Federal Register / Vol. 82, No. 247 / Wednesday, December 27, 2017 / Rules and Regulations 61147 

example, A and B merge. The surviving 

or newly formed institution meets the 

loan threshold described in 

§ 1003.2(g)(1)(v)(B) if the surviving or 

newly formed institution, A, and B 

originated a combined total of at least 

500 open-end lines of credit in each of 

the two preceding calendar years. 

Likewise, the surviving or newly formed 

institution meets the asset-size 

threshold in § 1003.2(g)(1)(i) if its assets 

and the combined assets of A and B on 

December 31 of the preceding calendar 

year exceeded the threshold described 

in § 1003.2(g)(1)(i). Comment 2(g)–4 

discusses a financial institution’s 

responsibilities during the calendar year 

of a merger. 

4. Merger or acquisition—coverage for 

calendar year of merger or acquisition. 

The scenarios described below illustrate 

a financial institution’s responsibilities 

for the calendar year of a merger or 

acquisition. For purposes of these 

illustrations, a ‘‘covered institution’’ 

means a financial institution, as defined 

in § 1003.2(g), that is not exempt from 

reporting under § 1003.3(a), and ‘‘an 

institution that is not covered’’ means 

either an institution that is not a 

financial institution, as defined in 

§ 1003.2(g), or an institution that is 

exempt from reporting under 

§ 1003.3(a). 

i. Two institutions that are not 

covered merge. The surviving or newly 

formed institution meets all of the 

requirements necessary to be a covered 

institution. No data collection is 

required for the calendar year of the 

merger (even though the merger creates 

an institution that meets all of the 

requirements necessary to be a covered 

institution). When a branch office of an 

institution that is not covered is 

acquired by another institution that is 

not covered, and the acquisition results 

in a covered institution, no data 

collection is required for the calendar 

year of the acquisition. 

ii. A covered institution and an 

institution that is not covered merge. 

The covered institution is the surviving 

institution, or a new covered institution 

is formed. For the calendar year of the 

merger, data collection is required for 

covered loans and applications handled 

in the offices of the merged institution 

that was previously covered and is 

optional for covered loans and 

applications handled in offices of the 

merged institution that was previously 

not covered. When a covered institution 

acquires a branch office of an institution 

that is not covered, data collection is 

optional for covered loans and 

applications handled by the acquired 

branch office for the calendar year of the 

acquisition. 

iii. A covered institution and an 

institution that is not covered merge. 

The institution that is not covered is the 

surviving institution, or a new 

institution that is not covered is formed. 

For the calendar year of the merger, data 

collection is required for covered loans 

and applications handled in offices of 

the previously covered institution that 

took place prior to the merger. After the 

merger date, data collection is optional 

for covered loans and applications 

handled in the offices of the institution 

that was previously covered. When an 

institution remains not covered after 

acquiring a branch office of a covered 

institution, data collection is required 

for transactions of the acquired branch 

office that take place prior to the 

acquisition. Data collection by the 

acquired branch office is optional for 

transactions taking place in the 

remainder of the calendar year after the 

acquisition. 

iv. Two covered institutions merge. 

The surviving or newly formed 

institution is a covered institution. Data 

collection is required for the entire 

calendar year of the merger. The 

surviving or newly formed institution 

files either a consolidated submission or 

separate submissions for that calendar 

year. When a covered institution 

acquires a branch office of a covered 

institution, data collection is required 

for the entire calendar year of the 

merger. Data for the acquired branch 

office may be submitted by either 

institution. 

5. Originations. Whether an 

institution is a financial institution 

depends in part on whether the 

institution originated at least 25 closedend mortgage loans in each of the two 

preceding calendar years or at least 500 

open-end lines of credit in each of the 

two preceding calendar years. 

Comments 4(a)–2 through –4 discuss 

whether activities with respect to a 

particular closed-end mortgage loan or 

open-end line of credit constitute an 

origination for purposes of § 1003.2(g). 

6. Branches of foreign banks—treated 

as banks. A Federal branch or a Statelicensed or insured branch of a foreign 

bank that meets the definition of a 

‘‘bank’’ under section 3(a)(1) of the 

Federal Deposit Insurance Act (12 

U.S.C. 1813(a)) is a bank for the 

purposes of § 1003.2(g). 

