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

70105 

Vol. 77, No. 226 

Friday, November 23, 2012 

1RESPA and TILA historically have been 

implemented by regulations of the Department of 

Housing and Urban Development (HUD) under 

Regulation X and the Board of Governors of the 

Federal Reserve System (the Board) under 

Regulation Z, respectively. The Dodd-Frank Act 

generally consolidated and transferred these 

rulemaking authorities to the Bureau. 

DEPARTMENT OF ENERGY 

10 CFR Parts 429 and 430 

[Docket No. EERE–2010–BT–TP–0039] 

RIN 1904–AC01 

Energy Conservation Program: Test 

Procedures for Residential 

Dishwashers, Dehumidifiers, and 

Conventional Cooking Products; 

Correction. 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Final rule; correction. 

SUMMARY: The Department of Energy is 

correcting a final rule that appeared in 

the Federal Register of October 31, 

2012. The rule established new test 

procedures for residential dishwashers 

and dehumidifiers, and amended the 

currently applicable test procedure for 

conventional cooking products under 

the Energy Policy and Conservation Act. 

DATES: The effective date of this rule is 

December 17, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Ms. Ashley Armstrong, U.S. Department 

of Energy, Office of Energy Efficiency 

and Renewable Energy, Building 

Technologies Program, EE–2J, 1000 

Independence Avenue SW., 

Washington, DC 20585–0121. 

Telephone: (202) 586–6590. Email: 

Ashley.Armstrong@ee.doe.gov. 

Ms. Elizabeth Kohl, U.S. Department of 

Energy, Office of the General Counsel, 

GC–71, 1000 Independence Avenue 

SW., Washington, DC 20585–0121. 

Telephone: (202) 586–7796. Email: 

Elizabeth.Kohl@hq.doe.gov. 

SUPPLEMENTARY INFORMATION: 

Procedural Issues and Regulatory 

Review 

The regulatory reviews conducted for 

this rulemaking are those set forth in the 

October 31, 2012 final rule. (77 FR 

65941) 

Pursuant to the Administrative 

Procedure Act, 5 U.S.C. 553(b), DOE has 

determined that notice and prior 

opportunity for comment on this rule 

are unnecessary and contrary to the 

public interest. The instruction is being 

revised to delete reference to adding 

section 3.1.3.3 because there is no 

accompanying text for such a section; 

the insertion was made in error. DOE 

has determined that there is good cause 

to waive the 30-day delay in effective 

date for these same reasons. 

Correction 

■ In FR Doc. 2012–25645, appearing on 

page 65941 in the Federal Register of 

Wednesday, October 31, 2012, the 

following correction is made: 

Appendix I to Subpart B of Part 430 

[Corrected] 

■ On page 65987, in the second column, 

the language of amendatory instruction 

11.d.4, ‘‘Adding sections 3.1.3, 3.1.3.1, 

3.1.3.2, and 3.1.3.3;’’ is corrected to read 

as follows: ‘‘Adding sections 3.1.3, 

3.1.3.1, and 3.1.3.2;’’ 

Issued in Washington, DC, on November 

16, 2012. 

Kathleen B. Hogan, 

Deputy Assistant Secretary for Energy 

Efficiency, Energy Efficiency and Renewable 

Energy. 

[FR Doc. 2012–28451 Filed 11–21–12; 8:45 am] 

BILLING CODE 6450–01–P 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1026 

[Docket No. CFPB–2012–0045] 

RIN 3170–AA32 

Delayed Implementation of Certain 

New Mortgage Disclosures 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Final rule; official 

interpretation. 

SUMMARY: The Bureau of Consumer 

Financial Protection (Bureau) is 

amending Regulation Z (Truth in 

Lending) to, in effect, delay 

implementation of certain new mortgage 

disclosure requirements in title XIV of 

the Dodd-Frank Wall Street Reform and 

Consumer Protection Act that would 

otherwise take effect on January 21, 

2013. Instead, to avoid potential 

consumer confusion and reduce 

compliance burden for industry, the 

Bureau plans to implement these 

disclosures as part of the integrated 

mortgage disclosure forms proposed 

earlier this year, which combine certain 

disclosures that consumers receive in 

connection with applying for and 

closing on a mortgage loan under the 

Truth in Lending Act and the Real 

Estate Settlement Procedures Act. 

Accordingly, this rulemaking exempts 

persons from complying with these 

mortgage disclosure requirements and 

provides that such exemptions are 

intended to last only until the integrated 

mortgage disclosure forms take effect. 

DATES: The rule is effective on 

November 23, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Michael G. Silver, Counsel; and Richard 

B. Horn, Senior Counsel, Office of 

Regulations, Consumer Financial 

Protection Bureau, 1700 G Street NW., 

Washington, DC 20552 at (202) 435– 

7700. 

SUPPLEMENTARY INFORMATION: 

I. Overview 

A. Dodd-Frank Act 

The Dodd-Frank Wall Street Reform 

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

amended the Real Estate Settlement 

Procedures Act of 1974 (RESPA) and the 

Truth in Lending Act (TILA) to mandate 

that the Bureau of Consumer Financial 

Protection (Bureau) establish a single 

disclosure scheme for use by lenders or 

creditors in complying with certain 

mortgage disclosure requirements under 

both statutes.1 Sections 1098 and 1100A 

of the Dodd-Frank Act amended RESPA 

section 4(a) and TILA section 105(b), 

respectively, to require that the Bureau 

publish a single, integrated disclosure 

for mortgage loan transactions 

(including real estate settlement cost 

statements) which includes the 

disclosure requirements of TILA and 

sections 4 and 5 of RESPA that, taken 


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70106 Federal Register / Vol. 77, No. 226 / Friday, November 23, 2012 / Rules and Regulations 

2See the Bureau’s press release Consumer 

Financial Protection Bureau proposes ‘‘Know Before 

You Owe’’ mortgage forms (July 9, 2012), available 

at http://www.consumerfinance.gov/pressreleases/

consumer-financial-protection-bureau-proposesknow-before-you-owe-mortgage-forms/; the Bureau’s 

blog post Know Before You Owe: Introducing our 

proposed mortgage disclosure forms (July 9, 2012), 

available at http://www.consumerfinance.gov/blog/

know-before-you-owe-introducing-our-proposedmortgage-disclosure-forms/. 

3 Dodd-Frank Act section 1400(c)(3) is codified at 

15 U.S.C. 1601 note. 

4 Dodd-Frank Act section 1414(a) also added to 

TILA new section 129C(f)(2), which requires firsttime borrowers for certain residential mortgage 

loans that could result in negative amortization to 

provide the creditor with documentation to 

demonstrate that the consumer received 

homeownership counseling from organizations or 

counselors certified as competent to provide such 

counseling by HUD. That provision is implemented 

in the Bureau’s proposal to implement Dodd-Frank 

Act requirements expanding protections for ‘‘highcost’’ mortgage loans under the Home Ownership 

and Equity Protection Act of 1994 (HOEPA), 

pursuant to TILA sections 103(bb) and 129, as 

amended by Dodd-Frank Act sections 1431 through 

1433 (the 2012 HOEPA Proposal). 77 FR 49090 

(Aug. 15, 2012). The 2012 HOEPA Proposal also 

implements the requirement of RESPA section 5(c), 

added by section 1450 of the Dodd-Frank Act, that 

lenders provide borrowers with a list of certified 

homeownership counselors. The Bureau expects to 

issue a final rule related to the 2012 HOEPA 

Proposal on or before January 21, 2013. 

5As it stated in the TILA–RESPA Integration 

Proposal, the Bureau believes that to give effect to 

the legislative purpose of section 1414(d) of the 

Dodd-Frank Act, the disclosure requirements of 

TILA section 129C(h) should apply without regard 

to whether the person would be a ‘‘creditor’’ under 

TILA and Regulation Z. See 77 FR 51116, 51265. 

For these reasons, in the TILA–RESPA Integration 

Proposal, the Bureau proposed to retain the term 

‘‘covered person’’ under § 1026.39(a)(1) and its 

definition, which would subject such covered 

persons to the proposed disclosure requirements. 

Id. As in the TILA–RESPA Integration Proposal, in 

this final rule the Bureau is temporarily exempting 

‘‘persons’’ (as defined in Regulation Z) rather than 

‘‘creditors’’ from compliance with the provisions of 

TILA section 129C(h), which includes covered 

persons. 

together, may apply to a transaction that 

is subject to both or either provisions of 

law. 12 U.S.C. 2603(a); 15 U.S.C. 

