Appraisals for Higher-Priced Mortgage Loans Exemption Threshold
| Published date | 10 December 2020 |
| Citation | 85 FR 79385 |
| Record Number | 2020-25872 |
| Section | Rules and Regulations |
| Court | Consumer Financial Protection Bureau,Federal Reserve System,The Comptroller Of The Currency Office |
79385
Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / Rules and Regulations
1
Public Law 111–203, section 1471, 124 Stat.
1376, 2185–87 (2010), codified at TILA section
129H, 15 U.S.C. 1639h.
and by the full Board on May 7, 2019,
were unanimous. There were no
opposing votes, and no handlers
commented on the rule during the
comment period. The handlers serving
on the MORC and the Board did not feel
that the additional information required
by the change represented a significant
burden to the reporting requirements.
AMS believes that benefits of this
change to the marketing of walnuts
outweigh the concerns of the minimal
increase in the reporting burden. Also,
AMS finds the claim of commitment
data being impacted by cancelled orders
or order adjustments to be highly
speculative, with no firm evidence
presented to substantiate the assertion.
Thus, there are no changes made to the
final rule.
In addition, the comment about
changes to the data created by potential
backorders may not materialize, since
handlers are free to make interhandler
transfers of walnuts to meet their
purchase commitments; and the nature
of agricultural commodities, in general,
is not conducive to the development of
backorders. In agriculture, a crop is
produced and harvested, and more is
not coming until about a year later.
Accordingly, no changes will be made
to the rule as proposed.
A small business guide on complying
with fruit, vegetable, and specialty crop
marketing agreements and orders may
be viewed at: https://
www.ams.usda.gov/rules-regulations/
moa/small-businesses. Any questions
about the compliance guide should be
sent to Richard Lower at the previously
mentioned address in the
FOR FURTHER
INFORMATION CONTACT
section.
After consideration of all relevant
material presented, including the
information and recommendation
submitted by the Board and other
available information, it is hereby found
that this rule will tend to effectuate the
declared policy of the Act.
List of Subjects in 7 CFR Part 984
Marketing agreements, Reporting and
recordkeeping requirements, Walnuts.
For the reasons set forth in the
preamble, 7 CFR part 984 is amended as
follows:
PART 984—WALNUTS GROWN IN
CALIFORNIA
■1. The authority citation for 7 CFR
part 984 continues to read as follows:
Authority: 7 U.S.C. 601–674.
■2. Amend § 984.472 by revising the
section heading and adding paragraph
(c) to read as follows:
§ 984.472 Reports of merchantable
walnuts, received, shipped, and committed.
* * * * *
(c) Reports of merchantable walnuts
on which handlers have made purchase
commitments with buyers during the
month, but which have not yet been
shipped, shall be submitted to the Board
on CWB Form No. 6, not later than the
5th day of the month following the
month in which the walnuts were
committed. Such reports shall show the
quantity of walnuts committed in either
inshell or shelled pounds. If the handler
made no commitments during any
month, he/she shall mark ‘‘None’’ in the
‘‘Purchase Commitments’’ section of
CWB Form No. 6.
Bruce Summers,
Administrator, Agricultural Marketing
Service.
[FR Doc. 2020–26880 Filed 12–9–20; 8:45 am]
BILLING CODE P
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the
Currency
12 CFR Part 34
[Docket No. OCC–2020–0039]
RIN 1557–AF04
FEDERAL RESERVE SYSTEM
12 CFR Part 226
[Docket No. R–1729]
RIN 7100–AG00
BUREAU OF CONSUMER FINANCIAL
PROTECTION
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 Bureau of
Consumer Financial Protection
(Bureau).
ACTION
: Final rules, official
interpretations and commentary.
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. However, in years following a year
in which the exemption threshold was
not adjusted, 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, 2020, the
exemption threshold will remain at
$27,200, effective January 1, 2021.
DATES
: This final rule is effective
January 1, 2021.
FOR FURTHER INFORMATION CONTACT
:
OCC: MaryAnn Nash, Counsel, Chief
Counsel’s Office, (202) 649–6287; for
persons who are deaf or hard of hearing
TTY, (202) 649–5597.
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
Telecommunications Device for the Deaf
(TDD) only, contact (202) 263–4869.
Bureau: Rachel Ross, Attorney-
Advisor, Office of Regulations, Bureau
of Consumer Financial Protection, at
(202) 435–7700. If you require this
document in an alternative electronic
format, please contact
CFPB_Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION
:
I. Background
The Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010
(Dodd-Frank Act) amended the Truth in
Lending Act (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
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Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / Rules and Regulations
2
78 FR 10368 (Feb. 13, 2013).
3
78 FR 48548 (Aug. 8, 2013).
4
78 FR 78520 (Dec. 26, 2013).
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).
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).
9
See 81 FR 86250 (Nov. 30, 2016).
10
5 U.S.C. 553(b)(B).
11
5 U.S.C. 603(a), 604(a).
12
44 U.S.C. 3506; 5 CFR part 1320.
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 (the 2013 Supplemental Proposed
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.