7. Branches and offices of foreign 

banks and other entities—treated as 

nondepository financial institutions. A 

Federal agency, State-licensed agency, 

State-licensed uninsured branch of a 

foreign bank, commercial lending 

company owned or controlled by a 

foreign bank, or entity operating under 

section 25 or 25A of the Federal Reserve 

Act, 12 U.S.C. 601 and 611 (Edge Act 

and agreement corporations) may not 

meet the definition of ‘‘bank’’ under the 

Federal Deposit Insurance Act and may 

thereby fail to satisfy the definition of a 

depository financial institution under 

§ 1003.2(g)(1). An entity is nonetheless 

a financial institution if it meets the 

definition of nondepository financial 

institution under § 1003.2(g)(2). 

* * * * * 

Dated: December 14, 2017. 

Mick Mulvaney, 

Acting Director, Bureau of Consumer 

Financial Protection. 

[FR Doc. 2017–27879 Filed 12–21–17; 4:15 pm] 

BILLING CODE 4810–AM–P 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1026 

Truth in Lending Act (Regulation Z) 

Adjustment to Asset-Size Exemption 

Threshold 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Final rule; official 

interpretation. 

SUMMARY: The Bureau is amending the 

official commentary that interprets the 

requirements of the Bureau’s Regulation 

Z (Truth in Lending) to reflect a change 

in the asset-size threshold for certain 

creditors to qualify for an exemption to 

the requirement to establish an escrow 

account for a higher-priced mortgage 

loan based on the annual percentage 

change in the average of the Consumer 

Price Index for Urban Wage Earners and 

Clerical Workers (CPI–W) for the 12- 

month period ending in November. The 

exemption threshold is adjusted to 

increase to $2.112 billion from $2.069 

billion. The adjustment is based on the 

2.1 percent increase in the average of 

the CPI–W for the 12-month period 

ending in November 2017. Therefore, 

creditors with assets of less than $2.112 

billion (including assets of certain 

affiliates) as of December 31, 2017, are 

exempt, if other requirements of 

Regulation Z also are met, from 

establishing escrow accounts for higherpriced mortgage loans in 2018. This 

asset limit will also apply during a grace 

period, in certain circumstances, with 

respect to transactions with applications 

received before April 1 of 2019. The 

adjustment to the escrows asset-size 

exemption threshold will also increase 

a similar threshold for small-creditor 

portfolio and balloon-payment qualified 

mortgages. Balloon-payment qualified 

mortgages that satisfy all applicable 


daltland on DSKBBV9HB2PROD with RULES
61148 Federal Register / Vol. 82, No. 247 / Wednesday, December 27, 2017 / Rules and Regulations 

1 78 FR 4726 (Jan. 22, 2013). 

2See 12 CFR 1026.35(b)(2)(iii)(C). 

3See 80 FR 59944 (Oct. 2, 2015). 

4See 80 FR 59943, 59951 (Oct. 2, 2015). 5The Bureau also issued an interim final rule in 

March 2016 to revise certain provisions in 

Regulation Z to effectuate the Helping Expand 

Lending Practices in Rural Communities Act’s 

amendments to TILA (Pub. L. 114–94, section 

89003, 129 Stat. 1312, 1800–01 (2015)). The rule 

broadened the cohort of creditors that may be 

eligible under TILA for the special provisions 

allowing origination of balloon-payment qualified 

mortgages and balloon-payment high-cost 

mortgages, as well as for the escrow exemption. See 

81 FR 16074 (Mar. 25, 2016). 

criteria, including being made by 

creditors that have (together with 

certain affiliates) total assets below the 

threshold, are also excepted from the 

prohibition on balloon payments for 

high-cost mortgages. 

DATES: This final rule is effective 

January 1, 2018. 

FOR FURTHER INFORMATION CONTACT: 

Monique Chenault, Paralegal Specialist, 

Office of Regulations, Consumer 

Financial Protection Bureau, 1700 G 

Street NW, Washington, DC 20552, at 

(202) 435–7700. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Dodd-Frank Wall Street Reform 

and Consumer Protection Act (DoddFrank Act) amended TILA to add 

section 129D(a), which contains a 

general requirement that an escrow 

account be established by a creditor to 

pay for property taxes and insurance 

premiums for certain first-lien higherpriced mortgage loan transactions. TILA 

section 129D also generally permits an 

exemption from the higher-priced 

mortgage loan escrow requirement for a 

creditor that meets certain requirements, 

including any asset-size threshold the 

Bureau may establish. 