1604(b). Section 1032(f) of the DoddFrank Act mandated that the Bureau 

propose for public comment rules and 

model disclosures that integrate the 

TILA and RESPA disclosures by July 21, 

2012. 12 U.S.C. 5532(f). As noted below, 

the Bureau satisfied this statutory 

mandate and issued proposed rules and 

forms on July 9, 2012.2

In addition to the integrated 

disclosure requirements in title X of the 

Dodd-Frank Act, various provisions of 

title XIV of the Dodd-Frank Act amend 

TILA, RESPA, and other consumer 

financial laws to impose new disclosure 

requirements for mortgage transactions 

(the Title XIV Disclosures). These 

provisions generally require disclosure 

of certain information when a consumer 

applies for a mortgage loan or shortly 

before consummation of the loan, 

around the same time that consumers 

will receive the TILA–RESPA integrated 

disclosures required by sections 1032(f), 

1098, and 1100A of the Dodd-Frank Act 

(the TILA–RESPA integrated 

disclosures), and after consummation of 

the loan if certain events occur. DoddFrank Act title XIV provisions generally 

take effect within 18 months after the 

designated transfer date (i.e., by January 

21, 2013) unless final rules 

implementing those requirements are 

issued on or before that date and 

provide for a different effective date 

pursuant to Dodd-Frank Act section 

1400(c)(3).3

The Title XIV Disclosures generally 

include the following: 

• Warning regarding negative 

amortization features. Dodd-Frank Act 

section 1414(a); TILA section 

129C(f)(1).4

• Disclosure of State law antideficiency protections. Dodd-Frank Act 

section 1414(c); TILA section 129C(g)(2) 

and (3). 

• Disclosure regarding creditor’s 

partial payment policy prior to 

consummation and, for new creditors, 

after consummation. Dodd-Frank Act 

section 1414(d); TILA section 129C(h). 

• Disclosure regarding mandatory 

escrow or impound accounts. DoddFrank Act section 1461(a); TILA section 

129D(h). 

• Disclosure prior to consummation 

regarding waiver of escrow in 

connection with the transaction. DoddFrank Act section 1462; TILA section 

129D(j)(1)(A). 

• Disclosure regarding cancellation of 

escrow after consummation. DoddFrank Act section 1462; TILA section 

129D(j)(1)(B). 

• Disclosure of monthly payment, 

including escrow, at initial and fullyindexed rate for variable-rate residential 

mortgage loan transactions. Dodd-Frank 

Act section 1419; TILA section 

128(a)(16). 

• Repayment analysis disclosure to 

include amount of escrow payments for 

taxes and insurance. Dodd-Frank Act 

section 1465; TILA 128(b)(4). 

• Disclosure of aggregate amount of 

settlement charges, amount of charges 

included in the loan and the amount of 

such charges the borrower must pay at 

closing, the approximate amount of the 

wholesale rate of funds, and the 

aggregate amount of other fees or 

required payments in connection with a 

residential mortgage loan. Dodd-Frank 

Act section 1419; TILA section 

128(a)(17). 

• Disclosure of aggregate amount of 

mortgage originator fees and the amount 

of fees paid by the consumer and the 

creditor. Dodd-Frank Act section 1419; 

TILA section 128(a)(18). 

• Disclosure of total interest as a 

percentage of principal. Dodd-Frank Act 

section 1419; TILA section 128(a)(19). 

• Optional disclosure of appraisal 

management company fees. Dodd-Frank 

Act section 1475; RESPA section 4(c). 

• Disclosure regarding notice of reset 

of hybrid adjustable rate mortgage. 

Dodd-Frank Act section 1418(a); TILA 

section 128A(b). 

• Loan originator identifier 

requirement. Dodd-Frank section 

1402(a)(2); TILA section 129B(b)(1)(B). 

• Consumer notification regarding 

appraisals for higher-risk mortgages. 

Dodd-Frank Act section 1471; TILA 

section 129H(d). 

• Consumer notification regarding the 

right to receive an appraisal copy. DoddFrank Act section 1474; Equal Credit 

Opportunity Act (ECOA) section 

701(e)(5). 

As noted in the list above, the Title 

XIV Disclosures include certain 

disclosures that may need to be given 

both before and after consummation. 

For example, the Title XIV Disclosures 

include disclosures regarding a 

creditor’s policy for acceptance of 

partial loan payments both before 

consummation and, for persons who 

subsequently become creditors for the 

transaction, after consummation as 

required by new TILA section 129C(h), 

added by Dodd-Frank Act section 

1414(d).5 In addition, the Title XIV 

Disclosures include disclosures for 

consumers who waive or cancel escrow 

services both before and after 

consummation, added by Dodd-Frank 

Act section 1462. Specifically, new 

TILA section 129D(j)(1)(A) requires a 

creditor or servicer to provide a 

disclosure with the information set forth 

under TILA section 129D(j)(2) when an 

impound, trust, or other type of account 

for the payment of property taxes, 

insurance premiums, or other purposes 

relating to real property securing a 

consumer credit transaction is not 

established in connection with the 

transaction (the Pre-Consummation 

Escrow Waiver Disclosure). New TILA 

section 129D(j)(1)(B) requires a creditor 

or servicer to provide disclosures postconsummation with the information set 

forth under TILA section 129D(j)(2) 

when a consumer chooses, and provides 

written notice of the choice, to close his 

or her escrow account established in 

connection with a consumer credit 

transaction secured by real property in 

accordance with any statute, regulation, 

or contractual agreement (the PostConsummation Escrow Cancellation 

Disclosure). 15 U.S.C. 1639d(j)(1)(A), 


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Federal Register / Vol. 77, No. 226 / Friday, November 23, 2012 / Rules and Regulations 70107 

6The information set forth under TILA section 

129D(j)(2) includes information concerning any 

applicable fees or costs associated with either the 

non-establishment of the escrow account at the time 

of the transaction, or any subsequent closure of the 

account; a clear and prominent statement that the 

consumer is responsible for personally and directly 

paying the non-escrowed items, in addition to 

paying the mortgage loan payment, in the absence 

of any such account, and the fact that the costs for 

taxes, insurance, and related fees can be substantial; 

a clear explanation of the consequences of any 

failure to pay non-escrowed items, including the 

possible requirement for the forced placement of 

insurance by the creditor or servicers and the 

potentially higher cost (including any potential 

commission payments to the servicer) or reduced 

coverage for the consumer in the event of any such 

creditor-placed insurance; and other information 

the Bureau determines is necessary for consumer 

protection. 15 U.S.C. 1639d(j)(2). 

7See the Bureau’s press release Consumer 

Financial Protection Bureau proposes ‘‘Know Before 

You Owe’’ mortgage forms (July 9, 2012), available 

at http://www.consumerfinance.gov/pressreleases/

consumer-financial-protection-bureau-proposesknow-before-you-owe-mortgage-forms/; the Bureau’s 

blog post Know Before You Owe: Introducing our 

proposed mortgage disclosure forms (July 9, 2012), 

available at http://www.consumerfinance.gov/blog/

know-before-you-owe-introducing-our-proposedmortgage-disclosure-forms/. 

8 In its initial Federal Register notice, the Bureau 

also applied the September 7, 2012 deadline to 

comments on the proposed amendments to the 

definition of finance charge in § 1026.4. On August 

31, 2012, however, the Bureau issued a notice 

extending the deadline for such comments to 

November 6, 2012. See the Bureau’s blog post, More 

time for comments on proposed changes to the 

definition of the finance charge (August 31, 2012), 

available at http://www.consumerfinance.gov/blog/

more-time-for-comments-on-proposed-changes-tothe-definition-of-the-finance-charge/. The extension 

was published in the Federal Register on 

September 6, 2012. See 77 FR 54843 (Sept. 6, 2012). 

It did not change the comment period for any other 

aspects of the TILA–RESPA Integration Proposal, 

which, as noted above, ended November 6, 2012. 

9Effective July 21, 2011, the Dodd-Frank Act 

generally transferred rulemaking authority for TILA 

to the Bureau (except for certain rulemaking 

authority over motor vehicle dealers that remains 

with the Board). See sections 1061 and 1100A of the 

Dodd-Frank Act. 

10Codified at 15 U.S.C. 1601 note. 

1639d(j)(1)(B). The statute sets forth an 

identical set of information for both of 

these disclosures.6

B. TILA–RESPA Integration Proposal 

On July 9, 2012, the Bureau issued a 

proposal requesting comment on 

proposed rules and forms to integrate 

certain disclosure requirements of TILA 

and RESPA for most closed-end 

consumer credit transactions secured by 

real property (the TILA–RESPA 

Integration Proposal), as required by 

sections 1032(f), 1098, and 1100A of the 

Dodd-Frank Act.7 The proposed rule 

would amend the Bureau’s Regulation 

X, 12 CFR part 1024, and Regulation Z, 

12 CFR part 1026. The proposal was 

published in the Federal Register on 

August 23, 2012. 77 FR 51116 (Aug. 23, 

2012). 

Among other things, the TILA–RESPA 

Integration Proposal requested comment 

on an amendment to § 1026.1(c) of 

Regulation Z that would temporarily 

exempt persons from compliance with 

the following Title XIV Disclosures 

(collectively, the Affected Title XIV 

Disclosures) so that the disclosures 

could instead be incorporated into the 

TILA–RESPA integrated disclosures that 

would be finalized in the future: 

• Warning regarding negative 

amortization features. Dodd-Frank Act 

section 1414(a); TILA section 129C(f)(1). 

• Disclosure of State law antideficiency protections. Dodd-Frank Act 

section 1414(c); TILA section 129C(g)(2) 

and (3). 

• Disclosure regarding creditor’s 

partial payment policy prior to 

consummation and, for new creditors, 

after consummation. Dodd-Frank Act 

section 1414(d); TILA section 129C(h). 

