Rule2023-25047
Appraisals for Higher-Priced Mortgage Loans Exemption Threshold
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 29, 2023
Effective
January 1, 2024
Issuing agencies
Treasury DepartmentComptroller of the CurrencyFederal Reserve SystemConsumer Financial Protection Bureau
Abstract
The OCC, the Board, and the Bureau are finalizing amendments to the official interpretations for their regulations that implement section 129H of the Truth in Lending Act (TILA). Section 129H of TILA establishes special appraisal requirements for "higher-risk mortgages," termed "higher-priced mortgage loans" or "HPMLs" in the agencies' regulations. The OCC, the Board, the Bureau, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Federal Housing Finance Agency (FHFA) (collectively, the Agencies) jointly issued final rules implementing these requirements, effective January 18, 2014. The Agencies' rules exempted, among other loan types, transactions of $25,000 or less, and required that this loan amount be adjusted annually based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there is no annual percentage increase in the CPI-W, the OCC, the Board, and the Bureau will not adjust this exemption threshold from the prior year. Additionally, in years following a year in which the exemption threshold was not adjusted because the CPI-W decreased, the threshold is calculated by applying the annual percentage increase in the CPI-W to the dollar amount that would have resulted, after rounding, if the decreases and any subsequent increases in the CPI-W had been taken into account. Based on the CPI-W in effect as of June 1, 2023, the exemption threshold will increase from $31,000 to $32,400, effective January 1, 2024.
Full Text
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<title>Federal Register, Volume 88 Issue 228 (Wednesday, November 29, 2023)</title>
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[Federal Register Volume 88, Number 228 (Wednesday, November 29, 2023)]
[Rules and Regulations]
[Pages 83311-83316]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-25047]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 34
[Docket No. OCC-2023-0012]
RIN 1557-AF23
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Docket No. R-1819]
RIN 7100-AG19
CONSUMER FINANCIAL PROTECTION BUREAU
12 CFR Part 1026
Appraisals for Higher-Priced Mortgage Loans Exemption Threshold
AGENCY: Office of the Comptroller of the Currency, Treasury (OCC);
Board of Governors of the Federal Reserve System (Board); and Consumer
Financial Protection Bureau (Bureau).
ACTION: Final rules, official interpretations, and commentary.
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SUMMARY: The OCC, the Board, and the Bureau are finalizing amendments
to the official interpretations for their regulations that implement
section 129H of the Truth in Lending Act (TILA). Section 129H of TILA
establishes special appraisal requirements for ``higher-risk
mortgages,'' termed ``higher-priced mortgage loans'' or ``HPMLs'' in
the agencies' regulations. The OCC, the Board, the Bureau, the Federal
Deposit Insurance Corporation (FDIC), the National Credit Union
Administration (NCUA), and the Federal Housing Finance Agency (FHFA)
(collectively, the Agencies) jointly issued final rules implementing
these requirements, effective January 18, 2014. The Agencies' rules
exempted, among other loan types, transactions of $25,000 or less, and
required that this loan amount be adjusted annually based on any annual
percentage increase in the Consumer Price Index for Urban Wage Earners
and Clerical Workers (CPI-W). If there is no annual percentage increase
in the CPI-W, the OCC, the Board, and the Bureau will not adjust this
exemption threshold from the prior year. Additionally, in years
following a year in which the exemption threshold was not adjusted
because the CPI-W decreased, the threshold is calculated by applying
the annual percentage increase in the CPI-W to the dollar amount that
[[Page 83312]]
would have resulted, after rounding, if the decreases and any
subsequent increases in the CPI-W had been taken into account. Based on
the CPI-W in effect as of June 1, 2023, the exemption threshold will
increase from $31,000 to $32,400, effective January 1, 2024.
DATES: This final rule is effective January 1, 2024.
FOR FURTHER INFORMATION CONTACT:
OCC: MaryAnn Nash, Counsel, Chief Counsel's Office, Office of the
Comptroller of the Currency, at (202) 649-6287. If you are deaf, hard
of hearing, or have a speech disability, please dial 7-1-1 to access
telecommunications relay services.
Board: Lorna M. Neill, Senior Counsel, Division of Consumer and
Community Affairs, Board of Governors of the Federal Reserve System, at
(202) 452-3667. For users of TTY-TRS, please call 711 from any
telephone, anywhere in the United States.
