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Federal Register / Vol. 86, No. 244 / Thursday, December 23, 2021 / Rules and Regulations I. Background Section 129D of the Truth in Lending Act TILA contains a general requirement that an escrow account be established by a creditor to pay for property taxes and insurance premiums for certain first-lien higher-priced mortgage loan transactions. TILA
section 129D also generally permits an exemption from the higher-priced mortgage loan escrow requirement for a creditor that meets certain requirements, including any asset-size threshold the Bureau may establish.
In the 2013 Escrows Final Rule,1 the Bureau established such an asset-size threshold of $2 billion, which would adjust automatically each year, based on the year-to-year change in the average of the CPIW for each 12-month period ending in November, with rounding to the nearest million dollars.2 In 2015, the Bureau revised the asset-size threshold for small creditors and how it applies.
The Bureau included in the calculation of the asset-size threshold the assets of the creditors affiliates that regularly extended covered transactions secured by first liens during the applicable period and added a grace period to allow an otherwise eligible creditor that exceeded the asset limit in the preceding calendar year but not in the calendar year before the preceding year to continue to operate as a small creditor with respect to transactions with applications received before April 1 of the current calendar year.3 For 2021, the threshold was $2.230 billion.
During the 12-month period ending in November 2021, the average of the CPI
W increased by 4.7 percent. As a result, the exemption threshold is increased to $2.336 billion for 2022. Thus, if the creditors assets together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2021 are less than $2.336
billion on December 31, 2021, and it meets the other requirements of 1026.35b2iii, the creditor will be exempt from the escrow-accounts requirement for higher-priced mortgage loans in 2022 and will also be exempt from the escrow-accounts requirement for higher-priced mortgage loans for 1 78

FR 4726 Jan. 22, 2013.
12 CFR 1026.35b2iiiC.
3 See 80 FR 59943, 59951 Oct. 2, 2015. The Bureau also issued an interim final rule in March 2016 to revise certain provisions in Regulation Z to effectuate the Helping Expand Lending Practices in Rural Communities Acts amendments to TILA
Pub. L. 11494, section 89003, 129 Stat. 1312, 180001 2015. The rule broadened the cohort of creditors that may be eligible under TILA for the special provisions allowing origination of balloonpayment qualified mortgages and balloon-payment high-cost mortgages, as well as for the escrow exemption. See 81 FR 16074 Mar. 25, 2016.

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purposes of any loan consummated in 2023 with applications received before April 1, 2023. The adjustment to the escrows asset-size exemption threshold will also increase the threshold for small-creditor portfolio and balloonpayment qualified mortgages under Regulation Z. The requirements for small-creditor portfolio qualified mortgages at 1026.43e5iD
reference the asset threshold in 1026.35b2iiiC. Likewise, the requirements for balloon-payment qualified mortgages at 1026.43f1vi reference the asset threshold in 1026.35b2iiiC. Under 1026.32d1iiC, balloon-payment qualified mortgages that satisfy all applicable criteria in 1026.43f1i through vi and f2, including being made by creditors that have together with certain affiliates total assets below the threshold in 1026.35b2iiiC, are also excepted from the prohibition on balloon payments for high-cost mortgages.
In the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act EGRRCPA,4 Congress directed the Bureau to issue regulations to add a new exemption from TILAs escrow requirement that exempts transactions by certain insured depository institutions and insured credit unions.5 In 2021, the Bureau issued a final rule implementing this exemption in 1026.35b2vi 2021
Escrows Rule.6 The final rule exempted from the Regulation Z HPML escrow requirement any loan made by an insured depository institution or insured credit union and 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 HPML escrow exemption criteria are met. In the 2021 Escrows Rule, the Bureau established such an asset-size threshold of $10 billion or less in 1026.35b2viA, which will adjust automatically each year, based on the year-to-year change in the average of the CPIW, not seasonally adjusted, for each 12-month period ending in November, with rounding to the nearest million dollars. Unlike the asset threshold in 1026.35b2iii and the other thresholds in 1026.35b2vi, affiliates are not considered in calculating compliance with this 4 Public
Law 115174, 132 Stat. 1296 2018.
section 108, 132 Stat. 130405; 15
U.S.C. 1639dc2.
6 86 FR 9840 Feb. 17, 2021.
5 EGRRCPA

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threshold. For calendar year 2021, the asset threshold was $10 billion.
During the 12-month period ending in November 2021, the average of the CPI
W increased by 4.7 percent. As a result, the exemption threshold is increased to $10.473 billion for 2022. Thus, a creditor that is an insured depository institution or insured credit union that during calendar year 2021 had assets of $10.473 billion or less on December 31, 2021, satisfies this criterion for purposes of any loan consummated in 2022 and for purposes of any loan secured by a first lien on a principal dwelling of a consumer consummated in 2023 for which the application was received before April 1, 2023.
II. Procedural Requirements A. Administrative Procedure Act Under the Administrative Procedure Act APA, notice and opportunity for public comment are not required if the Bureau finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest. 5 U.S.C. 553bB. Pursuant to this final rule, comment 35b2iii1
in Regulation Z is amended to update the exemption threshold in 1026.35b2iii and comment 35b2viA1 in Regulation Z is amended to update the exemption threshold in 1026.35b2vi. The amendments in this final rule are technical and merely apply the formulae previously established in Regulation Z
for determining any adjustments to the exemption thresholds. For these reasons, the Bureau has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary.
Therefore, the amendments are adopted in final form.
Section 553d of the APA generally requires publication of a final rule not less than 30 days before its effective date, except 1 a substantive rule which grants or recognizes an exemption or relieves a restriction; 2 interpretive rules and statements of policy; or 3 as otherwise provided by the agency for good cause found and published with the rule. 5 U.S.C. 553d. At a minimum, the Bureau believes the amendments fall under the third exception to section 553d. The Bureau finds that there is good cause to make the amendments effective on January 1, 2022. The amendment in this final rule is technical and non-discretionary, and it merely applies the method previously established in the agencys regulations for automatic adjustments to the threshold.

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