In the 2013 Escrows Final Rule,1 the 

Bureau established such an asset-size 

threshold of $2 billion, which would 

adjust automatically each year, based on 

the year-to-year change in the average of 

the CPI–W for each 12-month period 

ending in November, with rounding to 

the nearest million dollars.2 In 2015, the 

Bureau revised the criteria for small 

creditors, and rural and underserved 

areas, for purposes of certain special 

provisions and exemptions from various 

requirements provided to certain small 

creditors under the Bureau’s mortgage 

rules.3 As part of this revision the 

Bureau made certain changes that affect 

how the asset-size threshold applies. 

The Bureau revised 

§ 1026.35(b)(2)(iii)(C) and its 

accompanying commentary to include 

in the calculation of the asset-size 

threshold the assets of the creditor’s 

affiliates that regularly extended 

covered transactions secured by first 

liens during the applicable period. The 

Bureau also added a grace period from 

calendar year to calendar year to allow 

an otherwise eligible creditor that 

exceeded the asset limit in the 

preceding calendar year (but not in the 

calendar year before the preceding year) 

to continue to operate as a small 

creditor with respect to transactions 

with applications received before April 

1 of the current calendar year.4 5 For 

2017, the threshold was $2.069 billion. 

During the 12-month period ending in 

November 2017, the average of the CPI– 

W increased by 2.1 percent. As a result, 

the exemption threshold is increased to 

$2.112 billion for 2018. Thus, if the 

creditor’s assets together with the assets 

of its affiliates that regularly extended 

first-lien covered transactions during 

calendar year 2017 are less than $2.112 

billion on December 31, 2017, and it 

meets the other requirements of 

§ 1026.35(b)(2)(iii), it will be exempt in 

2018 from the escrow-accounts 

requirement for higher-priced mortgage 

loans and will also be exempt from the 

escrow-accounts requirement for higherpriced mortgage loans for purposes of 

any loan consummated in 2019 for 

which the application was received 

before April 1, 2019. The adjustment to 

the escrows asset-size exemption 

threshold will also increase the 

threshold for small-creditor portfolio 

and balloon-payment qualified 

mortgages under Regulation Z. The 

requirements for small-creditor portfolio 

qualified mortgages at 

§ 1026.43(e)(5)(i)(D) reference the asset 

threshold in § 1026.35(b)(2)(iii)(C). 

Likewise, the requirements for balloonpayment qualified mortgages at 

§ 1026.43(f)(1)(vi) reference the asset 

threshold in § 1026.35(b)(2)(iii)(C). 

Under § 1026.32(d)(1)(ii)(C), balloonpayment qualified mortgages that satisfy 

all applicable criteria in 

§ 1026.43(f)(1)(i) through (vi) and (f)(2), 

including being made by creditors that 

have (together with certain affiliates) 

total assets below the threshold in 

§ 1026.35(b)(2)(iii)(C), are also excepted 

from the prohibition on balloon 

payments for high-cost mortgages. 

II. Procedural Requirements 

A. Administrative Procedure Act 

Under the Administrative Procedure 

Act (APA), notice and opportunity for 

public comment are not required if the 

Bureau finds that notice and public 

comment are impracticable, 

unnecessary, or contrary to the public 

interest. 5 U.S.C. 553(b)(B). Pursuant to 

this final rule, comment 35(b)(2)(iii)–1 

in Regulation Z is amended to update 

the exemption threshold. The 

amendment in this final rule is 

technical and merely applies the 

formula previously established in 

Regulation Z for determining any 

adjustments to the exemption threshold. 

For these reasons, the Bureau has 

determined that publishing a notice of 

proposed rulemaking and providing 

opportunity for public comment are 

unnecessary. Therefore, the amendment 

is adopted in final form. 