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
The OCC’s, Board’s, and 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 Consumer
Price Index for Urban Wage Earners and
Clerical Workers (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
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 agencies 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 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.
II. 2021 Adjustment and Commentary
Revision
Effective January 1, 2021, the
exemption threshold amount remains at
$27,200. This amount is based on the
CPI–W in effect on June 1, 2020, which
was reported on May 12, 2020. The
Bureau of Labor Statistics publishes
consumer-based indices monthly but
does not report a CPI change on June 1;
indices are reported in the middle of the
prior month. The CPI–W is a subset of
the CPI–U index (based on all urban
consumers) and represents
approximately 29 percent of the U.S.
population. The CPI–W reported on
May 12, 2020, reflects a 0.1 percent
increase in the CPI–W from April 2019
to April 2020. Accordingly, the 0.1
percent increase in the CPI–W from
April 2019 to April 2020 results in an
exemption threshold amount of $27,200,
after rounding. The OCC, the Board, and
the Bureau are revising the
commentaries to their respective
regulations to add new comments as
follows:
•Comment 203(b)(2)–3.viii to 12 CFR
part 34, Appendix C to Subpart G
(OCC);
•Comment 43(b)(2)–3.viii to
Supplement I of 12 CFR part 226
(Board); and
•Comment 35(c)(2)(ii)–3.viii to
Supplement I of 12 CFR part 1026
(Bureau).
These new comments state that, from
January 1, 2021, through December 31,
2021, the threshold amount is $27,200.
These revisions are effective January 1,
2021.
III. Regulatory Analysis
Administrative Procedure Act
Under the Administrative Procedure
Act, notice and opportunity for public
comment are not required if the agency
finds that notice and public comment
are impracticable, unnecessary, or
contrary to the public interest.
10
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.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
does not apply to a rulemaking where a
general notice of proposed rulemaking
is not required.
11
As noted previously,
the agencies 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.
Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995,
12
the agencies
reviewed this final rule. No collections
of information pursuant to the
Paperwork Reduction Act are contained
in the final rule.
Unfunded Mandates Reform Act
The OCC analyzes proposed rules for
the factors listed in Section 202 of the
Unfunded Mandates Reform Act of
1995, before promulgating a final rule
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Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / Rules and Regulations
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2 U.S.C. 1532.
for which a general notice of proposed
rulemaking was published.
13
As
discussed above, the OCC has
determined that the publication of a
general notice of proposed rulemaking
is unnecessary.
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
(OIRA) has designated this rule as not
a ‘‘major rule’’ as defined by 5 U.S.C.
804(2).
Bureau Signing Authority
The Acting Associate Director for
Research, Markets and Regulations, Dan
S. Sokolov, having reviewed and
approved this document, is delegating
the authority to electronically sign this
document to Laura Galban, a Bureau
Federal Register Liaison, for purposes of
publication in the Federal Register.
List of Subjects
12 CFR Part 34
Appraisal, Appraiser, 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, Banking, Banks,
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
■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.
■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
* * * * *
Paragraph 34.203(b)(2)
1. Threshold amount. For purposes of
§ 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
§ 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.
4. Qualifying for exemption—in general. A
transaction is exempt under § 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
§ 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
§ 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 § 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 § 34.203 applies. See
§ 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)
■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.
■4. In Supplement I to part 226, under
Section 226.43—Appraisals for Higher-
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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
§ 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
§ 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.
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.
4. Qualifying for exemption—in general. A
transaction is exempt under § 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
§ 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
§ 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 § 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 § 226.43 applies. See
§ 226.43(b) and (d)(7).
* * * * *
BUREAU OF CONSUMER FINANCIAL
PROTECTION
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)
■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.
■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
§ 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
§ 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.
4. Qualifying for exemption—in general. A
transaction is exempt under
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79389
Federal Register / Vol. 85, No. 238 / Thursday, December 10, 2020 / Rules and Regulations
1
12 U.S.C. 287.
2
12 CFR 209.4(a).
3
12 U.S.C. 287 and 12 CFR 209.4(c)(2).
4
12 U.S.C. 289(a)(1).
5
12 CFR 209.1(d)(3) (‘‘Total consolidated assets
means the total assets on the stockholder’s balance
sheet as reported by the stockholder on its
Consolidated Report of Condition and Income (Call
Report) as of the most recent December 31, except
in the case of a new member or the surviving
stockholder after a merger ‘total consolidated assets’
means (until the next December 31 Call Report
becomes available) the total consolidated assets of
the new member or the surviving stockholder at the
time of its application for capital stock’’).
6
12 CFR 209.4(e), (c)(1)(ii), and (d)(1)(ii);
209.2(a); and 209.3(d)(3).
7
12 CFR 209.4(f).
8
81 FR 84415, 84417 (Nov. 23, 2016).
9
The BEA makes ongoing revisions to its
estimates of the Gross Domestic Product Price Index
for historical calendar quarters. The Board
calculates annual adjustments from the baseline
year (rather than from the prior-year total
consolidated asset threshold) to ensure that the
adjusted total consolidated asset threshold
accurately reflects the cumulative change in the
BEA’s most recent estimates of the Gross Domestic
Product Price Index.