• Disclosure regarding mandatory 

escrow or impound accounts. DoddFrank Act section 1461(a); TILA section 

129D(h). 

• Disclosure prior to consummation 

regarding waiver of escrow in 

connection with the transaction. DoddFrank Act section 1462; TILA section 

129D(j)(1)(A). 

• Disclosure of monthly payment, 

including escrow, at initial and fullyindexed rate for variable-rate residential 

mortgage loan transactions. Dodd-Frank 

Act section 1419; TILA section 

128(a)(16). 

• Repayment analysis disclosure to 

include amount of escrow payments for 

taxes and insurance. Dodd-Frank Act 

section 1465; TILA 128(b)(4). 

• Disclosure of aggregate amount of 

settlement charges, amount of charges 

included in the loan and the amount of 

such charges the borrower must pay at 

closing, the approximate amount of the 

wholesale rate of funds, and the 

aggregate amount of other fees or 

required payments in connection with a 

residential mortgage loan. Dodd-Frank 

Act section 1419; TILA section 

128(a)(17). 

• Disclosure of aggregate amount of 

mortgage originator fees and the amount 

of fees paid by the consumer and the 

creditor. Dodd-Frank Act section 1419; 

TILA section 128(a)(18). 

• Disclosure of total interest as a 

percentage of principal. Dodd-Frank Act 

section 1419; TILA section 128(a)(19). 

• Optional disclosure of appraisal 

management company fees. Dodd-Frank 

Act section 1475; RESPA section 4(c). 

The TILA–RESPA Integration 

Proposal provided for a bifurcated 

comment process. Comments regarding 

the proposed amendments to § 1026.1(c) 

were required to have been received on 

or before September 7, 2012. For all 

other proposed amendments and 

comments pursuant to the Paperwork 

Reduction Act, comments were required 

to have been received on or before 

November 6, 2012.8

C. 2011 Escrows Proposal 

Sections 1461 and 1462 of the DoddFrank Act create new TILA section 

129D, which substantially codifies 

requirements that the Board had 

previously adopted in Regulation Z 

regarding escrow requirements for 

higher-priced mortgage loans, but also 

adds disclosure requirements and 

lengthens the period for which escrow 

accounts are required. 15 U.S.C. 1639d. 

On March 2, 2011, the Board proposed 

amendments to Regulation Z 

implementing certain requirements of 

sections 1461 and 1462 of the DoddFrank Act. 76 FR 11598 (Mar. 2, 2011) 

(2011 Escrows Proposal). The Board 

proposed, among other things, to 

implement the disclosure requirements 

under TILA section 129D(j)(1) in 

Regulation Z under a new 

§ 226.19(f)(2)(ii) and § 226.20(d) of the 

Board’s Regulation Z, including both the 

Pre-Consummation Escrow Waiver 

Disclosure and the Post-Consummation 

Escrow Cancellation Disclosure. 

The comment period for the 2011 

Escrows Proposal closed on May 2, 

2011. The Board did not finalize the 

2011 Escrows Proposal. Subsequent to 

the issuance of the 2011 Escrows 

Proposal, the authority for finalizing the 

proposal was transferred to the Bureau 

pursuant to the Dodd-Frank Act.9

II. Summary of Proposed Rule and 

Comments 

A. Affected Title XIV Disclosures 

As described above, the Affected Title 

XIV Disclosures impose certain new 

disclosure requirements for mortgage 

transactions. Section 1400(c)(3) of the 

Dodd-Frank Act 10 provides that, if 

regulations implementing the Affected 

Title XIV Disclosures are not issued on 

the date that is 18 months after the 

designated transfer date (i.e., by January 

21, 2013), the statutory requirements 

will take effect on that date. 

The Bureau provided in the TILA– 

RESPA Integration Proposal that it 

believed that implementing integrated 

disclosures that satisfy the applicable 

sections of TILA and RESPA and the 

Affected Title XIV Disclosures would 

benefit consumers and facilitate 

compliance for industry with TILA and 

RESPA. The Bureau provided further 

that consumers would benefit from a 

consolidated disclosure that conveys 

loan terms and costs to consumers in a 


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70108 Federal Register / Vol. 77, No. 226 / Friday, November 23, 2012 / Rules and Regulations 

11As the Bureau stated in the TILA–RESPA 

Integration Proposal, certain of the Affected Title 

XIV Disclosures indicate that Congress did not 

intend for those disclosure requirements and the 

TILA–RESPA integrated disclosures to operate 

independently. For example, Dodd-Frank Act 

section 1419 amended paragraphs (a)(16) through 

(19) of TILA section 128 to require additional 

content on the disclosure provided to consumers 

within three days of application and in final form 

at or before consummation. 15 U.S.C. 1638(a)(16) 

through (19). Pursuant to TILA section 128(b)(1), for 

residential mortgage transactions, all disclosures 

required by TILA section 128(a) must be 

‘‘conspicuously segregated’’ from all other 

information provided in connection with the 

transaction. 15 U.S.C. 1638(b)(1). Therefore, the 

Bureau stated that these sections are directly 

implicated by the integrated TILA–RESPA 

requirement. 77 FR 51116, 51133. 

12 Id. 

13 77 FR 51116, 51134. 14 77 FR 51116, 51134. 

coordinated way, and industry would 

benefit by integrating two sets of 

overlapping disclosures into a single 

form and by avoiding regulatory burden 

associated with revising systems and 

practices multiple times. 77 FR 51116, 

51133. 

However, given the broad scope and 

complexity of TILA–RESPA Integration 

Proposal and the 120-day comment 

period provided, the Bureau stated that 

it believed a final rule would not be 

issued by January 21, 2013. The Bureau 

was concerned that absent a final rule 

implementing the Affected Title XIV 

Disclosures, institutions would have to 

comply with those disclosures 

beginning January 21, 2013 due to the 

statutory requirement that any section of 

Dodd-Frank Act title XIV for which 

regulations have not been issued by 

January 21, 2013 are self-effectuating as 

of that date. The Bureau stated that this 

likely would result in widely varying 

approaches to compliance in the 

absence of regulatory guidance, creating 

confusion for consumers, and would 

impose a significant burden on industry. 

For example, this could result in a 

consumer who shops for a mortgage 

loan receiving different disclosures from 

different creditors. The Bureau noted 

that it believed such disclosures would 

not only be unhelpful to consumers, but 

likely would be confusing since the 

same disclosures would be provided in 

widely different ways, and, moreover, 

implementing the Affected Title XIV 

Disclosures separately from the TILA– 

RESPA integrated disclosures would 

increase compliance costs and burdens 

on industry. The Bureau also noted in 

the TILA–RESPA Integration Proposal 

that nothing in the Dodd-Frank Act 

itself or its legislative history suggests 

that Congress contemplated how the 

separate requirements in titles X and 

XIV would work together.11

Accordingly, in the TILA–RESPA 

Integration Proposal, the Bureau 

proposed to implement the Affected 

Title XIV Disclosures for purposes of 

Dodd-Frank Act section 1400(c) by 

providing a temporary exemption from 

the requirement to comply with such 

requirements such that they would not 

become self-effective on January 21, 

2013, and instead would be required at 

the time the TILA–RESPA integrated 

disclosure requirements become 

effective.12 The Bureau proposed such 

temporary exemption pursuant to its 

authority under TILA sections 105(a) 

and 105(f), RESPA section 19(a), DoddFrank Act section 1032(a) and, for 

residential mortgage loans, Dodd-Frank 

Act section 1405(b). The Bureau 

explained that fully implementing the 

Affected Title XIV Disclosures as part of 

the broader integrated TILA–RESPA 

rulemaking, rather than issuing rules 

implementing each requirement 

individually or allowing those statutory 

provisions to take effect by operation of 

law, will improve the overall 

effectiveness of the integrated 

disclosures for consumers and reduce 

burden on industry. 

Specifically, as set forth in the 

section-by-section analysis to proposed 

§ 1026.1(c) in the TILA–RESPA 

Integration Proposal, the Bureau 

proposed to delay those requirements by 

temporarily exempting persons from the 

requirement to comply on January 21, 

2013.13 The Bureau stated in the TILA– 

RESPA Integration Proposal that it 

would remove this regulatory 

exemption in the final rule 

implementing the TILA–RESPA 

integrated disclosures. The proposed 

exemption would be, in effect, a delay 

of the effective date of the Affected Title 

XIV Disclosures. 

B. Other Title XIV Disclosures 

The Bureau proposed to exclude the 

following Title XIV Disclosures from the 

list of Affected Title XIV Disclosures in 

the TILA–RESPA Integration Proposal, 

stating they would be implemented in 

separate rulemakings: 

• Disclosure regarding notice of reset 

of hybrid adjustable rate mortgage. 

Dodd-Frank Act section 1418(a); TILA 

section 128A(b). 

• Loan originator identifier 

requirement. Dodd-Frank section 

1402(a)(2); TILA section 129B(b)(1)(B). 

• Consumer notification regarding 

appraisals for higher-risk mortgages. 

Dodd-Frank Act section 1471; TILA 

section 129H(d). 