Section 553(d) of the APA generally 

requires publication of a final rule not 

less than 30 days before its effective 

date, except (1) a substantive rule which 

grants or recognizes an exemption or 

relieves a restriction; (2) interpretive 

rules and statements of policy; or (3) as 

otherwise provided by the agency for 

good cause found and published with 

the rule. 5 U.S.C. 553(d). At a minimum, 

the Bureau believes the amendments fall 

under the third exception to section 

553(d). The Bureau finds that there is 

good cause to make the amendments 

effective on January 1, 2018. The 

amendment in this document is 

technical and applies the method 

previously established in the agency’s 

regulations for automatic adjustments to 

the threshold. 

B. Regulatory Flexibility Act 

Because no notice of proposed 

rulemaking is required, the Regulatory 

Flexibility Act does not require an 

initial or final regulatory flexibility 

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

C. Paperwork Reduction Act 

In accordance with the Paperwork 

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

5 CFR part 1320), the agency reviewed 

this final rule. No collections of 

information pursuant to the Paperwork 

Reduction Act are contained in the final 

rule. 

D. Congressional Review Act 

Pursuant to the Congressional Review 

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

(OIRA) has designated this rule as not 

a ‘‘major rule’’ as defined by 5 U.S.C. 

804(2). 

List of Subjects in 10 CFR Part 1026 

Advertising, Appraisal, Appraiser, 

Banking, Banks, Consumer protection, 

Credit, Credit unions, Mortgages, 


daltland on DSKBBV9HB2PROD with RULES
Federal Register / Vol. 82, No. 247 / Wednesday, December 27, 2017 / Rules and Regulations 61149 

National banks, Reporting and 

recordkeeping requirements, Savings 

associations, Truth in lending. 

Authority and Issuance 

For the reasons set forth above, the 

Bureau amends Regulation Z, 12 CFR 

part 1026, as set forth below: 

PART 1026—TRUTH IN LENDING 

(REGULATION Z) 

■ 1. The authority citation for part 1026 

continues to read as follows: 

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

2607, 2609, 2617, 3353, 5511, 5512, 5532, 

5581; 15 U.S.C. 1601 et seq. 

■ 2. In Supplement I to Part 1026— 

Official Interpretations, under Section 

1026.35—Requirements for HigherPriced Mortgage Loans, 35(b)(2) 

Exemptions, Paragraph 35(b)(2)(iii) is 

revised to read as follows: 

Supplement I to Part 1026—Official 

Interpretations 

* * * * * 

Section 1026.35—Requirements for 

Higher-Priced Mortgage Loans 

* * * * * 

35(b)(2) Exemptions. 

* * * * * 

Paragraph 35(b)(2)(iii). 

1. Requirements for exemption. Under 

§ 1026.35(b)(2)(iii), except as provided 

in § 1026.35(b)(2)(v), a creditor need not 

establish an escrow account for taxes 

and insurance for a higher-priced 

mortgage loan, provided the following 

four conditions are satisfied when the 

higher-priced mortgage loan is 

consummated: 

i. During the preceding calendar year, 

or during either of the two preceding 

calendar years if the application for the 

loan was received before April 1 of the 

current calendar year, a creditor 

extended a first-lien covered 

transaction, as defined in 

§ 1026.43(b)(1), secured by a property 

located in an area that is either ‘‘rural’’ 

or ‘‘underserved,’’ as set forth in 

§ 1026.35(b)(2)(iv). 

A. In general, whether the rural-orunderserved test is satisfied depends on 

the creditor’s activity during the 

preceding calendar year. However, if the 

application for the loan in question was 

received before April 1 of the current 

calendar year, the creditor may instead 

meet the rural-or-underserved test based 

on its activity during the next-to-last 

calendar year. This provides creditors 

with a grace period if their activity 

meets the rural-or-underserved test (in 

§ 1026.35(b)(2)(iii)(A)) in one calendar 

year but fails to meet it in the next 

calendar year. 

B. A creditor meets the rural-orunderserved test for any higher-priced 

mortgage loan consummated during a 

calendar year if it extended a first-lien 

covered transaction in the preceding 

calendar year secured by a property 

located in a rural-or-underserved area. If 

the creditor does not meet the rural-orunderserved test in the preceding 

calendar year, the creditor meets this 

condition for a higher-priced mortgage 

loan consummated during the current 

calendar year only if the application for 

the loan was received before April 1 of 

the current calendar year and the 

creditor extended a first-lien covered 

transaction during the next-to-last 

calendar year that is secured by a 

property located in a rural or 

underserved area. The following 

examples are illustrative: 

1. Assume that a creditor extended 

during 2016 a first-lien covered 

transaction that is secured by a property 

located in a rural or underserved area. 

