Source: https://www.federalregister.gov/documents/2015/12/23/2015-32293/truth-in-lending-act-regulation-z-adjustment-to-asset-size-exemption-threshold
Timestamp: 2019-07-21 02:14:55
Document Index: 182230789

Matched Legal Cases: ['§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', '§\u20091026', 'art 1026', '§\u20091026', '§\u20091026']

79674-79675 (2 pages)
https://www.federalregister.gov/d/2015-32293 https://www.federalregister.gov/d/2015-32293
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amended TILA section 129D(a) to contain a general requirement that an escrow account be established by a creditor to pay for property taxes and insurance premiums for certain first-lien higher-priced mortgage loan transactions. TILA section 129(D) 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 $2,000,000,000, 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] For 2015, the threshold was $2.060 billion. The Bureau recently 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. As part of this revision the Bureau made certain changes that affect how the asset-size threshold applies. The Bureau revised the rule 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.[3]
During the 12-month period ending in November 2015, the average of theCPI-W decreased by 0.4 percent. As a result, the exemption threshold is decreased to $2.052 billion for 2016. Thus, if the creditor's assets together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2015 are less than $2.052 billion on December 31, 2015, and it meets the other requirements of § 1026.35(b)(2)(iii) it will be exempt in 2016 from the escrow-accounts requirement for higher-priced mortgage loans and will also be exempt from the escrow-accounts requirement for higher-priced mortgage loans for purposes of any loan consummated in 2017 for which the application was received before April 1, 2017. The Start Printed Page 79675adjustment to the escrows exemption asset-size threshold will also decrease 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 balloon-payment qualified mortgages at § 1026.43(f)(1)(vi) reference the asset threshold in § 1026.35(b)(2)(iii)(C). Balloon-payment qualified mortgages that satisfy all applicable criteria in §§ 1026.43(f)(1)(i) through (vi) and 1026.43(f)(2), or the conditions set forth in § 1026.43(e)(6) for covered transactions for which the application is received before April 1, 2016,[4] 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 in § 1026.32(d)(1)(ii)(C).
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 for (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, 2016. The amendment in this rule is technical, and applies the method previously established in the agency's regulations for automatic adjustments to the threshold.
2. In Supplement I to Part 1026—Official Interpretations, under Section 1026.35—Requirements for Higher-Priced Mortgage Loans, 35(b)(2) Exemptions, Paragraph 35(b)(2)(iii), paragraph 1.iii.E introductory text, as amended at 80 FR 59968 (Oct. 2, 2015), is revised to read as follows:
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 2016, the asset threshold is $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 has total assets of less than $2,052,000,000 on December 31, 2015, satisfies 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. For historical purposes:
3. See 80 FR 59943, 59951 (Oct. 2, 2015).
4. The Bureau extended the temporary provision in § 1026.43(e)(6) from covered transactions consummated on or before January 10, 2016 to covered transactions for which the application was received on or before April 1, 2016. See 80 FR 59943, 59959 (Oct. 2, 2015).
[FR Doc. 2015-32293 Filed 12-22-15; 8:45 am]