Bureau: Anna Boadwee and Adrien Fernandez, Attorney-Advisors,
Office of Regulations, Consumer Financial Protection Bureau, at (202)
435-7700. If you require this document in an alternative electronic
format, please contact <a href="/cdn-cgi/l/email-protection#32717462706d7351515741415b505b5e5b464b72515442501c555d44"><span class="__cf_email__" data-cfemail="480b0e180a17092b2b2d3b3b212a2124213c31082b2e382a662f273e">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
The Dodd-Frank Wall Street Reform and Consumer Protection Act of
2010 (Dodd-Frank Act) amended TILA to add special appraisal
requirements for ``higher-risk mortgages.'' \1\ In January 2013, the
Agencies jointly issued a final rule implementing these requirements
and adopted the term ``higher-priced mortgage loan'' (HPML) instead of
``higher-risk mortgage'' (the January 2013 Final Rule).\2\ In July
2013, the Agencies proposed additional exemptions from the January 2013
Final Rule.\3\ In December 2013, the Agencies issued a supplemental
final rule with additional exemptions from the January 2013 Final Rule
(the December 2013 Supplemental Final Rule).\4\ Among other exemptions,
the Agencies adopted an exemption from the new HPML appraisal rules for
transactions of $25,000 or less, to be adjusted annually for inflation.
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\1\ Public Law 111-203, section 1471, 124 Stat. 1376, 2185-87
(2010), codified at TILA section 129H, 15 U.S.C. 1639h.
\2\ 78 FR 10368 (Feb. 13, 2013).
\3\ 78 FR 48548 (Aug. 8, 2013).
\4\ 78 FR 78520 (Dec. 26, 2013).
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The OCC's, the Board's, and the Bureau's versions of the January
2013 Final Rule and December 2013 Supplemental Final Rule and
corresponding official interpretations are substantively identical. The
FDIC, NCUA, and FHFA adopted the Bureau's version of the regulations
under the January 2013 Final Rule and December 2013 Supplemental Final
Rule.\5\
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\5\ See NCUA: 12 CFR 722.3; FHFA: 12 CFR part 1222. Although the
FDIC adopted the Bureau's version of the regulation, the FDIC did
not issue its own regulation containing a cross-reference to the
Bureau's version. See 78 FR 10368, 10370 (Feb. 13, 2013).
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The OCC's, the Board's, and the Bureau's regulations,\6\ and their
accompanying interpretations,\7\ provide that the exemption threshold
for smaller loans will be adjusted effective January 1 of each year
based on any annual percentage increase in the CPI-W that was in effect
on the preceding June 1. Any increase in the threshold amount will be
rounded to the nearest $100 increment. For example, if the annual
percentage increase in the CPI-W would result in a $950 increase in the
threshold amount, the threshold amount will be increased by $1,000.
However, if the annual percentage increase in the CPI-W would result in
a $949 increase in the threshold amount, the threshold amount will be
increased by $900. If there is no annual percentage increase in the
CPI-W, the OCC, the Board, and the Bureau will not adjust the threshold
amounts from the prior year.\8\
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\6\ 12 CFR 34.203(b)(2) (OCC); 12 CFR 226.43(b)(2) (Board); and
12 CFR 1026.35(c)(2)(ii) (Bureau).
\7\ 12 CFR part 34, appendix C to subpart G, comment 203(b)(2)-1
(OCC); 12 CFR part 226, Supplement I, comment 43(b)(2)-1 (Board);
and 12 CFR part 1026, Supplement I, comment 35(c)(2)(ii)-1 (Bureau).
\8\ See 12 CFR part 34, appendix C to subpart G, comment
203(b)(2)-1 and -2 (OCC); 12 CFR part 226, Supplement I, comment
43(b)(2)-1 and -2 (Board); and 12 CFR part 1026, Supplement I,
comment 35(c)(2)(ii)-1 and -2 (Bureau).