Because the creditor extended a firstlien covered transaction during 2016 

that is secured by a property located in 

a rural or underserved area, the creditor 

can meet this condition for exemption 

for any higher-priced mortgage loan 

consummated during 2017. 

2. Assume that a creditor did not 

extend during 2016 a first-lien covered 

transaction secured by a property that is 

located in a rural or underserved area. 

Assume further that the same creditor 

extended during 2015 a first-lien 

covered transaction that is located in a 

rural or underserved area. Assume 

further that the creditor consummates a 

higher-priced mortgage loan in 2017 for 

which the application was received in 

November 2017. Because the creditor 

did not extend during 2016 a first-lien 

covered transaction secured by a 

property that is located in a rural or 

underserved area, and the application 

was received on or after April 1, 2017, 

the creditor does not meet this 

condition for exemption. However, 

assume instead that the creditor 

consummates a higher-priced mortgage 

loan in 2017 based on an application 

received in February 2017. The creditor 

meets this condition for exemption for 

this loan because the application was 

received before April 1, 2017, and the 

creditor extended during 2015 a firstlien covered transaction that is located 

in a rural or underserved area. 

ii. The creditor and its affiliates 

together extended no more than 2,000 

covered transactions, as defined in 

§ 1026.43(b)(1), secured by first liens, 

that were sold, assigned, or otherwise 

transferred by the creditor or its 

affiliates to another person, or that were 

subject at the time of consummation to 

a commitment to be acquired by another 

person, during the preceding calendar 

year or during either of the two 

preceding calendar years if the 

application for the loan was received 

before April 1 of the current calendar 

year. For purposes of 

§ 1026.35(b)(2)(iii)(B), a transfer of a 

first-lien covered transaction to 

‘‘another person’’ includes a transfer by 

a creditor to its affiliate. 

A. In general, whether this condition 

is satisfied depends on the creditor’s 

activity during the preceding calendar 

year. However, if the application for the 

loan in question is received before April 

1 of the current calendar year, the 

creditor may instead meet this condition 

based on activity during the next-to-last 

calendar year. This provides creditors 

with a grace period if their activity falls 

at or below the threshold in one 

calendar year but exceeds it in the next 

calendar year. 

B. For example, assume that in 2015 

a creditor and its affiliates together 

extended 1,500 loans that were sold, 

assigned, or otherwise transferred by the 

creditor or its affiliates to another 

person, or that were subject at the time 

of consummation to a commitment to be 

acquired by another person, and 2,500 

such loans in 2016. Because the 2016 

transaction activity exceeds the 

threshold but the 2015 transaction 

activity does not, the creditor satisfies 

this condition for exemption for a 

higher-priced mortgage loan 

consummated during 2017 if the 

creditor received the application for the 

loan before April 1, 2017, but does not 

satisfy this condition for a higher-priced 

mortgage loan consummated during 

2017 if the application for the loan was 

received on or after April 1, 2017. 

C. For purposes of 

§ 1026.35(b)(2)(iii)(B), extensions of 

first-lien covered transactions, during 

the applicable time period, by all of a 

creditor’s affiliates, as ‘‘affiliate’’ is 

defined in § 1026.32(b)(5), are counted 

toward the threshold in this section. 

‘‘Affiliate’’ is defined in § 1026.32(b)(5) 

as ‘‘any company that controls, is 

controlled by, or is under common 

control with another company, as set 

forth in the Bank Holding Company Act 

of 1956 (12 U.S.C. 1841 et seq.).’’ Under 

the Bank Holding Company Act, a 

company has control over a bank or 

another company if it ‘‘directly or 

indirectly or acting through one or more 

persons owns, controls, or has power to 

vote 25 per centum or more of any class 

of voting securities of the bank or 

company’’; it ‘‘controls in any manner 

the election of a majority of the directors 


daltland on DSKBBV9HB2PROD with RULES
61150 Federal Register / Vol. 82, No. 247 / Wednesday, December 27, 2017 / Rules and Regulations 

or trustees of the bank or company’’; or 

the Federal Reserve Board ‘‘determines, 

after notice and opportunity for hearing, 

that the company directly or indirectly 

exercises a controlling influence over 

the management or policies of the bank 

or company.’’ 12 U.S.C. 1841(a)(2). 

iii. As of the end of the preceding 

calendar year, or as of the end of either 

of the two preceding calendar years if 

the application for the loan was 

received before April 1 of the current 

calendar year, the creditor and its 

affiliates that regularly extended 

covered transactions secured by first 

liens, together, had total assets that are 

less than the applicable annual asset 

threshold. 

