026.23(a)(1) and its commentary. In 

contrast, if a closed-end loan that is 

exempt under § 1026.3(b) is satisfied 

and replaced by a loan that is secured 

by real property, or by personal property 

used or expected to be used as the 

consumer’s principal dwelling, the new 

loan is not exempt under § 1026.3(b), 

and the creditor must comply with all 

of the applicable requirements of this 

part. See comment 3(b)–5. 

7. Application to extensions secured 

by mobile homes. Because a mobile 

home can be a dwelling under 

§ 1026.2(a)(19), the exemption in 

§ 1026.3(b) does not apply to a credit 

extension secured by a mobile home 

that is used or expected to be used as 

the principal dwelling of the consumer. 

See comment 3(b)–6. 

8. Transition rule for open-end 

accounts exempt prior to July 21, 2011. 

Section 1026.3(b)(2) applies only to 

open-end accounts opened prior to July 

21, 2011. Section 1026.3(b)(2) does not 

apply if a security interest is taken by 

the creditor in real property, or in 

personal property used or expected to 

be used as the consumer’s principal 

dwelling. If, on July 20, 2011, an openend account is exempt under § 1026.3(b) 

based on a firm commitment to extend 

credit in excess of $25,000, the account 

remains exempt under § 1026.3(b)(2) 

until December 31, 2011 (unless the 

firm commitment is reduced to $25,000 

or less). If the firm commitment is 

increased on or before December 31, 

2011, to an amount in excess of $50,000, 

the account remains exempt under 

§ 1026.3(b)(1) regardless of subsequent 

increases in the threshold amount as a 

result of increases in the CPI–W. If the 

firm commitment is not increased on or 

before December 31, 2011, to an amount 

in excess of $50,000, the account ceases 

to be exempt under § 1026.3(b) based on 

a firm commitment to extend credit. For 

example: 

i. Assume that, on July 20, 2011, the 

account is exempt under § 1026.3(b) 

based on the creditor’s firm 

commitment to extend $30,000 in 

credit. On November 1, 2011, the 

creditor increases the firm commitment 

on the account to $55,000. In these 

circumstances, the account remains 

exempt under § 1026.3(b)(1) regardless 

of subsequent increases in the threshold 

amount as a result of increases in the 

CPI–W. 

ii. Same facts as paragraph 8.i of this 

section except, on November 1, 2011, 

the creditor increases the firm 

commitment on the account to $40,000. 

In these circumstances, the account 

ceases to be exempt under § 1026.3(b)(2) 

after December 31, 2011, and the 

creditor must begin to comply with the 

applicable requirements of this part. 

* * * * * 

By order of the Board of Governors of the 

Federal Reserve System, acting through the 

Secretary of the Board under delegated 

authority. 

Michele Taylor Fennell, 

Deputy Associate Secretary of the Board. 

Brian Shearer, 

Senior Advisor, Consumer Financial 

Protection Bureau. 

[FR Doc. 2023–25048 Filed 11–28–23; 8:45 am] 

BILLING CODE 4810–AM–P; 6210–01–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 327 

RIN 3064–AF93 

Special Assessment Pursuant to 

Systemic Risk Determination 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Final rule. 

SUMMARY: The FDIC is adopting a final 

rule to implement a special assessment 

to recover the loss to the Deposit 

Insurance Fund (DIF or Fund) arising 

from the protection of uninsured 

depositors following the closures of 

Silicon Valley Bank, Santa Clara, CA, 

and Signature Bank, New York, NY. The 

FDIC will collect the $16.3 billion 

special assessment at a quarterly rate of 

3.36 basis points, multiplied by an 

insured depository institution’s (IDI) 

estimated uninsured deposits, reported 

for the quarter that ended December 31, 

2022, adjusted to exclude the first $5 

billion in estimated uninsured deposits 

from the IDI, or for IDIs that are part of 

a holding company with one or more 

subsidiary IDIs, at the banking 

organization level. The FDIC will collect 

the special assessment over eight 

quarterly assessment periods, although 

the collection period may change due to 

updates to the estimated loss pursuant 

to the systemic risk determination or if 

assessments collected change due to 

corrective amendments to the amount of 

uninsured deposits reported for the 

December 31, 2022, reporting period. 

DATES: The final rule is effective on 

April 1, 2024, with the first collection 

for the special assessment reflected on 

the invoice for the first quarterly 

assessment period of 2024 (i.e., January 

1 through March 31, 2024), with a 

payment date of June 28, 2024. 

FOR FURTHER INFORMATION CONTACT: 

Division of Insurance and Research: 


ddrumheller on DSK120RN23PROD with RULES1