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On November 30, 2016, the OCC, the Board, and the Bureau published
a final rule in the Federal Register to memorialize the calculation
method used by the OCC, the Board, and the Bureau each year to adjust
the exemption threshold to ensure that the values for the exemption
threshold keep pace with the CPI-W (HPML Small Dollar Adjustment
Calculation Rule).\9\ The HPML Small Dollar Adjustment Calculation Rule
memorialized the policy that, if there is no annual percentage increase
in the CPI-W, the OCC, the Board, and the Bureau will not adjust the
exemption threshold from the prior year. The HPML Small Dollar
Adjustment Calculation Rule also provided that, in years following a
year in which the exemption threshold was not adjusted because there
was a decrease in the CPI-W from the previous year, the threshold is
calculated by applying the annual percentage change in the CPI-W to the
dollar amount that would have resulted, after rounding, if the
decreases and any subsequent increases in the CPI-W had been taken into
account. If the resulting amount calculated, after rounding, is greater
than the current threshold, then the threshold effective January 1 the
following year will increase accordingly; if the resulting amount
calculated, after rounding, is equal to or less than the current
threshold, then the threshold effective January 1 the following year
will not change, but future increases will be calculated based on the
amount that would have resulted, after rounding.
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\9\ See 81 FR 86250 (Nov. 30, 2016).
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II. 2024 Adjustment and Commentary Revision
Effective January 1, 2024, the exemption threshold amount will
increase from $31,000 to $32,400. This amount is based on the CPI-W in
effect on June 1, 2023, which was reported on May 10, 2023 (based on
April 2023 data).\10\ The CPI-W is a subset of the CPI-U index (based
on all urban consumers) and represents approximately 30 percent of the
U.S. population. The CPI-W reported on May 10, 2023, reflects a 4.6
percent increase in the CPI-W from April 2022 to April 2023.
Accordingly, the 4.6 percent increase in the CPI-W from April 2022 to
April 2023 results in an exemption threshold amount of $32,400, after
rounding. The OCC, the Board, and the Bureau are revising the
commentaries to their respective regulations to add new comments as
follows:
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\10\ The Bureau of Labor Statistics calculates consumer-based
indices for each month but does not report those indices until the
middle of the following month. As such, the most recently reported
indices as of June 1, 2023, were reported on May 10, 2023, and
reflect economic conditions in April 2023.
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<bullet> Comment 203(b)(2)-3.xi to 12 CFR part 34, Appendix C to
Subpart G (OCC);
<bullet> Comment 43(b)(2)-3.xi to Supplement I of 12 CFR part 226
(Board); and
<bullet> Comment 35(c)(2)(ii)-3.xi to Supplement I of 12 CFR part
1026 (Bureau).
These new comments state that, from January 1, 2024, through
December 31, 2024, the threshold amount is $32,400. These revisions are
effective January 1, 2024.
III. Regulatory Analysis
Administrative Procedure Act
Under the Administrative Procedure Act, notice and opportunity for
public comment are not required if the agency
[[Page 83313]]
finds that notice and public comment are impracticable, unnecessary, or
contrary to the public interest.\11\ The amendments in this rule are
technical and apply the method previously memorialized in the December
2013 Supplemental Final Rule and the HPML Small Dollar Adjustment
Calculation Rule. For these reasons, the OCC, the Board, and the Bureau
have determined that publishing a notice of proposed rulemaking and
providing opportunity for public comment are unnecessary. Therefore,
the amendments are adopted in final form.
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\11\ 5 U.S.C. 553(b)(B).
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Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) does not apply to a rulemaking
where a general notice of proposed rulemaking is not required.\12\ As
noted previously, the OCC, the Board, and the Bureau have determined
that it is unnecessary to publish a general notice of proposed
rulemaking for this final rule. Accordingly, the RFA's requirements
relating to an initial and final regulatory flexibility analysis do not
apply.
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\12\ 5 U.S.C. 603(a), 604(a).
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Paperwork Reduction Act
The information collections contained in Regulation Z which
implements TILA are approved by OMB under Control number 3170-0015. The
current approval for this control number expires on May 31, 2026. In
accordance with the Paperwork Reduction Act of 1995,\13\ the OCC, the
Board, and the Bureau reviewed this final rule. The OCC, the Board, and
the Bureau have determined that this rule does not create any new
information collections or substantially revise any existing
collections.
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\13\ 44 U.S.C. 3506; 5 CFR part 1320.
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Unfunded Mandates Reform Act
As a general matter, the Unfunded Mandates Reform Act of 1995
(UMRA), 2 U.S.C. 1531 et seq., requires the preparation of a budgetary
impact statement before promulgating a rule that includes a Federal
mandate that may result in the expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector, of $100
million or more in any one year. However, the UMRA does not apply to
final rules for which a general notice of proposed rulemaking was not
published. See 2 U.S.C. 1532(a). Therefore, because the OCC has found
good cause to dispense with notice and comment for this final rule, the
OCC has not prepared a budgetary impact statement for the final rule
under the UMRA.