A. For purposes of 

§ 1026.35(b)(2)(iii)(C), in addition to the 

creditor’s assets, only the assets of a 

creditor’s ‘‘affiliate’’ (as defined by 

§ 1026.32(b)(5)) that regularly extended 

covered transactions (as defined by 

§ 1026.43(b)(1)) secured by first liens, 

are counted toward the applicable 

annual asset threshold. See comment 

35(b)(2)(iii)–1.ii.C for discussion of 

definition of ‘‘affiliate.’’ 

B. Only the assets of a creditor’s 

affiliate that regularly extended first-lien 

covered transactions during the 

applicable period are included in 

calculating the creditor’s assets. The 

meaning of ‘‘regularly extended’’ is 

based on the number of times a person 

extends consumer credit for purposes of 

the definition of ‘‘creditor’’ in 

§ 1026.2(a)(17). Because covered 

transactions are ‘‘transactions secured 

by a dwelling,’’ consistent with 

§ 1026.2(a)(17)(v), an affiliate regularly 

extended covered transactions if it 

extended more than five covered 

transactions in a calendar year. Also 

consistent with § 1026.2(a)(17)(v), 

because a covered transaction may be a 

high-cost mortgage subject to § 1026.32, 

an affiliate regularly extends covered 

transactions if, in any 12-month period, 

it extends more than one covered 

transaction that is subject to the 

requirements of § 1026.32 or one or 

more such transactions through a 

mortgage broker. Thus, if a creditor’s 

affiliate regularly extended first-lien 

covered transactions during the 

preceding calendar year, the creditor’s 

assets as of the end of the preceding 

calendar year, for purposes of the asset 

limit, take into account the assets of that 

affiliate. If the creditor, together with its 

affiliates that regularly extended firstlien covered transactions, exceeded the 

asset limit in the preceding calendar 

year—to be eligible to operate as a small 

creditor for transactions with 

applications received before April 1 of 

the current calendar year—the assets of 

the creditor’s affiliates that regularly 

extended covered transactions in the 

year before the preceding calendar year 

are included in calculating the creditor’s 

assets. 

C. If multiple creditors share 

ownership of a company that regularly 

extended first-lien covered transactions, 

the assets of the company count toward 

the asset limit for a co-owner creditor if 

the company is an ‘‘affiliate,’’ as defined 

in § 1026.32(b)(5), of the co-owner 

creditor. Assuming the company is not 

an affiliate of the co-owner creditor by 

virtue of any other aspect of the 

definition (such as by the company and 

co-owner creditor being under common 

control), the company’s assets are 

included toward the asset limit of the 

co-owner creditor only if the company 

is controlled by the co-owner creditor, 

‘‘as set forth in the Bank Holding 

Company Act.’’ If the co-owner creditor 

and the company are affiliates (by virtue 

of any aspect of the definition), the coowner creditor counts all of the 

company’s assets toward the asset limit, 

regardless of the co-owner creditor’s 

ownership share. Further, because the 

co-owner and the company are mutual 

affiliates the company also would count 

all of the co-owner’s assets towards its 

own asset limit. See comment 

35(b)(2)(iii)–1.ii.C for discussion of the 

definition of ‘‘affiliate.’’ 

D. A creditor satisfies the criterion in 

§ 1026.35(b)(2)(iii)(C) for purposes of 

any higher-priced mortgage loan 

consummated during 2016, for example, 

if the creditor (together with its affiliates 

that regularly extended first-lien 

covered transactions) had total assets of 

less than the applicable asset threshold 

on December 31, 2015. A creditor that 

(together with its affiliates that regularly 

extended first-lien covered transactions) 

did not meet the applicable asset 

threshold on December 31, 2015 

satisfies this criterion for a higherpriced mortgage loan consummated 

during 2016 if the application for the 

loan was received before April 1, 2016 

and the creditor (together with its 

affiliates that regularly extended firstlien covered transactions) had total 

assets of less than the applicable asset 

threshold on December 31, 2014. 