• Consumer notification regarding the 

right to receive an appraisal copy. DoddFrank Act section 1474; ECOA section 

701(e)(5). 

• Post-Consummation Escrow 

Cancellation Disclosure. Dodd-Frank 

Act section 1462; TILA section 

129D(j)(1)(B). 

The Bureau stated generally that these 

disclosures were expected to be 

proposed separately in summer 2012 

and finalized by January 21, 2013. 

However, the Post-Consummation 

Escrow Cancellation Disclosure was 

excluded from the list of Affected Title 

XIV Disclosures, in part, because the 

Bureau stated it ‘‘will be implemented 

by final rule pursuant to an outstanding 

proposal published by the Board,’’ 

referring to the Board’s 2011 Escrows 

Proposal.14

The Bureau proposed to delay the 

Affected Title XIV Disclosures to the 

fullest extent those requirements could 

apply under the statutory provisions, 

including to transactions not covered by 

the proposed integrated disclosure 

provisions, including open-end credit 

plans, transactions secured by dwellings 

that are not real property, and reverse 

mortgages. The Bureau specifically 

solicited comment on this scope of the 

exemption of the Affected Title XIV 

Disclosures. The Bureau also solicited 

comment on whether the regulatory 

exemption should sunset on a specific 

date, rather than provide an exemption 

until a final rule for the integrated 

disclosures becomes effective. 

C. Comments on the Proposed 

Amendments to Section 1026.1(c) 

As of September 7, 2012, the Bureau 

had received nearly 500 comments on 

the TILA–RESPA Integration Proposal 

from depository institutions, credit 

unions, settlement agents, mortgage 

brokers, mortgage brokerage companies, 

industry trade groups, consumers, 

consumer advocacy organizations, a 

State attorney general, GovernmentSponsored Enterprises (GSEs), and other 

sources. More than 20 of these 

comments specifically addressed the 

Bureau’s proposed delay of the Affected 

Title XIV Disclosures, and those 

commenters were unanimously 

supportive of a temporary exemption 

from the Affected Title XIV Disclosures 

until the TILA–RESPA integrated 

disclosure rulemaking is finalized. 

Several industry commenters and their 

trade groups stated that this approach 

would result in disclosures that are 

more useful for consumers and would 

facilitate compliance for financial 

institutions by delaying compliance 

until a comprehensive implementation 

of all such rules could be accomplished. 

A State attorney general commented in 

support of this delayed implementation 


emcdonald on DSK7TPTVN1PROD with RULES
Federal Register / Vol. 77, No. 226 / Friday, November 23, 2012 / Rules and Regulations 70109 

15 76 FR 11598. 

16 76 FR 11598, 11599. 

17As described under part IV below, the Bureau 

considers an exemption from the disclosure 

requirement under TILA section 129D(j)(1)(B), such 

as that proposed in the TILA–RESPA Integration 

Proposal for the Affected Title XIV Disclosures, to 

be the issuance of a regulation implementing that 

provision for purposes of Dodd-Frank Act section 

1400(c)(3). 

of the Affected Title XIV Disclosures, 

stating that it would allow business 

entities the time to make extensive 

changes to their software and retrain 

staff in order to comply with the new 

integrated disclosure requirements. 

A number of commenters urged the 

Bureau to delay implementation of other 

Title XIV Disclosures or otherwise 

addressed the Title XIV Disclosures 

more generally. One mortgage company 

expressly urged the Bureau to delay 

implementation of the other Title XIV 

Disclosures (which include the PostConsummation Escrow Cancellation 

Disclosure) in addition to the Affected 

Title XIV Disclosures. A national trade 

association for credit unions encouraged 

the Bureau to use its exemption 

authority under the Dodd-Frank Act, 

TILA, and RESPA to the fullest extent 

permissible to relieve regulatory 

burdens for credit unions. Several statelevel trade associations for credit unions 

urged the Bureau to finalize all 

Regulation Z rulemakings at the same 

time. A GSE noted the benefits of 

implementing rules in a manner that 

would necessitate only a one-time 

change for software and other systems. 

One trade association supported the 

proposal to delay implementation of the 

Affected Title XIV Disclosures and 

urged the Bureau to clarify in the final 

rule its reasoning for exercising its 

exemption authority under section 

1032(a) of the Dodd-Frank Act to 

specifically incorporate the 

considerations in section 1032(c) of the 

Dodd-Frank Act. Two trade associations 

commented that the Bureau should 

make clear that proposed § 1026.1(c) is 

a rule in ‘‘final form’’ pursuant to 

section 1400(c)(1) of the Dodd-Frank 

Act and that such a rule prevents the 

triggering of section 1400(c)(3) of the 

Dodd-Frank Act. 

Several industry trade associations 

were opposed to a sunset of the 

regulatory exemption on a specific date 

and instead, were in favor of the 

exemption existing until the TILA– 

RESPA integrated disclosures final rule 

becomes effective. These industry trade 

group commenters were concerned that 

a specific sunset date may precede the 

effective date for the TILA–RESPA 

integration final rule. Removing the 

exemption at the same time as 

implementing the TILA–RESPA 

integrated disclosures would, in their 

view, reduce unnecessary disruption 

and provide regulatory certainty. 

In addition, the Bureau did not 

receive any comments in favor of 

limiting the scope of the temporary 

exemptions, such that the disclosure 

requirements would become selfeffective for the types of loans that are 

not subject to the TILA–RESPA 

integrated disclosure requirements in 

the TILA–RESPA Integration Proposal. 

One national trade association 

representing the reverse mortgage 

industry commented in support of 

exemptions from the Affected Title XIV 

Disclosures for reverse mortgage loans. 

A national trade association 

representing banks and bank holding 

companies that provide retail financial 

services commented that the exemption 

should also apply to the fullest extent 

under the statute, and not be limited to 

the loans subject the TILA–RESPA 

integrated disclosure requirements as 

proposed. The trade association 

specifically stated that many banks use 

similar systems for home equity lines of 

credit, reverse mortgages, and loans 

secured by dwellings that are not real 

property and noted that including them 

in the exemption would allow banks to 

implement the disclosure requirements 

in a coordinated manner. A trade 

association representing financial 

institutions in a particular State also 

commented in favor of the full scope of 

the temporary exemption. 

D. Board’s 2011 Escrows Proposal for 

the Post-Consummation Escrow 

Cancellation Disclosure 

The 2011 Escrows Proposal proposed 

to implement the Pre-Consummation 

Escrow Waiver Disclosure required 

under TILA section 129D(j)(1)(A) and 

the Post-Consummation Escrow 

Cancellation Disclosure required under 

TILA section 129D(j)(1)(B).15 The 

content requirements set forth in TILA 

section 129D(j)(2) are the same for the 

Pre-Consummation Escrow Waiver 

Disclosure and the Post-Consummation 

Escrow Cancellation Disclosure. The 

2011 Escrows Proposal proposed model 

forms for both disclosures. Under the 

2011 Escrows Proposal, the disclosures 

would be required to be delivered at 

least three business days before 

consummation or cancellation of the 

existing escrow account after 

consummation, as applicable. The 

proposed disclosures would explain 

what an escrow account is; how it 

works; and the risk of not having an 

escrow account. It also would state the 

potential consequences of failing to pay 

home-related costs such as taxes and 

insurance in the absence of an escrow 

account. In addition, it would state why 

there will be no escrow account or why 

it is being cancelled, as applicable; the 

amount of any fee imposed for not 

having an escrow account; and how the 

consumer can request that an escrow 

account be established or left in place, 

along with any deadline for such 

requests.16

The Board received approximately 70 

comments to the 2011 Escrows 

Proposal, of which roughly a dozen 

addressed the timing of the 

implementation of the PostConsummation Escrow Cancellation 

Disclosure. Specifically, national 

industry trade associations, State 

industry trade associations, large 

depository institutions, and community 

banks urged the Board to delay 

implementation of the Dodd-Frank Act 

escrow disclosure requirements until 

the Bureau had authority over the 

disclosures or until the Bureau could 

finalize the escrow disclosure 

requirements along with the TILA– 

RESPA integrated disclosures. These 

commenters stated that harmonizing the 

rulemakings would allow for a 

comprehensive approach and avoid 

duplicative forms and repetitive 

rulemakings. One industry trade 

association commented that it would be 

‘‘premature’’ and ‘‘potentially 

counterproductive’’ to issue new escrow 

rules prior to the completion of the 

TILA–RESPA integrated disclosures, 

and therefore recommended that the 

Board delay finalizing the escrow rules 

to allow the Bureau to incorporate the 

Dodd-Frank Act’s escrow amendments 

into the TILA–RESPA integrated 

disclosures. 

