Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks (rule, 86 FR 9837, February 17, 2021)
Summary
An interim final rule from the Board of Governors of the Federal Reserve System, published in the Federal Register on February 17, 2021 (Vol. 86, No. 30), effective that day, with comments due by April 5, 2021. In 2020 the Board issued two interim final rules excepting certain Paycheck Protection Program (PPP) loans, made through June 30 and August 8, 2020, respectively, from Regulation O, which governs bank loans to insiders. The Consolidated Appropriations Act, 2021, signed on December 27, 2020, extended the PPP to March 31, 2021 and created PPP second draw loans. This rule extends the exception to cover those later loans. The Board notes that the restrictions could otherwise delay or prohibit a bank from making a PPP loan to a small business owned by its insiders.
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“Loans to Executive Officers, Directors, and Principal Shareholders of Member Banks (rule, 86 FR 9837, February 17, 2021).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/loans-to-executive-officers-directors-and-principal-shareholders-of-me-5ba25d329f/
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9837
Rules and Regulations Federal Register
Vol. 86, No. 30
Wednesday, February 17, 2021
This section of the FEDERAL REGISTER Constitution Avenue NW, Washington, containment measures (COVID event).
contains regulatory documents having general DC 20551. Although the CARES Act specified that
applicability and legal effect, most of which All public comments will be made the PPP would end on June 30, 2020, it
are keyed to and codified in the Code of available on the Board’s website at was later extended to August 8, 2020.1
Federal Regulations, which is published under http://www.federalreserve.gov/ On December 27, 2020, the President
50 titles pursuant to 44 U.S.C. 1510.
generalinfo/foia/ProposedRegs.cfm as signed into law the Consolidated
The Code of Federal Regulations is sold by submitted, unless modified for technical Appropriations Act, 2021
the Superintendent of Documents. reasons or to remove personally (Appropriations Act), which further
identifiable information at the extended the PPP to March 31, 2021.2
commenter’s request. Accordingly, The Appropriations Act also created
FEDERAL RESERVE SYSTEM comments will not be edited to remove ‘‘PPP second draw loans,’’ which are
any identifying or contact information. substantially similar to the PPP loans
12 CFR Part 215 Public comments also may be viewed that have been made to date.3
electronically or in paper form in Room Regulation O sets forth quantitative
[Regulation O; Docket No. R–1740]
146, 1709 New York Avenue NW, and qualitative requirements for loans
RIN 7100–AG 10 Washington, DC 20006, between 9:00 made by a bank 4 to its directors,
a.m. and 5:00 p.m. on weekdays. executive officers, and principal
Loans to Executive Officers, Directors, FOR FURTHER INFORMATION CONTACT: shareholders, as well as to any
and Principal Shareholders of Member Benjamin McDonough, Associate companies owned by such persons
Banks General Counsel, (202) 452–2036, (collectively, insiders).5 Regulation O
Alison Thro, Deputy Associate General also sets forth procedural and
AGENCY: Board of Governors of the Counsel, (202) 452–3236, Dan Hickman, recordkeeping requirements for loans by
Federal Reserve System (Board). Senior Counsel, (202) 973–7432, Josh banks to their insiders. These
ACTION: Interim final rule with request Strazanac, Senior Attorney, (202) 452– requirements normally would apply to
for comment. 2457, Jasmin Keskinen, Attorney, (202) PPP loans made by banks to the small
475–6650, Legal Division; or Anna Lee businesses owned by their insiders. In
SUMMARY: On April 17 and July 15,
Hewko, Associate Director, (202) 530– some cases, the restrictions in
2020, the Board issued two interim final 6360, Juan Climent, Assistant Director, Regulation O could delay or entirely
rules to except certain loans made (202) 872–7526, (202) 452–5239, prohibit a bank from making a PPP loan
through June 30 and August 8, 2020, Kathryn Ballintine, Manager, (202) 452– to such a business. This could be
respectively, that are guaranteed under 2555, Rebecca Zak, Lead Financial particularly challenging in small
the Small Business Administration’s Institution Policy Analyst, (202) 912– communities where bank insiders often
Paycheck Protection Program from the 7995, Eusebius Luk, Senior Financial own small businesses and there are few
requirements of section 22(h) of the Policy Analyst I, (202) 452–2874, alternative lenders.