Bureau Congressional Review Act Statement
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Bureau will submit a report containing this rule and other required
information to the U.S. Senate, the U.S. House of Representatives, and
the Comptroller General of the United States prior to the rule taking
effect. The Office of Information and Regulatory Affairs has designated
this rule as not a ``major rule'' as defined by 5 U.S.C. 804(2).
OCC Congressional Review Act Statement
For purposes of the Congressional Review Act, OMB makes a
determination as to whether a final rule constitutes a ``major''
rule.\14\ If a rule is deemed a ``major rule'' by OMB, the
Congressional Review Act generally provides that the rule may not take
effect until at least 60 days following its publication.\15\
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\14\ 5 U.S.C. 801 et seq.
\15\ 5 U.S.C. 801(a)(3).
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The Congressional Review Act defines a ``major rule'' as any rule
that the Administrator of the Office of Information and Regulatory
Affairs of the OMB finds has resulted in or is likely to result in (A)
an annual effect on the economy of $100,000,000 or more; (B) a major
increase in costs or prices for consumers, individual industries,
Federal, State, or local government agencies or geographic regions, or
(C) significant adverse effects on competition, employment, investment,
productivity, innovation, or on the ability of United States-based
enterprises to compete with foreign-based enterprises in domestic and
export markets.\16\ The OCC currently supervises approximately 1,060
national banks, federal savings associations, trust companies and
federal branches and agencies of foreign banks (collectively,
banks).\17\ Based on the CPI-W in effect as of June 1, 2023, this final
rule will increase the exemption threshold from $31,000 to $32,400,
effective January 1, 2024. The Office of Information and Regulatory
Affairs has designated this rule as not a ``major rule'' as defined by
5 U.S.C. 804(2).
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\16\ 5 U.S.C. 804(2).
\17\ Based on data as of February 28, 2023.
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For the same reasons set forth above, the OCC is adopting this
final rule without the delayed effective date generally prescribed
under the Congressional Review Act. The delayed effective date required
by the Congressional Review Act does not apply to ``any rule which an
agency for good cause finds (and incorporates the finding and a brief
statement of reasons therefor in the rule issued) that notice and
public procedure thereon are impracticable, unnecessary, or contrary to
the public interest.'' \18\ In light of the fact that the final rule
will have a de minimis impact, delaying the effective date of the final
rule is unnecessary.
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\18\ 5 U.S.C. 808(2).
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As required by the Congressional Review Act, the OCC will submit
the final rule and other appropriate reports to Congress and the
Government Accountability Office for review.
List of Subjects
12 CFR Part 34
Accounting, Banks, Banking, Consumer protection, Credit, Mortgages,
National banks, Reporting and recordkeeping requirements, Savings
associations, Truth-in-lending.
12 CFR Part 226
Advertising, Appraisal, Appraiser, Consumer protection, Credit,
Federal Reserve System, Reporting and recordkeeping requirements, Truth
in lending.
12 CFR Part 1026
Advertising, Banks, banking, Consumer protection, Credit, Credit
unions, Mortgages, National banks, Reporting and recordkeeping
requirements, Savings associations, Truth-in-lending.
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
Authority and Issuance
For the reasons set forth in the preamble, the OCC amends 12 CFR
part 34 as set forth below:
PART 34--REAL ESTATE LENDING AND APPRAISALS
0
1. The authority citation for part 34 continues to read as follows:
Authority: 12 U.S.C. 1 et seq., 25b, 29, 93a, 371, 1462a, 1463,
1464, 1465, 1701j-3, 1828(o), 3331 et seq., 5101 et seq.,
5412(b)(2)(B) and 15 U.S.C. 1639h.
0
2. In Appendix C to Subpart G, under Section 34.203--Appraisals for
Higher-Priced Mortgage Loans, paragraph 34.203(b)(2) is revised to read
as follows:
Appendix C to Subpart G--OCC Interpretations
* * * * *
Section 34.203--Appraisals for Higher-Priced Mortgage Loans
* * * * *
[[Page 83314]]
Paragraph 34.203(b)(2)
1. Threshold amount. For purposes of Sec. 34.203(b)(2), the
threshold amount in effect during a particular period is the amount
stated in comment 203(b)(2)-3 for that period. The threshold amount
is adjusted effective January 1 of each year by any annual
percentage increase in the Consumer Price Index for Urban Wage
Earners and Clerical Workers (CPI-W) that was in effect on the
preceding June 1. Comment 203(b)(2)-3 will be amended to provide the
threshold amount for the upcoming year after the annual percentage
change in the CPI-W that was in effect on June 1 becomes available.