As noted above, the Bureau proposed, 

as part of the TILA–RESPA Integration 

Proposal, to provide a temporary 

exemption from compliance with the 

TILA section 129D(j)(1)(A), which 

requires the Pre-Consummation Escrow 

Waiver Disclosure. The Bureau did not 

propose to effectively delay the PostConsummation Escrow Cancellation 

Disclosure in the TILA–RESPA 

Integration Proposal, and instead stated 

it would implement the statute, TILA 

section 129D(j)(1)(B), by final rule 

pursuant to the Board’s 2011 Escrows 

Proposal. Absent the Bureau’s issuance 

of a final rule implementing TILA 

section 129D(j)(1)(B) by January 21, 

2013, the provision would go into effect 

as of such date by operation of law 

under the Dodd-Frank Act section 

1400(c)(3).17


emcdonald on DSK7TPTVN1PROD with RULES
70110 Federal Register / Vol. 77, No. 226 / Friday, November 23, 2012 / Rules and Regulations 

18As the Bureau stated in the TILA–RESPA 

Integration Proposal, Dodd-Frank Act section 

1032(c) provides that, in prescribing rules pursuant 

to section 1032, the Bureau ‘‘shall consider 

available evidence about consumer awareness, 

understanding of, and responses to disclosures or 

communications about the risks, costs, and benefits 

of consumer financial products or services.’’ 12 

U.S.C. 5532(c). Consistent with Dodd-Frank Act 

section 1032(a), in developing this final rule to 

delay implementation of the Affected Title XIV 

Disclosures and the Post-Consummation Escrow 

Cancellation Disclosure, the Bureau considered 

available studies, reports, and other evidence about 

consumer awareness, understanding of, and 

responses to disclosures or communications about 

the risks, costs, and benefits of consumer financial 

products or services, including the evidence 

developed through its consumer testing of the 

TILA–RESPA integrated disclosures as well as prior 

testing done by the Board and HUD regarding TILA 

and RESPA disclosures. See parts II and III of the 

TILA–RESPA Integration Proposal. For the reasons 

discussed in this final rule, the Bureau has 

considered available evidence pursuant to DoddFrank Act section 1032(c). 

III. Summary of the Final Rule 

The final rule implements the 

Affected Title XIV Disclosures and the 

Post-Consummation Escrow 

Cancellation Disclosure in § 1026.1(c) of 

Regulation Z and provides for a 

temporary exemption for persons from 

these statutory disclosure requirements. 

The Bureau is issuing this final rule 

implementing the Affected Title XIV 

Disclosures and the Post-Consummation 

Escrow Cancellation Disclosure prior to 

the statutory provisions becoming selfeffectuating on January 21, 2013. 

Accordingly, persons will not be 

required to comply with these statutory 

disclosure requirements until such time 

as the Bureau removes the exemption, 

which it plans to do in the final rule for 

the TILA–RESPA integrated disclosures, 

and such removal takes effect. 

IV. Legal Authority 

The Bureau is exercising its authority 

under and consistent with TILA section 

105(a) and (f), RESPA section 19(a), 

Dodd-Frank section 1032(a), and, for 

residential mortgage loans, Dodd-Frank 

Act section 1405(b) to, in effect, delay 

the effective date of the Affected Title 

XIV Disclosures and the PostConsummation Escrow Cancellation 

Disclosure by exempting regulated 

persons from these provisions until a 

final rule for the TILA–RESPA 

integrated disclosures mandated by 

Dodd-Frank Act sections 1032(f), 1098 

and 1100A takes effect. 15 U.S.C. 

1604(a), 1604(f); 12 U.S.C. 2617(a); 12 

U.S.C. 5532(a); 15 U.S.C. 1601 note. 

TILA section 105(a) gives the Bureau 

authority to adjust or except from the 

disclosure requirements of TILA all or 

any class of transactions to effectuate 

the purposes of TILA, to prevent 

circumvention or evasion thereof, or 

facilitate compliance therewith. As set 

forth above and below, delaying the 

Affected Title XIV Disclosures and the 

Post-Consummation Escrow 

Cancellation Disclosure until such time 

as a final rule implementing the TILA– 

RESPA integrated disclosures takes 

effect achieves the purpose of TILA to 

promote the informed use of credit 

through a more effective, consolidated 

disclosure, and facilitates compliance 

by reducing regulatory burden 

associated with revising systems and 

practices multiple times and providing 

multiple disclosures to consumers. 

The Bureau is also exercising 

exemption authority pursuant to TILA 

section 105(f). The Bureau has 

considered the factors in TILA section 

105(f) and believes that an exemption is 

appropriate under that provision. 

Specifically, the Bureau believes that 

the exemption is appropriate for all 

affected borrowers, regardless of their 

other financial arrangements and 

financial sophistication and the 

importance of the loan to them. 

Similarly, the Bureau believes that the 

exemption is appropriate for all affected 

loans, regardless of the amount of the 

loan and whether the loan is secured by 

the principal residence of the consumer. 

Furthermore, the Bureau believes that, 

on balance, the exemption will simplify 

the credit process without undermining 

the goal of consumer protection or 

denying important benefits to 

consumers. 

As discussed above, the Bureau 

believes that the exemption overall 

provides a benefit to consumers by 

facilitating a more effective, 

consolidated disclosure scheme. Absent 

an exemption, the Affected Title XIV 

Disclosures and the Post-Consummation 

Escrow Cancellation Disclosure would 

complicate and hinder the mortgage 

lending process because consumers 

would receive inconsistent disclosures 

and, likely, numerous additional pages 

of Federal disclosures that do not work 

together in a meaningful, synchronized 

way. The Bureau also believes that the 

credit process could be more expensive 

and complicated if the Affected Title 

XIV Disclosures and the PostConsummation Escrow Cancellation 

Disclosure take effect independent of 

the larger TILA–RESPA integration 

rulemaking because industry would be 

required to revise systems and practices 

multiple times. The Bureau has also 

considered the status of mortgage 

borrowers in issuing the exemptions, 

and believes the exemption is 

appropriate to improve the informed use 

of credit. The Bureau does not believe 

that the goal of consumer protection 

would be undermined by the 

exemption, because of the risk that 

layering the Affected Title XIV 

Disclosures and the Post-Consummation 

Escrow Cancellation Disclosure on top 

of existing mandated disclosures would 

lead to consumer confusion. The 

exemption allows the Bureau to 

coordinate the changes in a way that 

improves overall consumer 

understanding of the disclosures. 

RESPA section 19(a) provides the 

Bureau with authority to grant 

reasonable exemptions for classes of 

transactions from the requirements of 

RESPA as necessary to achieve the 

purposes of RESPA. 12 U.S.C. 2617(a). 

As discussed above, one purpose of 

RESPA is to achieve more effective 

advance disclosure to home buyers and 

sellers of settlement costs. RESPA 

section 2(b)(1); 12 U.S.C. 2601(b). 

Delaying the optional disclosure of the 

appraisal management company fee and 

the fee paid to the appraiser provided 

for by Dodd-Frank Act section 1475 

(amending RESPA section 4(c)) until 

such time as a final rule implementing 

the TILA–RESPA integrated disclosures 

takes effect will result in a more 

effective disclosure and improve 

consumer understanding, as discussed 

above. 

Section 1405(b) of the Dodd-Frank 

Act additionally gives the Bureau 

authority to exempt from or modify 

disclosure requirements, in whole or in 

part, for any class of residential 

mortgage loans if the Bureau determines 

that the exemption or modification is in 

the interest of consumers and the 

public. 15 U.S.C. 1601 note. As 

discussed above, implementing the 

Affected Title XIV Disclosures and the 

Post-Consummation Escrow 

Cancellation Disclosure with the TILA– 

RESPA integrated disclosures is in the 

interest of consumers because it allows 

the Bureau to coordinate the changes 

mandated by the Dodd-Frank Act in a 

way that synchronizes and harmonizes 

the disclosures, which in turn will 

improve overall consumer 

understanding of the disclosures. 

Further, implementing the Affected 

Title XIV Disclosures and the PostConsummation Escrow Cancellation 

Disclosure as part of the integrated 

disclosure rulemaking is in the public 

interest because it produces a more 

efficient regulatory scheme by 

incorporating multiple, potentially 

confusing disclosures into clear and 

understandable forms through consumer 

testing. 

Consistent with section 1032(a) of the 

Dodd-Frank Act,18 implementing the 

Affected Title XIV Disclosures and the 

Post-Consummation Escrow 

Cancellation Disclosure together with 


emcdonald on DSK7TPTVN1PROD with RULES
Federal Register / Vol. 77, No. 226 / Friday, November 23, 2012 / Rules and Regulations 70111 

19For a report on the Bureau’s consumer testing, 

see Kleimann Communication Group, Inc., Know 

Before You Owe: Evolution of the Integrated TILA– 

RESPA Disclosures (July 2012), available at http:// 

files.consumerfinance.gov/f/ 

201207_cfpb_report_tila-respa-testing.pdf. 

the TILA–RESPA integrated disclosures 

would ensure that the features of 

consumer credit transactions secured by 

real property are fully, accurately, and 

effectively disclosed to consumers in a 

manner that permits consumers to 

understand the costs, benefits, and risks 

associated with the product or service, 

in light of the facts and circumstances. 

12 U.S.C. 5532(a). The Bureau believes 

that implementing a single, 

consolidated disclosure will benefit 

consumers and facilitate compliance 

with TILA and RESPA. 