Federal Reserve Act and the Board’s Division of Supervision and Regulation; On April 17, 2020, the Board issued
Regulation O. The Board is issuing this Board of Governors of the Federal an exception to section 22(h) of the
interim final rule to further extend this Reserve System, 20th Street and Federal Reserve Act 6 and the
relief to PPP loans, including PPP Constitution Avenue NW, Washington, corresponding provisions of Regulation
second draw loans, made through DC 20551. Users of Telecommunication O for PPP loans made to insiders that
March 31, 2021. Device for Deaf (TDD) only, call (202) would not be prohibited from receiving
DATES: This interim final rule is 263–4869. a PPP loan under the Small Business
effective February 17, 2021. Comments SUPPLEMENTARY INFORMATION: Administration (SBA) lending
on the interim final rule must be
received no later than April 5, 2021. Table of Contents 1 Prioritized Paycheck Protection Program Act, S.
ADDRESSES: You may submit comments, I. Background 4116, 116th Cong. section 1 (2020).
2 Consolidated Appropriations Act, 2021, H.R.
identified by Docket No. R–1740 and II. The Interim Final Rule
133, 116th Cong. section 323 (2020).
RIN 7100 AG 10, by any of the following III. Administrative Law Matters 3 Consolidated Appropriations Act, 2021, H.R.
methods: A. Administrative Procedure Act 133, 116th Cong. section 311.
B. Paperwork Reduction Act
• Agency Website: http:// 4 Sections 22(g) and 22(h), and Regulation O,
C. Regulatory Flexibility Act apply to all banks that are members of the Federal
www.federalreserve.gov. Follow the D. Riegle Community Development and Reserve System. Other federal law subjects federally
instructions for submitting comments at Regulatory Improvement Act of 1994 insured state non-member banks and insured
https://www.federalreserve.gov/ E. Use of Plain Language savings associations to sections 22(g) and 22(h) in
generalinfo/foia/ProposedRegs.cfm. the same manner and to the same extent as if they
• Email: regs.comments@ I. Background were member banks. 12 U.S.C. 1828(j) (non-member
banks); 12 U.S.C. 1468(b) (savings associations); 12
federalreserve.gov. Include docket and On March 27, 2020, the President CFR 337.3 (state non-member banks and state
RIN numbers in the subject line of the signed into law the Coronavirus Aid, savings associations); 12 CFR 31.2 (national banks
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message. Relief, and Economic Security (CARES) and federal savings associations). Accordingly, any
• Fax: (202) 452–3819 or (202) 452– Act which, among other things, created reference to ‘‘bank’’ in this notice applies to all
member banks and institutions subject to sections
3102. the Paycheck Protection Program (PPP) 22(g) and 22(h) in the same manner and to the same
• Mail: Ann E. Misback, Secretary, to facilitate lending to small businesses extent as member banks.
Board of Governors of the Federal affected by the outbreak of COVID–19 5 See generally 12 CFR part 215.
Reserve System, 20th Street and and imposition of associated 6 12 U.S.C. 375b.
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9838 Federal Register / Vol. 86, No. 30 / Wednesday, February 17, 2021 / Rules and Regulations
restrictions (original IFR).7 The II. The Interim Final Rule or PPP second draw loan by the SBA
exception was intended to facilitate lending restrictions.