Any increase in the threshold amount will be rounded to the nearest
$100 increment. For example, if the annual percentage increase in
the CPI-W would result in a $950 increase in the threshold amount,
the threshold amount will be increased by $1,000. However, if the
annual percentage increase in the CPI-W would result in a $949
increase in the threshold amount, the threshold amount will be
increased by $900.
2. No increase in the CPI-W. If the CPI-W in effect on June 1
does not increase from the CPI-W in effect on June 1 of the previous
year, the threshold amount effective the following January 1 through
December 31 will not change from the previous year. When this
occurs, for the years that follow, the threshold is calculated based
on the annual percentage change in the CPI-W applied to the dollar
amount that would have resulted, after rounding, if decreases and
any subsequent increases in the CPI-W had been taken into account.
i. Net increases. If the resulting amount calculated, after
rounding, is greater than the current threshold, then the threshold
effective January 1 the following year will increase accordingly.
ii. Net decreases. If the resulting amount calculated, after
rounding, is equal to or less than the current threshold, then the
threshold effective January 1 the following year will not change,
but future increases will be calculated based on the amount that
would have resulted.
3. Threshold. For purposes of Sec. 34.203(b)(2), the threshold
amount in effect during a particular period is the amount stated
below for that period.
i. From January 18, 2014, through December 31, 2014, the
threshold amount is $25,000.
ii. From January 1, 2015, through December 31, 2015, the
threshold amount is $25,500.
iii. From January 1, 2016, through December 31, 2016, the
threshold amount is $25,500.
iv. From January 1, 2017, through December 31, 2017, the
threshold amount is $25,500.
v. From January 1, 2018, through December 31, 2018, the
threshold amount is $26,000.
vi. From January 1, 2019, through December 31, 2019, the
threshold amount is $26,700.
vii. From January 1, 2020, through December 31, 2020, the
threshold amount is $27,200.
viii. From January 1, 2021, through December 31, 2021, the
threshold amount is $27,200.
ix. From January 1, 2022, through December 31, 2022, the
threshold amount is $28,500.
x. From January 1, 2023, through December 31, 2023, the
threshold amount is $31,000.
xi. From January 1, 2024, through December 31, 2024, the
threshold amount is $32,400.
4. Qualifying for exemption--in general. A transaction is exempt
under Sec. 34.203(b)(2) if the creditor makes an extension of
credit at consummation that is equal to or below the threshold
amount in effect at the time of consummation.
5. Qualifying for exemption--subsequent changes. A transaction
does not meet the condition for an exemption under Sec.
34.203(b)(2) merely because it is used to satisfy and replace an
existing exempt loan unless the amount of the new extension of
credit is equal to or less than the applicable threshold amount. For
example, assume a closed-end loan that qualified for a Sec.
34.203(b)(2) exemption at consummation in year one is refinanced in
year ten and that the new loan amount is greater than the threshold
amount in effect in year ten. In these circumstances, the creditor
must comply with all of the applicable requirements of Sec. 34.203
with respect to the year ten transaction if the original loan is
satisfied and replaced by the new loan unless another exemption from
the requirements of Sec. 34.203 applies. See Sec. 34.203(b) and
(d)(7).
* * * * *
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Authority and Issuance
For the reasons set forth in the preamble, the Board amends
Regulation Z, 12 CFR part 226, as set forth below:
PART 226--TRUTH IN LENDING (REGULATION Z)
0
3. The authority citation for part 226 continues to read as follows:
Authority: 12 U.S.C. 3806; 15 U.S.C. 1604, 1637(c)(5), 1639(l),
and 1639h; Pub. L. 111-24, section 2, 123 Stat. 1734; Pub. L. 111-
203, 124 Stat. 1376.