E. Under § 1026.35(b)(2)(iii)(C), the 

$2,000,000,000 asset threshold adjusts 

automatically each year based on the 

year-to-year change in the average of the 

Consumer Price Index for Urban Wage 

Earners and Clerical Workers, not 

seasonally adjusted, for each 12-month 

period ending in November, with 

rounding to the nearest million dollars. 

The Bureau will publish notice of the 

asset threshold each year by amending 

this comment. For calendar year 2018, 

the asset threshold is $2,112,000,000. A 

creditor that together with the assets of 

its affiliates that regularly extended 

first-lien covered transactions during 

calendar year 2017 has total assets of 

less than $2,112,000,000 on December 

31, 2017, satisfies this criterion for 

purposes of any loan consummated in 

2018 and for purposes of any loan 

consummated in 2019 for which the 

application was received before April 1, 

2019. For historical purposes: 

1. For calendar year 2013, the asset 

threshold was $2,000,000,000. Creditors 

that had total assets of less than 

$2,000,000,000 on December 31, 2012, 

satisfied this criterion for purposes of 

the exemption during 2013. 

2. For calendar year 2014, the asset 

threshold was $2,028,000,000. Creditors 

that had total assets of less than 

$2,028,000,000 on December 31, 2013, 

satisfied this criterion for purposes of 

the exemption during 2014. 

3. For calendar year 2015, the asset 

threshold was $2,060,000,000. Creditors 

that had total assets of less than 

$2,060,000,000 on December 31, 2014, 

satisfied this criterion for purposes of 

any loan consummated in 2015 and, if 

the creditor’s assets together with the 

assets of its affiliates that regularly 

extended first-lien covered transactions 

during calendar year 2014 were less 

than that amount, for purposes of any 

loan consummated in 2016 for which 

the application was received before 

April 1, 2016. 

4. For calendar year 2016, the asset 

threshold was $2,052,000,000. A 

creditor that together with the assets of 

its affiliates that regularly extended 

first-lien covered transactions during 

calendar year 2015 had total assets of 

less than $2,052,000,000 on December 

31, 2015, satisfied this criterion for 

purposes of any loan consummated in 

2016 and for purposes of any loan 

consummated in 2017 for which the 

application was received before April 1, 

2017. 

5. For calendar year 2017, the asset 

threshold was $2,069,000,000. A 

creditor that together with the assets of 

its affiliates that regularly extended 

first-lien covered transactions during 

calendar year 2016 had total assets of 

less than $2,069,000,000 on December 

31, 2016, satisfied this criterion for 

purposes of any loan consummated in 

2017 and for purposes of any loan 

consummated in 2018 for which the 

application was received before April 1, 

2018. 

iv. The creditor and its affiliates do 

not maintain an escrow account for any 

mortgage transaction being serviced by 

the creditor or its affiliate at the time the 

transaction is consummated, except as 


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Federal Register / Vol. 82, No. 247 / Wednesday, December 27, 2017 / Rules and Regulations 61151 

provided in § 1026.35(b)(2)(iii)(D)(1) 

and (2). Thus, the exemption applies, 

provided the other conditions of 

§ 1026.35(b)(2)(iii) are satisfied, even if 

the creditor previously maintained 

escrow accounts for mortgage loans, 

provided it no longer maintains any 

such accounts except as provided in 

§ 1026.35(b)(2)(iii)(D)(1) and (2). Once a 

creditor or its affiliate begins escrowing 

for loans currently serviced other than 

those addressed in 

§ 1026.35(b)(2)(iii)(D)(1) and (2), 

however, the creditor and its affiliate 

become ineligible for the exemption in 

§ 1026.35(b)(2)(iii) on higher-priced 

mortgage loans they make while such 

escrowing continues. Thus, as long as a 

creditor (or its affiliate) services and 

maintains escrow accounts for any 

mortgage loans, other than as provided 

in § 1026.35(b)(2)(iii)(D)(1) and (2), the 

creditor will not be eligible for the 

exemption for any higher-priced 

mortgage loan it may make. For 

purposes of § 1026.35(b)(2)(iii), a 

creditor or its affiliate ‘‘maintains’’ an 

escrow account only if it services a 

mortgage loan for which an escrow 

account has been established at least 

through the due date of the second 

periodic payment under the terms of the 

legal obligation. 