lending by banks to a broad range of Section 22(h) authorizes the Board to This interim final rule does not except
small businesses within their adopt, by regulation, exceptions to the a PPP loan or PPP second draw loan
communities, consistent with applicable definition of ‘‘extension of credit’’ in from other restrictions that may apply to
law and safe and sound banking section 22(h) for transactions that ‘‘pose the loan, including section 22(g) of the
practices. The exception applied only to minimal risk.’’ 10 Therefore, the Board Federal Reserve Act or section 215.5 of
PPP loans made by June 30, 2020, the may except PPP loans and PPP second Regulation O.15 This determination also
original date on which the PPP was set draw loans from the restrictions in does not affect application of SBA
to expire. The Board extended the section 22(h) and the corresponding lending restrictions to a PPP loan or PPP
exception after Congress extended the provisions of Regulation O upon a second draw loan. The SBA has stated
PPP.8 determination that such loans pose that ‘‘[f]avoritism by [a PPP] [l]ender in
The Board received a dozen minimal risk. processing time or prioritization of [a]
comments in response to the IFRs it The Board determined in the original director’s or equity holder’s PPP
issued in April and July from one trade IFR that PPP loans pose minimal risk.11 application is prohibited.’’ 16 The Board
association, several small businesses, Among other things, this determination will administer the interim final rule
and several individuals. Most of the relieved member banks from ensuring accordingly.
comments expressed support for the that PPP loans made to certain insiders Question 1: Are there any additional
Board’s relief, indicating that it would complied with the qualitative, terms or conditions that should apply to
bolster the effectiveness of the PPP in quantitative, and procedural the exception? Why?
providing support to small businesses. requirements set forth in section 22(h) Question 2: Based on the experience
Several raised issues related to the terms and Regulation O. The Appropriations with the PPP program, what, if any,
and administration of the PPP. One Act did not change any of the features terms or conditions for PPP second draw
commenter asserted that no bank of PPP loans on which the Board relied loans would make it unreasonable for
executives should receive loans from in the original IFR to determine that PPP such loans to be exempted from the
their banks in excess of $15,000 because loans pose minimal risk. Moreover, requirements of section 22(h)?
executives could take advantage of their under the Appropriations Act, PPP
banks to the detriment of depositors. second draw loans have the same III. Administrative Law Matters
In response to comments about the features as PPP loans, except that fewer A. Administrative Procedure Act
terms and administration of the PPP, the borrowers are eligible for PPP second
Board notes that the SBA is the agency draw loans as for PPP loans.12 The Board is issuing the interim final
responsible for setting forth the Accordingly, for the same reasons cited rule without prior notice and the
requirements and administering the in the original IFR, the Board has opportunity for public comment and the
program. Any comments concerning determined that PPP loans and PPP delayed effective date ordinarily
those matters are properly addressed to second draw loans appear to pose prescribed by the Administrative
the SBA. Regarding one commenter’s minimal risk to bank safety and Procedure Act (APA).17 Pursuant to
suggestion that no executive should be soundness.13 section 553(b)(B) of the APA, general
able to borrow more than $15,000 from notice and the opportunity for public
its banks because executives could exert SBA lending restrictions continue to comment are not required with respect
undue influence and cause harm to a apply to certain PPP loans and PPP to a rulemaking when an ‘‘agency for
bank, the Board notes that PPP loans second draw loans that also would be good cause finds (and incorporates the
have standardized terms and are fully subject to section 22(h) and the finding and a brief statement of reasons
guaranteed as to principal and interest corresponding provisions of Regulation therefor in the rules issued) that notice
by the U.S. government. Accordingly, a O.14 Excepting loans that would be and public procedure thereon are
bank may not amend the terms of a PPP prohibited by the SBA lending impracticable, unnecessary, or contrary
loan to be unduly favorable to an restrictions from the requirements of to the public interest.’’ 18
executive and the bank is unlikely to section 22(h) and the corresponding The Board believes that the public
suffer a loss because of the loan provisions in Regulation O would not interest is best served by implementing
guarantee. The Board also notes that the achieve any meaningful regulatory the interim final rule immediately in
relief only extends to insiders who purpose. Excepting these loans from one light of the short timeframe for
would not be prohibited from receiving regime and not the other also may create execution of the renewed PPP mandated
a PPP loan by the SBA’s lending confusion because some lenders may by the Appropriations Act. Accordingly,
restrictions, which currently prohibit an mistakenly interpret an exception under the Board finds that there is good cause
‘‘officer’’ from receiving a PPP loan from one regime to extend to both regimes. consistent with the public interest to
his or her bank.9 Accordingly, the exception continues to issue the rule without advance notice
The Board is issuing this interim final apply only for insiders that would not and comment.19
rule to extend the exception to PPP be prohibited from receiving a PPP loan The APA also requires a 30-day
loans made through March 31, 2021, delayed effective date, except for (1)
and to PPP second draw loans. 10 12 U.S.C. 375b(9)(D)(ii).