0
4. In Supplement I to part 226, under Section 226.43--Appraisals for
Higher-Risk Mortgage Loans, paragraph 43(b)(2) is revised to read as
follows:
Supplement I to Part 226--Official Staff Interpretations
* * * * *
Section 226.43--Appraisals for Higher-Risk Mortgage Loans
* * * * *
Paragraph 43(b)(2)
1. Threshold amount. For purposes of Sec. 226.43(b)(2), the
threshold amount in effect during a particular period is the amount
stated in comment 43(b)(2)-3 for that period. The threshold amount is
adjusted effective January 1 of each year by any annual percentage
increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W) that was in effect on the preceding June 1.
Comment 43(b)(2)-3 will be amended to provide the threshold amount for
the upcoming year after the annual percentage change in the CPI-W that
was in effect on June 1 becomes available. Any increase in the
threshold amount will be rounded to the nearest $100 increment. For
example, if the annual percentage increase in the CPI-W would result in
a $950 increase in the threshold amount, the threshold amount will be
increased by $1,000. However, if the annual percentage increase in the
CPI-W would result in a $949 increase in the threshold amount, the
threshold amount will be increased by $900.
2. No increase in the CPI-W. If the CPI-W in effect on June 1 does
not increase from the CPI-W in effect on June 1 of the previous year,
the threshold amount effective the following January 1 through December
31 will not change from the previous year. When this occurs, for the
years that follow, the threshold is calculated based on the annual
percentage change in the CPI-W applied to the dollar amount that would
have resulted, after rounding, if decreases and any subsequent
increases in the CPI-W had been taken into account.
i. Net increases. If the resulting amount calculated, after
rounding, is greater than the current threshold, then the threshold
effective January 1 the following year will increase accordingly.
ii. Net decreases. If the resulting amount calculated, after
rounding, is equal to or less than the current threshold, then the
threshold effective January 1 the following year will not change, but
future increases will be calculated based on the amount that would have
resulted.
3. Threshold. For purposes of Sec. 226.43(b)(2), the threshold
amount in effect during a particular period is the amount stated below
for that period.
i. From January 18, 2014, through December 31, 2014, the threshold
amount is $25,000.
ii. From January 1, 2015, through December 31, 2015, the threshold
amount is $25,500.
iii. From January 1, 2016, through December 31, 2016, the threshold
amount is $25,500.
iv. From January 1, 2017, through December 31, 2017, the threshold
amount is $25,500.
v. From January 1, 2018, through December 31, 2018, the threshold
amount is $26,000.
[[Page 83315]]
vi. From January 1, 2019, through December 31, 2019, the threshold
amount is $26,700.
vii. From January 1, 2020, through December 31, 2020, the threshold
amount is $27,200.
viii. From January 1, 2021, through December 31, 2021, the
threshold amount is $27,200.
ix. From January 1, 2022, through December 31, 2022, the threshold
amount is $28,500.
x. From January 1, 2023, through December 31, 2023, the threshold
amount is $31,000.
xi. From January 1, 2024, through December 31, 2024, the threshold
amount is $32,400.
4. Qualifying for exemption--in general. A transaction is exempt
under Sec. 226.43(b)(2) if the creditor makes an extension of credit
at consummation that is equal to or below the threshold amount in
effect at the time of consummation.
5. Qualifying for exemption--subsequent changes. A transaction does
not meet the condition for an exemption under Sec. 226.43(b)(2) merely
because it is used to satisfy and replace an existing exempt loan
unless the amount of the new extension of credit is equal to or less
than the applicable threshold amount. For example, assume a closed-end
loan that qualified for a Sec. 226.43(b)(2) exemption at consummation
in year one is refinanced in year ten and that the new loan amount is
greater than the threshold amount in effect in year ten. In these
circumstances, the creditor must comply with all of the applicable
requirements of Sec. 226.43 with respect to the year ten transaction
if the original loan is satisfied and replaced by the new loan unless
another exemption from the requirements of Sec. 226.43 applies. See
Sec. 226.43(b) and (d)(7).
* * * * *
CONSUMER FINANCIAL PROTECTION BUREAU
Authority and Issuance
For the reasons set forth in the preamble, the Bureau amends
Regulation Z, 12 CFR part 1026, as set forth below:
PART 1026--TRUTH IN LENDING (REGULATION Z)
0
5. 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.