For these reasons, the Bureau is 

issuing this final rule to delay the 

Affected Title XIV Disclosures and the 

Post-Consummation Escrow 

Cancellation Disclosure until the Bureau 

issues a final rule implementing the 

TILA–RESPA integrated disclosures 

required by sections 1032(f), 1098, and 

1100A of the Dodd-Frank Act and such 

rule takes effect. The Bureau considers 

the adoption of these amendments to 

§ 1026.1(c) as prescribing the rules in 

final form for the Affected Title XIV 

Disclosures and the Post-Consummation 

Escrow Cancellation Disclosure 

pursuant to Dodd-Frank Act section 

1400(c)(1)(A), to the extent regulations 

are required to be prescribed, and the 

effective date of the final rule as 

satisfying Dodd-Frank Act section 

1400(c)(1)(B). The Bureau views this 

final rule as issuing regulations for 

purposes of Dodd-Frank Act section 

1400(c)(3); therefore, the Affected Title 

XIV Disclosures and PostConsummation Escrow Cancellation 

Disclosure do not take effect by 

operation of law with respect to any 

transaction covered by TILA or RESPA 

on January 21, 2013. 

This final rule will be effective on the 

date of publication in the Federal 

Register. Under section 553(d) of the 

Administrative Procedure Act (APA), 

the required publication or service of a 

substantive rule shall be made not less 

than 30 days before its effective date, 

except for (1) a substantive rule which 

grants or recognizes an exemption or 

relieves a restriction; (2) interpretative 

rules and statements of policy; or (3) as 

otherwise provided by the agency for 

good cause found and published with 

the rule. 5 U.S.C. 553(d). As discussed 

in part III above and part V below, this 

final rule provides for a temporary 

exemption from the Affected Title XIV 

Disclosures and the Post-Consummation 

Escrow Cancellation Disclosure such 

that they would not become selfeffective on January 21, 2013, and 

instead would be required at the time 

the TILA–RESPA integrated disclosures 

become effective. Therefore, under 

section 553(d)(1) of the APA, the Bureau 

is publishing this final rule less than 30 

days before its effective date because it 

is a substantive rule which grants or 

recognizes an exemption or relieves a 

restriction. 5 U.S.C. 553(d)(1). 

V. Section-by-Section Analysis of Final 

Rule 

In the TILA–RESPA Integration 

Proposal, the Bureau proposed to 

exempt persons temporarily from the 

disclosure requirements of the Affected 

Title XIV Disclosures (i.e., sections 

128(a)(16) through (19), 128(b)(4), 

129C(f)(1), 129C(g)(2) and (3), 129C(h), 

129D(h), and 129D(j)(1)(A) of TILA and 

section 4(c) of RESPA), until regulations 

implementing the integrated disclosures 

required by sections 1032(f), 1098, and 

1100A of the Dodd-Frank Act take 

effect. 15 U.S.C. 1638(a)(16)–(19), 

1638(b)(4), 1639c(f)(1), 1639c(g), 

1639c(h), 1639d(h), and 1639d(j)(1)(A); 

12 U.S.C. 2604(c); 12 U.S.C. 5532(f); 12 

U.S.C. 2603; 15 U.S.C. 1604. The TILA– 

RESPA Integration Proposal provided 

for implementation of the exemption in 

proposed § 1026.1(c)(5) by stating that 

no person is required to provide the 

disclosures required by the statutory 

provisions listed above. Proposed 

comment 1(c)(5)–1 explained that 

§ 1026.1(c)(5) implements the abovelisted provisions of TILA and RESPA 

added by the Dodd-Frank Act by 

exempting persons from the disclosure 

requirements of those sections. The 

comment proposed to clarify that the 

exemptions provided in proposed 

§ 1026.1(c)(5) are intended to be 

temporary and will apply only until 

compliance with the regulations 

implementing the integrated disclosures 

required by section 1032(f) of the DoddFrank Act become mandatory. Proposed 

comment 1(c)(5)–1 also clarified that the 

exemption in proposed § 1026.1(c)(5) 

does not exempt any person from any 

other requirement of Regulation Z, 

Regulation X, or of TILA or RESPA. 

The Bureau has considered the 

comments addressing the proposed 

amendments to § 1026.1(c), which are 

summarized in part II.C, above. Based 

on those comments and its own 

analysis, the Bureau has determined 

that it will adopt the proposed 

amendments to § 1026.1(c), with only 

one substantive change and the 

technical changes described below. 

1. Post-Consummation Escrow 

Cancellation Disclosure 

Although the Post-Consummation 

Escrow Cancellation Disclosure was not 

included in the Affected Title XIV 

Disclosures in the TILA–RESPA 

Integration Proposal, the Bureau 

nevertheless received comment 

requesting that it delay implementation 

of this disclosure, as described above. 

Furthermore, as discussed above, the 

Board received similar requests from 

commenters on its 2011 Escrows 

Proposal, which is now the Bureau’s 

responsibility. 

The Bureau has considered the 

comments received by the Board and 

the Bureau and believes that, for the 

reasons given by the commenters and 

the reasons described in part II above, 

delaying implementation of the PostConsummation Escrow Cancellation 

Disclosure and coordinating such 

implementation with that of the TILA– 

RESPA integrated disclosures is in the 

interest of industry and consumers 

alike. As discussed in part II above, the 

Dodd-Frank Act statutory requirements 

for the content of the PreConsummation Escrow Waiver 

Disclosure and the Post-Consummation 

Escrow Cancellation Disclosure are the 

same, and the model forms proposed in 

the Board’s 2011 Escrows Proposal 

contained similar language for both 

disclosures. The Bureau tested language 

for the Pre-Consummation Escrow 

Waiver Disclosure at its consumer 

testing conducted in connection with 

the TILA–RESPA Integration Proposal 

and proposed to integrate this 

disclosure into the Closing Disclosure 

(which integrates the final TILA 

disclosure and the RESPA settlement 

statement).19 Implementing the PostConsummation Escrow Cancellation 

Disclosure along with the TILA–RESPA 

integrated disclosures will allow the 

Bureau to use feedback it has received 

from consumer testing conducted prior 

to the TILA–RESPA Integration 

Proposal, the comments on that 

proposal, and any consumer testing 

conducted subsequent to the proposal to 

harmonize the content and format of the 

Post-Consummation Escrow 

Cancellation Disclosure, the PreConsummation Escrow Waiver 

Disclosure, and the TILA–RESPA 

integrated disclosures. Consumers, 

therefore, would benefit from a more 

fully integrated and synchronized 

overall mortgage disclosure scheme, and 

industry would benefit from a more 

coordinated implementation of the 

overall mortgage disclosure scheme 

mandated by the Dodd-Frank Act and 

implemented by the Bureau. The Bureau 

also notes that no commenters 

supported the finalization of the PostConsummation Escrow Cancellation 


emcdonald on DSK7TPTVN1PROD with RULES
70112 Federal Register / Vol. 77, No. 226 / Friday, November 23, 2012 / Rules and Regulations 

20See 77 FR 51116, 51267. The Bureau stated that 

in developing the proposed rule, the Bureau had 

considered potential benefits, costs, and impacts, 

and had consulted or offered to consult with the 

prudential regulators, the Department of Housing 

and Urban Development, and the Federal Trade 

Commission, including regarding consistency with 

any prudential, market, or systemic objectives 

administered by such agencies. The Bureau also 

held discussions with or solicited feedback from the 

United States Department of Agriculture Rural 

Housing Service, the Farm Credit Administration, 

the Federal Housing Administration, the Federal 

Housing Finance Agency, and the Department of 

Veterans Affairs regarding the potential impacts of 

the proposed rule on those entities’ loan programs. 

Id. In addition, prior to finalizing the rule, the 

Bureau consulted or offered to consult with the 

appropriate prudential regulators and Federal 

agencies regarding this final rule. 

Disclosure with the planned finalization 

of the Board’s 2011 Escrows Proposal on 

or before January 21, 2013, and no 

commenters supported allowing the 

Post-Consummation Escrow 

Cancellation Disclosure to take effect by 

operation of law on that date. 

In light of the considerations 

discussed above, including the 

comments submitted to the Board and 

the Bureau in support of a temporary 

exemption from compliance, the Bureau 

is modifying the proposed amendments 

to § 1026.1(c) to exempt persons from 

compliance with the PostConsummation Escrow Cancellation 

Disclosure in addition to the Affected 

Title XIV Disclosures. Accordingly, the 

Bureau is adding a reference in 

§ 1026.1(c)(5) and associated 

commentary to TILA section 

129D(j)(1)(B). 

2. Technical Changes 

In addition, in the final rule the 

Bureau is making three technical 

changes to § 1026.1 and its commentary. 

First, in § 1026.1(a), reference has been 

added to reflect the implementation of 

certain provisions of RESPA. This 

technical change relates to the fact that 

the optional disclosure of appraisal 

management company fees and fees 

paid to appraisers under RESPA section 

4(c) (as added by Dodd-Frank Act 

section 1475) is being implemented in 

Regulation Z, rather than Regulation X, 

by exempting persons from the 

disclosure requirements of that section. 