substantive rules which grant or
11 85 FR 22346.
12 For example, only borrowers who already have
recognize an exemption or relieve a
7 ‘‘Loans to Executive Officers, Directors, and
Principal Shareholders of Member Banks,’’ 85 FR received a PPP loan may obtain a PPP second draw restriction; (2) interpretative rules and
22345 (Apr. 22, 2020)). loan. PPP Second draw loans also are only available statements of policy; or (3) as otherwise
8 ‘‘Loans to Executive Officers, Directors, and to employers with 300 or fewer employees. provided by the agency for good
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Principal Shareholders of Member Banks,’’ 85 FR Consolidated Appropriations Act, 2021, H.R. 133,
43119 (July 16, 2020)). 116th Cong. section 311.
15 12 U.S.C. 375a; 12 CFR 215.5.
9 13 CFR 120.110 (prohibiting an ‘‘Associate’’ of 13 85 FR 22345, 22346 (Apr. 22, 2020); 85 FR
16 Id. at 14–15.
a lender from receiving a loan made by the lender 43119, 43119–20 (July 16, 2020).
14 Business Loan Program Temporary Changes; 17 5 U.S.C. 553.
pursuant to section 7(a) of the Small Business Act);
18 5 U.S.C. 553(b)(B).
13 CFR 120.10 (defining ‘‘Associate of a Lender’’ to Paycheck Protection Program as Amended by the
include ‘‘an officer’’). Economic Aid Act, 86 FR 3712 (Jan. 6, 2021). 19 5 U.S.C. 553(b)(B); 553(d)(3).
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Federal Register / Vol. 86, No. 30 / Wednesday, February 17, 2021 / Rules and Regulations 9839
cause.20 Because the rules relieve a concluded that the RFA’s requirements in all proposed and final rules
restriction by providing an exception to relating to initial and final regulatory published after January 1, 2000. The
the definition of ‘‘extension of credit’’ in flexibility analysis do not apply. Board has sought to present the interim
section 22(h) and Regulation O, the Nevertheless, the Board seeks final rule in a simple and
interim final rule is exempt from the comment on whether, and the extent to straightforward manner. The Board
APA’s delayed effective date which, the interim final rule would invites comments on whether there are
requirement.21 affect a significant number of small additional steps it could take to make
While the Board believes that there is entities. the rule easier to understand. For
good cause to issue the rule without example:
D. Riegle Community Development and
advance notice and comment and with
Regulatory Improvement Act of 1994 • Have we organized the material to
an immediate effective date, the Board suit your needs? If not, how could this
is interested in the views of the public Pursuant to section 302(a) of the material be better organized?
and requests comment on all aspects of Riegle Community Development and • Are the requirements in the
the interim final rule. Regulatory Improvement Act regulation clearly stated? If not, how
(RCDRIA),24 in determining the effective could the regulation be more clearly
B. Paperwork Reduction Act date and administrative compliance stated?
The Paperwork Reduction Act (44 requirements for new regulations that • Does the regulation contain
U.S.C. 3501–3521) (PRA) states that no impose additional reporting, disclosure, language or jargon that is not clear? If
agency may conduct or sponsor, nor is or other requirements on insured so, which language requires
the respondent required to respond to, depository institutions (IDIs), the federal clarification?
