Mortgage Servicing Supporting Statement (Regulation Z)

CONSUMER FINANCIAL PROTECTION BUREAU
INFORMATION COLLECTION REQUEST – SUPPORTING STATEMENT
TRUTH IN LENDING ACT (REGULATION Z)
12 CFR 1026
(OMB CONTROL NUMBER: 3170-0015)
The Consumer Financial Protection Bureau (Bureau) is dividing certain proposals to amend the
Bureau’s Regulations X and Z into separate Information Collection Requests (ICRs) in the
Office of Management and Budget (OMB) system (accessible at www.reginfo.gov) to ease the
public’s ability to view and understand the individual proposals. Subsequent to the finalization of
the rules, CFPB anticipates that it will recombine the portions of Regulations Z and X that are
broken out in the reginfo.gov system into the existing control numbers for Regulations X and Z.
CFPB respondents should continue to use the 3170-0015 control number for Regulation Z and
3170-0016 control number for Regulation X throughout this time.
A. JUSTIFICATION
1. Circumstances Necessitating the Data Collection
The Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq., was enacted to foster
comparison credit shopping and informed credit decision making by requiring accurate
disclosure of the costs and terms of credit to consumers and to protect consumers against
inaccurate and unfair credit billing practices. Creditors are subject to disclosure and other
requirements that apply to open-end credit (e.g., revolving credit or credit lines) and closed-end
credit (e.g., installment financing). TILA imposes disclosure requirements on all types of
creditors in connection with consumer credit, including mortgage companies, finance companies,
retailers, and credit card issuers, to ensure that consumers are fully apprised of the terms of
financing prior to consummation of the transaction and, as in the case of the regulations covered
by this rulemaking, during the loan term. Regulation Z was previously implemented by the
Board of Governors of the Federal Reserve System (Board) at 12 CFR 226. In light of the
transfer of the Board’s rulemaking authority for TILA to the CFPB, the CFPB adopted an interim
final rule (Interim Final Rule) recodifying the Board’s Regulation Z at 12 CFR 1026. The CFPB
enforces TILA as to certain creditors and advertisers. TILA also contains a private right of
action for consumers.
The Dodd-Frank Act amended TILA and the Real Estate Settlement Procedures Act
(RESPA) by mandating new mortgage servicing disclosures and procedures to improve
protections for consumers with certain residential mortgages. 12 U.S.C. 2601 et seq.; 15 U.S.C.
1638a, 1638(f), 1639f, and 1639g. Through its proposed rule published on September 17, 2012,
the CFPB proposes to amend Regulation Z to implement the new TILA mortgage servicing
provisions required by the Dodd-Frank Act.
The proposed amendments to Regulation Z implement DFA sections 1418 (initial rateadjustment notice for adjustable-rate mortgages (“ARMs”)), 1420 (periodic statements), and
1464 (prompt crediting of mortgage payments and response to requests for payoff amounts).
Revised Regulation Z § 1026.20(d) proposes to implement DFA section 1418 by requiring