0
6. In Supplement I to part 1026, under Section 1026.35--Requirements
for Higher-Priced Mortgage Loans, paragraph 35(c)(2)(ii) is revised to
read as follows:
Supplement I to Part 1026--Official Interpretations
* * * * *
Section 1026.35--Requirements for Higher-Priced Mortgage Loans
* * * * *
Paragraph 35(c)(2)(ii)
1. Threshold amount. For purposes of Sec. 1026.35(c)(2)(ii), the
threshold amount in effect during a particular period is the amount
stated in comment 35(c)(2)(ii)-3 for that period. The threshold amount
is adjusted effective January 1 of each year by any annual percentage
increase in the Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W) that was in effect on the preceding June 1.
Comment 35(c)(2)(ii)-3 will be amended to provide the threshold amount
for the upcoming year after the annual percentage change in the CPI-W
that was in effect on June 1 becomes available. Any increase in the
threshold amount will be rounded to the nearest $100 increment. For
example, if the annual percentage increase in the CPI-W would result in
a $950 increase in the threshold amount, the threshold amount will be
increased by $1,000. However, if the annual percentage increase in the
CPI-W would result in a $949 increase in the threshold amount, the
threshold amount will be increased by $900.
2. No increase in the CPI-W. If the CPI-W in effect on June 1 does
not increase from the CPI-W in effect on June 1 of the previous year,
the threshold amount effective the following January 1 through December
31 will not change from the previous year. When this occurs, for the
years that follow, the threshold is calculated based on the annual
percentage change in the CPI-W applied to the dollar amount that would
have resulted, after rounding, if decreases and any subsequent
increases in the CPI-W had been taken into account.
i. Net increases. If the resulting amount calculated, after
rounding, is greater than the current threshold, then the threshold
effective January 1 the following year will increase accordingly.
ii. Net decreases. If the resulting amount calculated, after
rounding, is equal to or less than the current threshold, then the
threshold effective January 1 the following year will not change, but
future increases will be calculated based on the amount that would have
resulted.
3. Threshold. For purposes of Sec. 1026.35(c)(2)(ii), the
threshold amount in effect during a particular period is the amount
stated below for that period.
i. From January 18, 2014, through December 31, 2014, the threshold
amount is $25,000.
ii. From January 1, 2015, through December 31, 2015, the threshold
amount is $25,500.
iii. From January 1, 2016, through December 31, 2016, the threshold
amount is $25,500.
iv. From January 1, 2017, through December 31, 2017, the threshold
amount is $25,500.
v. From January 1, 2018, through December 31, 2018, the threshold
amount is $26,000.
vi. From January 1, 2019, through December 31, 2019, the threshold
amount is $26,700.
vii. From January 1, 2020, through December 31, 2020, the threshold
amount is $27,200.
viii. From January 1, 2021, through December 31, 2021, the
threshold amount is $27,200.
ix. From January 1, 2022, through December 31, 2022, the threshold
amount is $28,500.
x. From January 1, 2023, through December 31, 2023, the threshold
amount is $31,000.
xi. From January 1, 2024, through December 31, 2024, the threshold
amount is $32,400.
4. Qualifying for exemption--in general. A transaction is exempt
under Sec. 1026.35(c)(2)(ii) if the creditor makes an extension of
credit at consummation that is equal to or below the threshold amount
in effect at the time of consummation.
5. Qualifying for exemption--subsequent changes. A transaction does
not meet the condition for an exemption under Sec. 1026.35(c)(2)(ii)
merely because it is used to satisfy and replace an existing exempt
loan unless the amount of the new extension of credit is equal to or
less than the applicable threshold amount. For example, assume a
closed-end loan that qualified for a Sec. 1026.35(c)(2)(ii) exemption
at consummation in year one is refinanced in year ten and that the new
loan amount is greater than the threshold amount in effect in year ten.
In these circumstances, the creditor must comply with all of the
applicable requirements of Sec. 1026.35(c) with respect to the year
ten transaction if the original loan is satisfied and replaced by the
new loan unless another exemption from the requirements of Sec.
1026.35(c)
[[Page 83316]]
applies. See Sec. 1026.35(c)(2) and (c)(4)(vii).
* * * * *
Michael J. Hsu,
Acting Comptroller of the Currency.
By order of the Board of Governors of the Federal Reserve
System, acting through the Secretary of the Board under delegated
authority.
Michele Taylor Fennell,
Deputy Associate Secretary of the Board.
Brian Shearer,
Senior Advisor, Consumer Financial Protection Bureau.
[FR Doc. 2023-25047 Filed 11-28-23; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 4810-AM-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.