* * * * * 

Dated: December 14, 2017. 

Mick Mulvaney, 

Acting Director, Bureau of Consumer 

Financial Protection. 

[FR Doc. 2017–27897 Filed 12–21–17; 4:15 pm] 

BILLING CODE 4810–AM–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2017–0750; Product 

Identifier 2017–NE–24–AD; Amendment 39– 

19137; AD 2017–26–06] 

RIN 2120–AA64 

Airworthiness Directives; Rolls-Royce 

Corporation Turbofan Engines 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: We are adopting a new 

airworthiness directive (AD) for certain 

Rolls-Royce Corporation (RRC) AE 

3007A and AE 3007C model turbofan 

engines. This AD was prompted by an 

updated analysis that lowered the life 

limit of fan wheels installed on the 

affected engines. This AD requires 

removal of the affected fan wheel at 

new, lower life limits. We are issuing 

this AD to address the unsafe condition 

on these products. 

DATES: This AD is effective January 31, 

2018. 

The Director of the Federal Register 

approved the incorporation by reference 

of a certain publication listed in this AD 

as of January 31, 2018. 

ADDRESSES: For service information 

identified in this final rule, contact 

Rolls-Royce Corporation, 450 South 

Meridian Street, Mail Code NB–02–05, 

Indianapolis, IN 46225; phone: 317– 

230–3774; email: indy.pubs.services@

rolls-royce.com; internet: www.rollsroyce.com. You may view this service 

information at the FAA, Engine and 

Propeller Standards Branch, 1200 

District Avenue, Burlington, MA. For 

information on the availability of this 

material at the FAA, call 781–238–7125. 

Examining the AD Docket 

You may examine the AD docket on 

the internet at http://

www.regulations.gov by searching for 

and locating Docket No. FAA–2017– 

0750; 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 final rule, 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: Kyri 

Zaroyiannis, Aerospace Engineer, 

Chicago ACO Branch, FAA, 2300 E. 

Devon Ave., Des Plaines, IL 60018; 

phone: 847–294–7836; fax: 847–294– 

7834; email: kyri.zaroyiannis@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Discussion 

We issued a notice of proposed 

rulemaking (NPRM) to amend 14 CFR 

part 39 by adding an AD that would 

apply to certain RRC AE 3007A and AE 

3007C model turbofan engines. The 

NPRM published in the Federal 

Register on September 22, 2017 (82 FR 

44357). The NPRM was prompted by an 

updated stress analysis that showed 

higher stress than previously calculated 

in the aft retainer flange scallop of the 

fan wheel, part number (P/N) 23061670. 

As a result, RRC reduced the published 

life of the affected fan wheel. The NPRM 

proposed to require removal of the 

affected fan wheel at new, lower life 

limits. We are issuing this AD to correct 

the unsafe condition on these products. 

Comments 

We gave the public the opportunity to 

participate in developing this final rule. 

We have considered the comment 

received. The Air Line Pilots 

Association supported the NPRM. 

Conclusion 

We reviewed the relevant data, 

considered the comment received, and 

determined that air safety and the 

public interest require adopting this 

final rule as proposed except for minor 

editorial changes. We have determined 

that these minor changes: 

• Are consistent with the intent that 

was proposed in the NPRM for 

correcting the unsafe condition; and 

• Do not add any additional burden 

upon the public than was already 

proposed in the NPRM. 

Related Service Information Under 1 

CFR Part 51 

We reviewed RRC Alert Service 

Bulletin (ASB) AE 3007A–A–72–424/ 

ASB AE 3007C–A–72–327 (one 

document), Revision 1, dated April 20, 

2017. The ASB provides updated life 

limits for the affected fan wheels. This 

service information is reasonably 

available because the interested parties 

have access to it through their normal 

course of business or by the means 

identified in the ADDRESSES section. 

Costs of Compliance 

We estimate that this AD affects 341 

engines installed on airplanes of U.S. 

registry. 

We estimate the following costs to 

comply with this AD: 


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