Second, in comment 1(c)(5)–1, 

references have been added to DoddFrank Act sections 1098 and 1100A, 

which amend RESPA section 4(a) and 

TILA section 105(b), respectively, in 

addition to the proposed comment’s 

reference to Dodd-Frank Act section 

1032(f). This technical change reflects 

the fact that sections 1098 and 1100A of 

the Dodd-Frank Act also mandate the 

TILA–RESPA integrated disclosures. 

Third, the Bureau has amended 

§ 1026.1(a) to make clear that the Office 

of Management and Budget control 

number listed applies only to Bureau 

respondents. 

VI. Section 1022(b)(2) Analysis 

Section VII of the TILA–RESPA 

Integration Proposal contained the 

Bureau’s preliminary analysis under 

section 1022(b)(2)(A) of the Dodd-Frank 

Act of the potential benefits and costs of 

the proposed rule to consumers and 

covered persons (as defined in DoddFrank Act section 1002(6), 12 U.S.C. 

5481(6)), including the potential 

reduction of access by consumers to 

consumer financial products or services; 

the 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; and 

the impact on consumers in rural areas 

(the Preliminary Section 1022(b)(2) 

Analysis).20 In the Preliminary Section 

1022(b)(2) Analysis, the Bureau 

addressed the impact of the proposed 

delay of the Affected Title XIV 

Disclosures on covered persons and 

consumers. See section VII.D.8 of the 

TILA–RESPA Integration Proposal. 

There, the Bureau noted that the 

proposed rule would exempt creditors 

temporarily from compliance with 

certain new disclosure requirements 

added to TILA and RESPA by the DoddFrank Act until such final rule takes 

effect. Although the Dodd-Frank Act 

does not specifically require inclusion 

of the Affected Title XIV Disclosures in 

the TILA–RESPA integrated disclosures, 

the Bureau stated in the TILA–RESPA 

Integration Proposal that it believes 

these disclosures should be included in 

the integrated disclosures because doing 

so would improve the overall 

effectiveness of the integrated 

disclosures, which may benefit 

consumers and covered persons, and 

also reduce burden on covered persons. 

See 77 FR 51116, 51279. The Bureau 

further stated that making the 

requirements to provide the Affected 

Title XIV Disclosures become effective 

simultaneously with the TILA–RESPA 

integrated disclosures would avoid 

unnecessary regulatory burden by 

preventing creditors from having to 

implement multiple iterations of 

disclosure rules. Lastly, the Bureau 

stated that it did not anticipate 

additional costs to covered persons as a 

result of delayed implementation of the 

Affected Title XIV Disclosures, although 

covered persons may incur additional 

recurring costs associated with 

calculating and disclosing this 

additional information to consumers 

once the implementing rules take effect. 

See 77 FR 51116, 51279–80. As 

discussed above, this final rule 

effectively delays implementation of 

certain disclosure requirements and 

thus, consumers will not receive the 

information provided in such 

disclosures as early as they would have 

if the statutory requirements had 

become self-effective pursuant to DoddFrank Act section 1400(c). However, the 

Bureau believes that these disclosures 

are of lesser value to consumers without 

the comprehensive reform of the 

integrated TILA–RESPA disclosures. In 

addition, any benefits that consumers 

would derive from allowing the 

statutory requirements to take effect 

prior to the TILA–RESPA integrated 

disclosures would only accrue during 

the time between when the 

requirements would take effect and 

when the TILA–RESPA integrated 

disclosure requirements would be 

finalized. 

The baseline for analysis in this final 

Dodd-Frank Act section 1022(b)(2) 

analysis is a post-statutory baseline 

analysis. The Preliminary Section 

1022(b)(2) Analysis used a pre-statutory 

baseline, i.e., it analyzed the benefits, 

costs, and impacts of the proposed 

temporary exemption against a prestatutory baseline. The Bureau believes 

a post-statutory baseline more fully 

informs the rulemaking and is more 

appropriate for the distinct nature of 

this final rule—to prevent effectively 

certain statutory disclosure 

requirements from becoming selfeffective. The Bureau has discretion in 

future rulemakings to choose the most 

appropriate baseline for each particular 

rulemaking. 

The Bureau did not receive any 

comments on the Bureau’s Preliminary 

Section 1022(b)(2) Analysis regarding 

the effect of the proposed delay of 

implementing the Affected Title XIV 

Disclosures on covered persons and 

consumers. The Bureau also believes 

that delaying implementation of the 

Post-Consummation Escrow 

Cancellation Disclosure and, instead, 

implementing the disclosure along with 

the TILA–RESPA integrated disclosures 

would avoid unnecessary regulatory 

burden by preventing covered persons 

from having to implement multiple 

iterations of disclosure rules. The 

Bureau does not anticipate additional 

costs to covered persons as a result of 

such delayed implementation of the 

Post-Consummation Escrow 

Cancellation Disclosure, although 

covered persons may incur additional 

recurring costs associated with 

calculating and disclosing this 

additional information to consumers 

once the implementing rules take effect. 

In light of this, the Bureau concludes, 

using a post-statutory baseline, that the 


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Federal Register / Vol. 77, No. 226 / Friday, November 23, 2012 / Rules and Regulations 70113 

21See 77 FR 51116, 51285–6. 

final rule will have the benefits, costs, 

and impacts on covered persons and 

consumers that were discussed in the 

Preliminary Section 1022(b)(2) Analysis. 

This final rule does not have the 

potential to reduce access by consumers 

to consumer financial products or 

services, as it will not increase costs on 

covered persons. In addition, as noted 

above, because this rule effectively 

delays the implementation of disclosure 

requirements, it will cause no additional 

costs on depository institutions and 

credit unions with $10 billion or less in 

total assets, as described in section 1026 

of the Dodd-Frank Act. Further, it will 

have no significant or adverse impact on 

consumers in rural areas, as it does not 

increase costs for covered persons or 

consumers. The Bureau believes that 

delaying the implementation of the 

Affected Title XIV Disclosures and the 

Post-Consummation Escrow 

Cancellation Disclosure will eliminate 

the costs that covered persons would 

have incurred if they had to implement 

the disclosure provisions multiple 

times, i.e., if these statutory provisions 

had taken effect by operation of law 

pursuant to Dodd-Frank Act section 

1400(c)(3) and were also later 

implemented through the TILA–RESPA 

integration final rule (including 

potential increased compliance costs 

due to uncertainty of complying with 

statutory provisions without 

implementing regulations). 

VII. Regulatory Flexibility Act 

The Bureau’s TILA–RESPA 

Integration Proposal included an initial 

regulatory flexibility analysis (IRFA) 

discussing the potential impact of the 

Bureau’s regulations on small entities, 

including small businesses, under the 

Regulatory Flexibility Act (RFA). See 77 

FR 51116, 51282. Among other issues, 

the IRFA discussed how the proposed 

rule would exempt creditors 

temporarily from compliance with 

certain new disclosure requirements 

added to TILA and RESPA by the DoddFrank Act until the integrated TILA– 

RESPA rule takes effect. See 77 FR 

51116, 51293. The Bureau stated in the 

IRFA that, although the Dodd-Frank Act 

does not specifically require inclusion 

of all of these new disclosures in the 

integrated disclosures, the Bureau 

believes these disclosures should be 

included in the integrated disclosures 

because doing so would improve the 

overall effectiveness of the integrated 

disclosures, which may benefit 

consumers and covered persons that are 

small entities, and also reduce burden 

on covered persons that are small 

entities. The Bureau provided in the 

IRFA that finalizing the rules 

implementing these title XIV 

disclosures simultaneously with the 

final TILA–RESPA rule would avoid 

unnecessary regulatory burden by 

preventing creditors that are small 

entities from having to implement 

multiple iterations of disclosure rules. 

The Bureau stated in the IRFA that it 

does not anticipate additional costs to 

covered persons as a result of delayed 

implementation of the new disclosure 

requirements, although small entities 

may incur additional recurring costs 

associated with calculating and 

disclosing this additional information to 

consumers once the implementing rules 

take effect. Id. The Bureau also noted in 

the IRFA that incorporating the Affected 

Title XIV Disclosures into the TILA– 

RESPA integrated disclosures was being 

proposed to avoid duplication, overlaps, 

and conflicts. See 77 FR 51116, 51294. 

The Bureau did not receive any 

comments on the conclusions that the 

Bureau made in the IRFA regarding the 

effect on small entities of the proposed 

delay of implementing the Affected 

Title XIV Disclosures. The Bureau also 

believes that delaying implementation 

of the Post-Consummation Escrow 

Cancellation Disclosure to implement it 

simultaneously with the TILA–RESPA 

integration final rulemaking will avoid 

unnecessary regulatory burden by 

preventing covered persons that are 

small entities from having to implement 

multiple iterations of disclosure rules. 

The Bureau does not anticipate 

additional costs as a result of delayed 

implementation of the PostConsummation Escrow Cancellation 

Disclosure, although small entities may 

incur additional recurring costs 

associated with calculating and 

disclosing this additional information to 

consumers once the implementing rules 

take effect. Id. The Bureau also believes 

that synchronizing the format and 

content of the Post-Consummation 

Escrow Cancellation Disclosure with the 

Pre-Consummation Escrow Waiver 

Disclosure and the integrated TILA– 

RESPA disclosures avoids duplication, 

overlaps, and conflicts with other 

Federal rules. See 77 FR 51116, 51294. 