an information collection unless it banking agencies must consider, • Would a different format (grouping
displays a currently valid OMB control consistent with the principle of safety and order of sections, use of headings,
number. On June 15, 1984, OMB and soundness and the public interest, paragraphing) make the regulation
delegated to the Board authority under any administrative burdens that such easier to understand? If so, what
the PRA to approve and assign OMB regulations would place on depository changes to the format would make the
control numbers to collections of institutions, including small depository regulation easier to understand?
information conducted or sponsored by institutions, and customers of • What else could we do to make the
the Board, as well as the authority to depository institutions, as well as the regulation easier to understand?
temporarily approve a new collection of benefits of such regulations. In addition,
information without providing section 302(b) of RCDRIA requires new List of Subjects in 12 CFR Part 215
opportunity for public comment if the regulations and amendments to Credit, Penalties, Reporting and
Board determines that a change in an regulations that impose additional Recordkeeping requirements.
existing collection must be instituted reporting, disclosures, or other new
Authority and Issuance
quickly and that public participation in requirements on IDIs generally to take
the approval process would defeat the effect on the first day of a calendar For the reasons stated in the
purpose of the collection or quarter that begins on or after the date preamble, the Board of Governors of the
substantially interfere with the Board’s on which the regulations are published Federal Reserve System amends 12 CFR
ability to perform its statutory in final form, with certain exceptions, chapter II as follows:
obligation. including for good cause.25 The Board
This interim final rule does not believes that the public interest is best PART 215—LOANS TO EXECUTIVE
contain any collections of information served by implementing the interim OFFICERS, DIRECTORS, AND
subject to the PRA. final rule immediately. As discussed in PRINCIPAL SHAREHOLDERS OF
the original IFR, the COVID event has MEMBER BANKS (REGULATION O)
C. Regulatory Flexibility Act
disrupted economic activity in the ■ 1. The authority citation for part 215
The Regulatory Flexibility Act United States and other countries. The
(RFA) 22 requires an agency to consider is revised to read as follows:
magnitude and persistence of the
whether the rules it proposes will have COVID event on the economy remain Authority: 12 U.S.C. 248(a), 375a(10),
a significant economic impact on a uncertain. In light of the substantial 375b(9) and (10), 1468, 1817(k), 5412; and
substantial number of small entities.23 Pub. L. 102–242, 105 Stat. 2236 (1991) (12
disruptions in the economy, and the U.S.C. 1811 note).
The RFA applies only to rules for which likelihood that this interim final rule
an agency publishes a general notice of would help ameliorate those disruptions ■ 2. In § 215.3, revise paragraphs
proposed rulemaking pursuant to 5 by promoting lending to small (b)(8)(i) through (iii) to read as follows:
U.S.C. 553(b). As discussed previously, businesses, the Board finds good cause § 215.3 Extension of credit.
consistent with section 553(b)(B) of the exists under section 302 of RCDRIA to
APA, the Board has determined for good publish this interim final rule with an * * * * *
cause that general notice and immediate effective date. (b) * * *
opportunity for public comment are As such, the interim final rule will be (8) * * *
unnecessary, and therefore the Board is effective immediately on publication. (i) Made pursuant to the ‘‘Paycheck
not issuing a notice of proposed Nevertheless, the Board seeks comment Protection Program’’ in which the
rulemaking. Accordingly, the Board has on RCDRIA. participation by the Small Business
Administration on a deferred basis is
20 5 U.S.C. 553(d). E. Use of Plain Language 100 percent pursuant to section 1102 of
21 5 U.S.C. 553(d)(1).
Section 722 of the Gramm-Leach- Public Law 116–136 or section 311 of
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22 5 U.S.C. 601 et seq.
