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Federal Register / Vol. 86, No. 30 / Wednesday, February 17, 2021 / Rules and Regulations Section 1026.35b2iiiD of the existing escrow exemption, which EGRRCPA section 108 makes a requirement for the new exemption, generally provides that a creditor may not use the exemption if it or its affiliate maintains an escrow account for any extension of consumer credit secured by real property or a dwelling that the creditor or its affiliate currently services. The Bureau proposed to implement this requirement in 1026.35b2viC. See the sectionby-section analysis of 1026.35b2iii above for a discussion of this requirement and the exception to this requirement for escrows established between certain dates.
One mortgage lender commenter stated that it now uses escrows often for its customers, because it did not previously qualify for an exemption from the escrow rule. The commenter further stated that stopping all escrows would interfere with its current level of service, and that the customer and the lender should decide if an escrow is appropriate for a given loan. For these reasons, the commenter suggested that the Bureau eliminate the non-escrowing requirement from the new exemption.
EGRRCPA section 108 cites to and adopts the non-escrowing requirement in the Bureaus existing regulation, making the non-escrowing requirement in the new exemption statutory. The commenter did not provide any factual or legal evidence to support its suggestion that the Bureaus regulations not follow the statutory requirement.
For these reasons and the reasons explained above in the discussion of 1026.35b2iiiD, the Bureau declines to eliminate the non-escrowing requirement in this final rule. The Bureau will, however, continue to monitor the market regarding this issue.
The Bureau now finalizes the provision as proposed, with the extension of the end date for non-escrowing described below and discussed above in regard to 1026.35b2iiiD1.
There are two exclusions from the non-escrowing requirement in the existing escrow exemption and that, therefore, were proposed for the new escrow exemption. First, escrow accounts established after consummation as an accommodation to distressed consumers to assist such consumers in avoiding default or foreclosure are excluded from this prohibition. In addition, escrow accounts established between certain dates during which the creditor would have been required to provide escrows to comply with the regulation are also excluded. As explained in the sectionby-section analysis of
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1026.35b2iiiD above, the Bureau proposed to change the end date of this second exclusion to accommodate the new section 108 exemption. Because the Bureau proposed to make the final rule effective upon publication in the Federal Register see part VI below, the Bureau proposed to extend the end date in 1026.35b2iiiD1 to 90 days after such publication. The Bureau believed that the extra 90 days would help potentially exempt institutions avoid inadvertently making themselves ineligible.
As explained above in regard to 1026.35b2iiiD1, the Bureau is adopting an end date for the nonescrowing requirement that is 120 days after the effective date i.e., publication date.
Section 1026.43Minimum Standards for Transactions Secured by a Dwelling 43f Balloon-Payment Qualified Mortgages Made by Certain Creditors 43f1 Exemption 43f1vi As explained above in the section-bysection analysis of 1026.35b2ivA, the Bureau proposed to remove an obsolete provision from that section and remove references to that obsolete provision in comments 35b2iv1.i and 2.i, as well as comment 43f1vi1. The Bureau did not receive any comments on this change. For the reasons described in that section-by-section analysis and immediately above, the Bureau now removes the obsolete language in comment 43f1vi1.
VI. Effective Date The Bureau proposed that the amendments included in the proposed rule would take effect for mortgage applications received by an exempt institution on the date of the final rules publication in the Federal Register.
Under section 553d of the Administrative Procedure Act, the required publication or service of a substantive rule must be made not less than 30 days before its effective date except for certain instances, including when a substantive rule grants or recognizes an exemption or relieves a restriction.57 The final rule will grant an exemption from a requirement to provide escrow accounts for certain HPMLs and relieve a restriction against providing certain HPMLs without such accounts. The final rule is therefore a substantive rule that grants an 57 5

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exemption and relieves requirements and restrictions.
Two commenters discussed the proposal to make the rule effective upon publication and supported it. Another commenter requested that the Bureau extend the effective date indefinitely and study the effect of the escrow rule on community banks. To make the benefits of the new EGRRCPA section 108 exemption available to eligible financial institutions as soon as possible, the Bureau is making this final rule effective on the date of its publication in the Federal Register.
VII. Dodd-Frank Act Section 1022b2
Analysis A. Overview The Bureau is finalizing this rule to implement EGRRCPA section 108. See the section-by-section analysis above for a full description of the final rule. In developing the final rule, the Bureau has considered the rules potential benefits, costs, and impacts as required by section 1022b2A of the DoddFrank Act.58 In addition, the Bureau has consulted, or offered to consult, with the appropriate prudential regulators and other Federal agencies, including regarding consistency of this final rule with any prudential, market, or systemic objectives administered by such agencies as required by section 1022b2B of the Dodd-Frank Act.
B. Data Limitations and Quantification of Benefits, Costs, and Impacts The discussion in this part VII relies on information that the Bureau has obtained from industry, other regulatory agencies, and publicly available sources.
These sources form the basis for the Bureaus consideration of the likely impacts of the final rule. The Bureau provides the best estimates possible of the potential benefits and costs to consumers and covered persons of this rule given available data. However, as discussed further below in this part VII, the data with which to quantify the potential costs, benefits, and impacts of the final rule are generally limited.
In light of these data limitations, the analysis below generally provides a qualitative discussion of the benefits, costs, and impacts of the final rule.
58 Specifically, section 1022b2A of the DoddFrank Act requires the Bureau to consider the potential benefits and costs of the regulation to consumers and covered persons, including the potential reduction of access by consumers to consumer financial products and services; the impact of proposed rules on insured depository institutions and insured credit unions with less than $10 billion in total assets as described in section 1026 of the Dodd-Frank Act; and the impact on consumers in rural areas.

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