Accordingly, because this final rule, 

which the Bureau is issuing separately 

from the other parts of the TILA–RESPA 

Integration Proposal, will not create 

additional costs for covered persons that 

are small entities, the undersigned 

certifies that it will not have a 

significant economic impact on a 

substantial number of small entities. 

Therefore, an analysis under the RFA is 

not required for this final rule. However, 

the factors required in such an analysis 

are addressed below for informational 

purposes. 

The Bureau has concluded that the 

final rule will impose, subject to a poststatutory baseline, the impacts on small 

entities that were discussed in the IRFA. 

The delay of the implementation of the 

Affected Title XIV Disclosures and the 

Post-Consummation Escrow 

Cancellation Disclosure, so that they 

may be implemented with the integrated 

TILA–RESPA disclosures, will improve 

the integrated disclosures, which may 

benefit consumers and small entities, 

and avoid unnecessary regulatory 

burden by preventing covered persons 

that are small entities from having to 

implement multiple iterations of 

disclosure rules. 

As described in the TILA–RESPA 

Integration Proposal, the Bureau 

estimates the final rule to affect small 

entities that are engaged in closed-end 

mortgage transactions that are 

commercial banks and savings 

associations, credit unions, non-bank 

mortgage lenders, mortgage brokers, and 

settlement agents, totaling about 26,000 

small entities.21 This rule provides an 

exemption and, therefore, does not 

contain any reporting, recordkeeping, or 

other requirements. The Bureau has 

reviewed possible steps to minimize the 

impact on small entities in connection 

with the TILA–RESPA Integration 

Proposal. As the nature of this final rule 

is an exemption, it is itself a step taken 

to minimize impact on small entities (as 

opposed to the alternative of letting the 

statutory disclosure provisions become 

self-effective). The final rule covers all 

small entities subject to the statutory 

provisions, because the final rule 

applies to persons generally. 

In sum, this final rule will eliminate 

the costs that covered small entities 

would have incurred if they had to 

implement the disclosure provisions 

multiple times, i.e., if these statutory 

provisions had taken effect by operation 

of law pursuant to Dodd-Frank Act 

section 1400(c)(3) and were also later 

implemented through the TILA–RESPA 

integration final rule (including 

potential increased compliance costs 

due to uncertainty of complying with 

statutory provisions without 

implementing regulations). 

VIII. Paperwork Reduction Act 

The Bureau has determined that this 

final rule does not impose any new 

recordkeeping, reporting, or disclosure 

requirements on covered persons or 

members of the public that would be 

collections of information requiring 

OMB approval under the Paperwork 

Reduction Act (PRA), 44 U.S.C. 3501, et 

seq. Rather, the final rule defers certain 


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70114 Federal Register / Vol. 77, No. 226 / Friday, November 23, 2012 / Rules and Regulations 

information collection requirements 

subject to the PRA until such time as the 

TILA–RESPA integrated disclosure final 

rule, and the corresponding information 

collection requirements, becomes 

effective. The Bureau did not receive 

any comments related to this exemption 

under the PRA. 

List of Subjects in 12 CFR Part 1026 

Advertising, Consumer protection, 

Credit, Credit unions, Mortgages, 

National banks, Recordkeeping 

requirements, Reporting, Savings 

associations, Truth in lending. 

Authority and Issuance 

For the reasons stated 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 

is revised 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. 

■ 2. Section 1026.1 is amended by 

revising paragraph (a) and adding 

paragraph (c)(5) to read as follows: 

§ 1026.1 Authority, purpose, coverage, 

organization, enforcement, and liability. 

(a) Authority. This part, known as 

Regulation Z, is issued by the Bureau of 

Consumer Financial Protection to 

implement the Federal Truth in Lending 

Act, which is contained in title I of the 

Consumer Credit Protection Act, as 

amended (15 U.S.C. 1601 et seq.). This 

part also implements title XII, section 

1204 of the Competitive Equality 

Banking Act of 1987 (Pub. L. 100–86, 

101 Stat. 552). Furthermore, this part 

implements certain provisions of the 

Real Estate Settlement Procedures Act of 

1974, as amended (12 U.S.C. 2601 et 

seq.). The Bureau’s informationcollection requirements contained in 

this part have been approved by the 

Office of Management and Budget under 

the provisions of 44 U.S.C. 3501 et seq. 

and have been assigned OMB No. 3170– 

0015 (Truth in Lending). 

* * * * * 

(c) * * * 

(5) No person is required to provide 

the disclosures required by sections 

128(a)(16) through (19), 128(b)(4), 

129C(f)(1), 129C(g)(2) and (3), 129C(h), 

129D(h), 129D(j)(1)(A), or 129D(j)(1)(B) 

of the Truth in Lending Act or section 

4(c) of the Real Estate Settlement 

Procedures Act. 

* * * * * 

■ 3. In Supplement I to Part 1026: 

A. Under Section 1026.1—Authority, 

Purpose, Coverage, Organization, 

Enforcement and Liability, under 

subheading 1(c) Coverage, add in 

alphanumerical order the subheading 

Paragraph 1(c)(5) and paragraph 1. 

under that subheading. 

The additions read as follows: 

Supplement I to Part 1026—Official 

Interpretations 

* * * * * 

Subpart A—General 

Section 1026.1—Authority, Purpose, 

Coverage, Organization, Enforcement 

and Liability 1(c) Coverage 

* * * * * 

Paragraph 1(c)(5). 

1. Temporary exemption. Section 

1026.1(c)(5) implements sections 

128(a)(16) through (19), 128(b)(4), 

129C(f)(1), 129C(g)(2) and (3), 129C(h), 

129D(h), 129D(j)(1)(A), and 129D(j)(1)(B) 

of the Truth in Lending Act and section 

4(c) of the Real Estate Settlement 

Procedures Act, by exempting persons 

from the disclosure requirements of 

those sections. These exemptions are 

intended to be temporary, lasting only 

until regulations implementing the 

integrated disclosures required by 

sections 1032(f), 1098, and 1100A of the 

Dodd-Frank Act (12 U.S.C. 5532(f), 12 

U.S.C. 2603(a), 15 U.S.C. 1604(b)) 

become mandatory. Section 1026.1(c)(5) 

does not exempt any person from any 

other requirement of this part, 

Regulation X (12 CFR part 1024), the 

Truth in Lending Act, or the Real Estate 

Settlement Procedures Act. 

* * * * * 

Dated: November 13, 2012. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2012–28341 Filed 11–21–12; 8:45 am] 

BILLING CODE 4810–AM–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2012–0846; Directorate 

Identifier 2012–CE–021–AD; Amendment 

39–17237; AD 2012–22–01] 

RIN 2120–AA64 

Airworthiness Directives; Cessna 

Aircraft Company Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: We are adopting a new 

airworthiness directive (AD) for certain 

Cessna Aircraft Company Models 172R 

and 172S airplanes. This AD was 

prompted by reports of chafed fuel 

return line assemblies, which were 

caused by the fuel return line assembly 

rubbing against the right steering tube 

assembly during full rudder pedal 

actuation. This AD requires you to 

inspect the fuel return line assembly for 

chafing; replace the fuel return line 

assembly if chafing is found; inspect the 

clearance between the fuel return line 

assembly and both the right steering 

tube assembly and the airplane 

structure; and adjust as necessary. We 

are issuing this AD to correct the unsafe 

condition on these products. 

DATES: This AD is effective December 

28, 2012. 

Director of the Federal Register 

approved the incorporation by reference 

of a certain other publication listed in 

this AD as of March 13, 2012 (77 FR 

6003, February 7, 2012). 

ADDRESSES: For service information 

identified in this AD, contact Cessna 

Aircraft Company, Customer service, 

P.O. Box 7706, Wichita, KS 67277; 

telephone: (316) 517–5800; fax: (316) 

517–7271; Internet: http://www.

cessnasupport.com. You may review 

copies of the referenced service 

information at the FAA, Small Airplane 

Directorate, 901 Locust, Kansas City, 

MO 64106. For information on the 

availability of this material at the FAA, 

call (816) 329–4148. 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http://www.regulations.

gov; or in person at the Docket 

Management Facility between 9 a.m. 

and 5 p.m., Monday through Friday, 

except Federal holidays. The AD docket 

contains this AD, the regulatory 

evaluation, any comments received, and 

other information. The address for the 

Docket Office (phone: 800–647–5527) is 

Document Management Facility, U.S. 

Department of Transportation, Docket 

Operations, M–30, West Building 

Ground Floor, Room W12–140, 1200 

New Jersey Avenue SE., Washington, 

DC 20590. 

FOR FURTHER INFORMATION CONTACT: Jeff 

Janusz, Aerospace Engineer, Wichita 

Aircraft Certification Office, FAA, 1801 

S. Airport Road, Room 100, Wichita, 

Kansas 67209; phone: (316) 946–4148; 

fax: (316) 946–4107; email: jeff.janusz@

faa.gov. 


emcdonald on DSK7TPTVN1PROD with RULES