Bliley Act 26 requires the federal Public Law 116–260;
23 Under regulations issued by the SBA, a small
banking agencies to use plain language (ii) That is made during the period
entity includes a depository institution, bank beginning on February 15, 2020, and
holding company, or savings and loan holding
company with total assets of $600 million or less
24 12 U.S.C. 4802(a). ending on March 31, 2021; and
and trust companies with total assets of $41.5 25 12 U.S.C. 4802. (iii) That would not be prohibited by
million or less. See 13 CFR 121.201. 26 12 U.S.C. 4809. 13 CFR 120.110(o) or rules or
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9840 Federal Register / Vol. 86, No. 30 / Wednesday, February 17, 2021 / Rules and Regulations
interpretations thereof issued by the and also provides for certain II. Background
Small Business Administration. exemptions from this requirement.2 In
A. Federal Reserve Board Escrow Rule
* * * * * the 2018 Economic Growth, Regulatory
and the Dodd-Frank Act
Relief, and Consumer Protection Act
By order of the Board of Governors of the Prior to the enactment of the Dodd-
Federal Reserve System, February 9, 2021.
(EGRRCPA),3 Congress directed the
Bureau to issue regulations to add a new Frank Wall Street Reform and Consumer
Ann Misback, Protection Act (Dodd-Frank Act),7 the
exemption from TILA’s escrow
Secretary of the Board. requirement that exempts transactions Board of Governors of the Federal
[FR Doc. 2021–02966 Filed 2–16–21; 8:45 am] by certain insured depository Reserve System (Board) issued a rule 8
BILLING CODE 6210–01–P institutions and insured credit unions. requiring, among other things, the
This final rule implements the establishment of escrow accounts for
EGRRCPA section 108 statutory payment of property taxes and
BUREAU OF CONSUMER FINANCIAL directive, removes certain obsolete text insurance for certain ‘‘higher-priced
PROTECTION from the Official Interpretations to mortgage loans,’’ a category which the
Regulation Z (commentary),4 and also Board defined to capture what it
12 CFR Part 1026 corrects prior inadvertent deletions from deemed to be subprime loans.9 The
and two scrivener’s errors in existing Board explained that this rule was
[Docket No. CFPB–2020–0023]
commentary.5 intended to reduce consumer and
RIN 3170–AA83 New § 1026.35(b)(2)(vi) exempts from systemic risks by requiring the subprime
the Regulation Z HPML escrow market to structure loans and disclose
Higher-Priced Mortgage Loan Escrow their pricing similarly to the prime
requirement any loan made by an
Exemption (Regulation Z) market.10
insured depository institution or
In 2010, Congress enacted the Dodd-
AGENCY: Bureau of Consumer Financial insured credit union and secured by a
Frank Act, which amended TILA and
Protection. first lien on the principal dwelling of a
transferred TILA rulemaking authority
ACTION: Final rule; official consumer if: (1) The institution has
and other functions from the Board to
interpretation. assets of $10 billion or less; (2) the
the Bureau.11 The Dodd-Frank Act
institution and its affiliates originated
added TILA section 129D(a), which
SUMMARY: The Bureau of Consumer 1,000 or fewer loans secured by a first
adopted the Board’s rule requiring that
Financial Protection (Bureau) is issuing lien on a principal dwelling during the
creditors establish an escrow account
this final rule to amend Regulation Z, preceding calendar year; and (3) certain
for higher-priced mortgage loans.12 The
which implements the Truth in Lending of the existing HPML escrow exemption
Dodd-Frank Act also excluded certain
Act, as mandated by section 108 of the criteria are met, as described below in loans, such as reverse mortgages, from
Economic Growth, Regulatory Relief, part V.6 this escrow requirement. The Dodd-
and Consumer Protection Act. The Frank Act further granted the Bureau
amendments exempt certain insured subordinate-lien transaction. The escrow
authority to structure an exemption
depository institutions and insured requirement only applies to first-lien HPMLs.