10
See 12 CFR 209.4(f) and n. 8 and accompanying
text, supra.
§ 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
§ 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
§ 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 § 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 § 1026.35(c) applies. See
§ 1026.35(c)(2) and (c)(4)(vii).
* * * * *
Brian P. Brooks
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.
Ann Misback,
Secretary of the Board.
Laura Galban
Federal Register Liaison, Bureau of Consumer
Financial Protection.
[FR Doc. 2020–25872 Filed 12–9–20; 8:45 am]
BILLING CODE 6210–01–P 4810–33–P; 4810–AM–P
FEDERAL RESERVE SYSTEM
12 CFR Part 209
[Regulation I; Docket No. R–1732]
RIN 7100–AG 02
Federal Reserve Bank Capital Stock
AGENCY
: Board of Governors of the
Federal Reserve System.
ACTION
: Final rule.
SUMMARY
: The Board of Governors
(Board) is publishing a final rule that
applies an inflation adjustment to the
threshold for total consolidated assets in
Regulation I. Federal Reserve Bank
(Reserve Bank) stockholders that have
total consolidated assets above the
threshold receive a different dividend
rate on their Reserve Bank stock than
stockholders with total consolidated
assets at or below the threshold. The
Federal Reserve Act requires that the
Board annually adjust the total
consolidated asset threshold to reflect
the change in the Gross Domestic
Product Price Index, published by the
Bureau of Economic Analysis (BEA).
Based on the change in the Gross
Domestic Product Price Index as of
September 30, 2020, the total
consolidated asset threshold will be
$10,785,000,000 through December 31,
2021.
DATES
: This final rule is effective
January 11, 2021.
FOR FURTHER INFORMATION CONTACT
:
Evan Winerman, Senior Counsel (202–
872–7578), Legal Division; or Michael
Long, Senior Financial Institutions
Policy Analyst (202–452–2262), Reserve
Bank Operations and Payments Systems
Division. For users of
Telecommunications Device for the Deaf
(TDD) only, contact (202) 263–4869.
SUPPLEMENTARY INFORMATION
:
I. Background
Regulation I governs the issuance and
cancellation of capital stock by the
Reserve Banks. Under section 5 of the
Federal Reserve Act
1
and Regulation I,
2
a member bank must subscribe to
capital stock of the Reserve Bank of its
district in an amount equal to six
percent of the member bank’s capital
and surplus. The member bank must
pay for one-half of this subscription on
the date that the Reserve Bank approves
its application for capital stock, while
the remaining half of the subscription
shall be subject to call by the Board.
3
Section 7(a)(1) of the Federal Reserve
Act
4
provides that Reserve Bank
stockholders with $10 billion or less in
total consolidated assets shall receive a
six percent dividend on paid-in capital
stock, while stockholders with more
than $10 billion in total consolidated
assets shall receive a dividend on paid-
in capital stock equal to the lesser of six
percent and ‘‘the rate equal to the high
yield of the 10-year Treasury note
auctioned at the last auction held prior
to the payment of such dividend.’’
Section 7(a)(1) requires that the Board
adjust the threshold for total
consolidated assets annually to reflect
the change in the Gross Domestic
Product Price Index, published by the
BEA.
Regulation I implements section
7(a)(1) of the Federal Reserve Act by (1)
defining the term ‘‘total consolidated
assets,’’
5
(2) incorporating the statutory
dividend rates for Reserve Bank
stockholders
6
and (3) providing that the
Board shall adjust the threshold for total
consolidated assets annually to reflect
the change in the Gross Domestic
Product Price Index.
7
The Board has
explained that it ‘‘expects to make this
adjustment [to the threshold for total
consolidated assets] using the final
second quarter estimate of the Gross
Domestic Product Price Index for each
year, published by the Bureau of
Economic Analysis.’’
8
II. Adjustment
The Board annually adjusts the $10
billion total consolidated asset
threshold based on the change in the
Gross Domestic Product Price Index
between the second quarter of 2015 (the
baseline year) and the second quarter of
the current year.
9
The second quarter
2020 Gross Domestic Product Price
Index estimate published by the BEA in
September 2020 (112.860) is 7.85
percent higher than the second quarter
2015 Gross Domestic Product Price
Index estimate published by the BEA in
September 2020 (104.647). Based on this
change in the Gross Domestic Product
Price Index, the threshold for total
consolidated assets in Regulation I will
be $10,785,000,000 as of January 11,
2021.
III. Administrative Law Matters
Administrative Procedure Act
The provisions of 5 U.S.C. 553(b)
relating to notice of proposed
rulemaking have not been followed in
connection with the adoption of these
amendments. The amendments involve
expected, ministerial adjustments that
are required by statute and Regulation I
and are consistent with a method
previously set forth by the Board.
10
Accordingly, the Board finds good cause
for determining, and so determines, that
notice in accordance with 5 U.S.C.
553(b) is unnecessary.
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