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Federal Register / Vol. 86, No. 30 / Wednesday, February 17, 2021 / Rules and Regulations predominantly for creditors operating in rural or underserved areas.15
B. Economic Growth, Regulatory Relief, and Consumer Protection Act Congress enacted the EGRRCPA in 2018. In section 108 of the EGRRCPA,16
Congress directed the Bureau to conduct a rulemaking to create a new exemption, this one to exempt from TILAs escrow requirement loans made by certain creditors with assets of $10 billion or less and meeting other criteria.
Specifically, section 108 of the EGRRCPA amended TILA section 129Dc to require the Bureau to exempt certain loans made by certain insured depository institutions and insured credit unions from the TILA section 129Da HPML escrow requirement.
TILA section 129Dc2, as amended by the EGRRCPA, requires the Bureau to issue regulations to exempt from the HPML escrow requirement any loan made by an insured depository institution or insured credit union secured by a first lien on the principal dwelling of a consumer if: 1 The institution has assets of $10 billion or less; 2 the institution and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year; and 3 certain of the existing Regulation Z
HPML escrow exemption criteria, or those of any successor regulation, are met. The Regulation Z exemption criteria that the statute includes in the new exemption are: 1 The requirement that the creditor extend credit in a rural or underserved area 1026.35b2iiiA; 2 the exclusion from exemption eligibility of transactions involving forward purchase commitments 1026.35b2v; and 3 the prerequisite that the institution and its affiliates not maintain an escrow account other than either a those established for HPMLs at a time when the creditor may have been required by the HPML escrow rule to do so, or b those established after consummation as an accommodation to distressed consumers 1026.35b2iiiD.

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III. Summary of the Rulemaking Process The Bureau released a proposed rule to implement EGRRCPA section 108 on July 2, 2020, and the proposal was published in the Federal Register on July 22, 2020.17 The comment period 15 Public Law 11494, div. G, tit. LXXXIX, section 89003, 129 Stat. 1799, 1800 2015. In 2016, the Bureau amended Regulation Z to implement this change. 81 FR 16074 Mar. 25, 2016.
16 EGRRCPA section 108, 132 Stat. 130405; 15
U.S.C. 1639dc2.
17 85 FR 44228 July 22, 2020.

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closed on September 21, 2020. Twelve commenters explicitly supported the proposed rule and four were generally opposed to it. Almost all of the commenters who supported the rule suggested one or more changes, discussed below in the section-bysection analysis. The commenters were individuals and individual banks and credit unions, as well as State, regional and national trade associations representing banks and credit unions.
There were also two anonymous comments. No community or consumer organizations commented on the proposed rule. As discussed in more detail below, the Bureau has considered these comments in finalizing this final rule as proposed, except that the final rule provides a transition period of 120
days, rather than the 90 days set forth in the proposed rule.18
IV. Legal Authority The Bureau is issuing this final rule pursuant to its authority under the Dodd-Frank Act and TILA.
A. Dodd-Frank Act Section 1022b Section 1022b1 of the Dodd-Frank Act authorizes the Bureau to prescribe rules as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of the Federal consumer financial laws, and to prevent evasions thereof. 19 Among other statutes, TILA
and title X of the Dodd-Frank Act are Federal consumer financial laws.20
Accordingly, in adopting this rule, the Bureau is exercising its authority under Dodd-Frank Act section 1022b to prescribe rules that carry out the purposes and objectives of TILA and title X of the Dodd-Frank Act and prevent evasion of those laws.
B. TILA
As amended by the Dodd-Frank Act, TILA section 105a directs the Bureau 18 The transition period is discussed in the section-by-section analysis of 1026.35b2iii. In addition to the comments described in the paragraph above, three trade association commenters requested that the Bureau reduce the scope of the general HPML definition by changing the interest rate trigger for non-jumbo first liens to 2 percent over the APOR. Because the proposed rule did not propose to change the statutory general HPML definition and doing so would affect regulatory provisions that are not affected by EGRRCPA section 108 or the proposed rule, the Bureau considers these comments beyond the scope of this rulemaking.
19 12 U.S.C. 5512b1.
20 Dodd-Frank Act section 100214, 12 U.S.C.
548114 defining Federal consumer financial law to include the enumerated consumer laws and the provisions of title X of the Dodd-Frank Act;
Dodd-Frank Act section 100212, 12 U.S.C.
548112 defining enumerated consumer laws to include TILA.

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to prescribe regulations to carry out the purposes of TILA, and provides that such regulations may contain additional requirements, classifications, differentiations, or other provisions, and may provide for such adjustments and exceptions for all or any class of transactions, that the Bureau judges are necessary or proper to effectuate the purposes of TILA, to prevent circumvention or evasion thereof, or to facilitate compliance therewith.21 A
purpose of TILA is to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit. 22 This stated purpose is tied to Congresss finding that economic stabilization would be enhanced and the competition among the various financial institutions and other firms engaged in the extension of consumer credit would be strengthened by the informed use of credit. 23 Thus, strengthened competition among financial institutions is a goal of TILA, achieved through the effectuation of TILAs purposes.
Historically, TILA section 105a has served as a broad source of authority for rules that promote the informed use of credit through required disclosures and substantive regulation of certain practices. Dodd-Frank Act section 1100A clarified the Bureaus section 105a authority by amending that section to provide express authority to prescribe regulations that contain additional requirements that the Bureau finds are necessary or proper to effectuate the purposes of TILA, to prevent circumvention or evasion thereof, or to facilitate compliance therewith. The Dodd-Frank Act amendment clarified that the Bureau has the authority to use TILA section 105a to prescribe requirements beyond those specifically listed in TILA that meet the standards outlined in section 105a. As amended by the Dodd-Frank Act, TILA section 105a authority to make adjustments and exceptions to the requirements of TILA applies to all transactions subject to TILA, except with respect to the provisions of TILA
section 129 that apply to the high-cost mortgages referred to in TILA section 103bb.24
The Bureaus authority under TILA
section 105a to make exceptions, adjustments, and additional provisions that the Bureau finds are necessary or proper to effectuate the purposes of 21 15
22 15

U.S.C. 1604a.
U.S.C. 1601a.

23 Id.
24 15

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U.S.C. 1602bb.

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