2 12 CFR 1026.35(b)(2)(i) and (iii). based on asset size and mortgage
credit unions from the requirement to 3 Public Law 115–174, 132 Stat. 1296 (2018). lending activity for creditors operating
establish escrow accounts for certain 4 As discussed in more detail in the section-by- predominantly in rural or underserved
higher-priced mortgage loans. section analysis of § 1026.35(b)(2)(iv), this obsolete areas.13 In 2013, the Bureau exercised
DATES: This rule is effective on February text includes, among other text, language related to
a recently issued interpretive rule. On June 23,
this authority to exempt from the
17, 2021. 2020, the Bureau issued an interpretive rule that escrow requirement creditors with
FOR FURTHER INFORMATION CONTACT: describes the Home Mortgage Disclosure Act of under $2 billion in assets and meeting
Joseph Devlin, Senior Counsel, Office of 1975 (HMDA), Public Law 94–200, 89 Stat. 1125 other criteria.14 In the Helping Expand
(1975), data to be used in determining that an area Lending Practices in Rural Communities
Regulations, at 202–435–7700 or https:// is ‘‘underserved.’’ 85 FR 38299 (June 26, 2020). As
reginquiries.consumerfinance.gov/. If the Bureau explained in the interpretive rule, Act of 2015, Congress amended TILA
you require this document in an certain parts of the methodology described in section 129D again by striking the term
alternative electronic format, please comment 35(b)(2)(iv)–1.ii became obsolete because
they referred to HMDA data points replaced or changes this final rule makes to the regulatory and
contact CFPB_Accessibility@cfpb.gov. otherwise modified by a 2015 Bureau final rule commentary text of Regulation Z. This redline is
SUPPLEMENTARY INFORMATION: (2015 HMDA Final Rule). 80 FR 66128, 66256–58 posted on the Bureau’s website with the final rule.
(Oct. 28, 2015). The Bureau stated that it was If any conflicts exist between the redline and the
I. Summary of the Final Rule issuing the interpretive rule to supersede the text of Regulation Z or this final rule, the
outdated portions of the commentary and to documents published in the Federal Register and
Regulation Z, 12 CFR part 1026, identify current HMDA data points it will use to the Code of Federal Regulations are the controlling
implements the Truth in Lending Act determine whether a county is underserved. 85 FR documents.
(TILA), 15 U.S.C. 1601 et seq., and at 38299. In this final rule the Bureau amends the 7 Public Law 111–203, 124 Stat. 1376 (2010).
includes a requirement that creditors comment to remove the obsolete text. 8 73 FR 44522 (July 30, 2008).
5 As discussed in more detail in the section-by-
establish an escrow account for certain section analysis of § 1026.35(b)(2)(iii), the
9 Id. at 44532.
higher-priced mortgage loans (HPMLs),1 scrivener’s errors that this rule corrects were in the
10 Id. at 44557–61. Prime market loans generally
commentary from Truth in Lending Act (Regulation include an escrow account, which may make the
1 12 CFR 1026.35(a) and (b). An HPML is defined Z) Adjustment to Asset-Size Exemption Threshold, monthly payment appear higher than for a higher-
85 FR 83411 (Dec. 22, 2020). priced loan that does not include an escrow
in 12 CFR 1026.35(a)(1) and generally means a
6 When amending commentary, the Office of the account.
closed-end consumer credit transaction secured by 11 Dodd-Frank Act sections 1022, 1061, 1100A
the consumer’s principal dwelling with an annual Federal Register requires reprinting of certain
percentage rate (APR) that exceeds the average subsections being amended in their entirety rather and 1100B, 124 Stat. 1980, 2035–39, 2107–10.
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12 Dodd-Frank Act section 1461(a); 15 U.S.C.
prime offer rate (APOR) for a comparable than providing more targeted amendatory
transaction as of the date the interest rate is set by: instructions and related text. The sections of 1639d.
13 Id.
1.5 percentage points or more for a first-lien commentary text included in this document show
transaction at or below the Freddie Mac conforming the language of those sections with the changes as 14 78 FR 4726 (Jan. 22, 2013). This rule was
loan limit; 2.5 percentage points or more for a first- adopted in this final rule. In addition, the Bureau subsequently amended several times, including in
lien transaction above the Freddie Mac conforming is releasing an unofficial, informal redline to assist 2013 and 2015. See 78 FR 30739 (May 23, 2013) and
loan limit; or 3.5 percentage points or more for a industry and other stakeholders in reviewing the 80 FR 59944 (Oct. 2, 2015).
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