creditors, assignees, and servicers to provide consumers who have closed-end adjustable-rate
mortgages secured by their principal residence with disclosures six to seven months prior to their
initial interest rate adjustment. The Bureau proposes to implement DFA section 1420 by adding
§ 1026.41 to Regulation Z, which would require creditors, assignees, and servicers to provide
periodic statements for closed-end residential mortgage loans. The Bureau proposes to
implement DFA section 1464 by revising§ 1026.36(c) to require servicers to promptly credit
mortgage payments in connection with consumer credit transactions secured by the consumer’s
principal dwelling and to respond to requests for payoff statements in connection with consumer
credit transactions secured by a consumer’s dwelling. The proposed revisions also amend
current § 1026.20(c) and (d) and other Regulation Z rules governing the scope, timing, content,
and format of current disclosures to consumers occasioned by the interest rate adjustments of
their variable-rate transactions. Several of these requirements would involve information
collections.
The CFPB is proposing to implement in Regulation Z certain additional disclosures
derived from the following statutory provisions under TILA, as amended by the Dodd-Frank
Act, in 12 CFR 1026.20(d), 1026.36(c), and 1026.41: 15 U.S.C. 1638(f), 1638a, 1639f and
1639g.
ARM Disclosures: The proposed rule would require disclosures to be provided to
consumers with closed-end adjustable-rate mortgages secured by their principal dwelling, six to
seven months before the ARM’s first interest rate adjustment in order to alert consumers to the
upcoming initial adjustment of their interest rate. The requirements proposed by the rules
regarding the ARM interest rate adjustment disclosures would apply to creditors, assignees, and
servicers.
Periodic Statement: The proposed rule also would require that a periodic statement
containing billing information, creating a record of the transaction to aid in error detection and
resolution, and providing information to distressed or delinquent borrowers be provided each
billing cycle to consumers with closed-end residential mortgage loans. The requirements
proposed by the rules regarding the periodic statements would apply to creditors, assignees, and
servicers.
Payoff Statement: The rule would require that a payoff statement be provided to
consumers with mortgages secured by a dwelling no later than seven days after receipt of a
written request from the consumer for such a statement. The requirements proposed by the rules
regarding the ARM interest rate adjustment disclosures and the periodic statements would apply
to creditors, assignees, and servicers. The requirements proposed by the rules regarding the
payoff statement requirements would apply to creditors and servicers.
The CFPB also is proposing to revise current rules 1026.20(c) and (d). The proposal
would expand the scope and content of the disclosures currently required by 1026.20(c) for
interest rate adjustments that result in a corresponding payment change in order to closely track
the requirements of proposed 1026.20(d). The CFPB also proposes eliminating the notice
currently required by 1026.20(c) at least once each year during which an interest rate adjustment
is implemented without resulting in a corresponding payment change. The proposal would also
2

delete 1026.20(d), which permits the substitution of disclosures provided by other Federal
agencies in place of the disclosures required by current 1026.20(d).
The CFPB is proposing that the disclosures described above for ARM interest rate
adjustments and periodic statements serve as model forms and clauses for transactions subject to
TILA. See Appendices H-4 and H-28.
2. Use of the Information
The third party disclosures in this collection are required by statute and regulations.
Consumers use the disclosures required by TILA and Regulation Z to shop among options and to
facilitate their informed use of credit terms as well as to protect themselves against inaccurate
and unfair credit billing practices. Disclosures are not submitted to the federal government.
3. Use of Information Technology
The Hybrid ARM disclosures and payoff statements may be provided in electronic form,
subject to compliance with the consumer consent and other applicable provisions of the E-Sign
Act. The Periodic Statement disclosures may be provided in electronic form subject to
affirmative consent by the consumer and would not require compliance with E-Sign verification
procedures.
4. Efforts to Identify Duplication
The disclosures required by TILA and Regulation Z are not otherwise required by
Federal law. State laws do not duplicate these requirements, although some States may have
other rules applicable to consumer credit transactions.
5. Efforts to Minimize Burdens on Small Entities
The Bureau estimates that 65% of respondents are small entities.
The Bureau has developed model forms to assist servicers with complying with the
proposed ARM and periodic statement disclosures. Correct use of these forms and clauses
would insulate a creditor from liability as to proper format. The CFPB is further proposing that
servicers may integrate the periodic statement disclosures with other statements provided to
consumers.
The Bureau is proposing an exemption to the periodic statement requirement for certain
small servicers. Other exemptions the Bureau is proposing for the periodic statement
requirement -- for fixed-rate loans where servicers provide borrowers with coupon books,
reverse mortgages, and timeshares – may minimize burden for small entities that service such
loans.
6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction

3

This information is not submitted to the federal government. These third-party
disclosures are required by statute, 15 U.S.C. 1601 et seq., and regulations. The burdens on
respondents are the minimum necessary to ensure consumers receive the information required
regarding interest rate adjustment for ARMs, the disclosures required for periodic statements,
and the payoff statements.
7. Circumstances Requiring Special Information Collection
There are no circumstances requiring special information collection.
8. Consultation Outside the Agency
On September 17, 2012, the CFPB published a notice of proposed rulemaking in the
Federal Register for public comment. The comment period for the PRA section of the preamble
will end on November 16, 2012. Prior to issuing the proposed rule, the CFPB consulted with
HUD and other Federal agencies consistent with section 1022 of the Dodd-Frank Act and
consulted with affected small entities through a Small Business Review Panel convened under
Small Business Regulatory Enforcement Fairness Act. Consistent with the PRA, the Bureau also
consulted with other stakeholders, including roundtables with industry representatives and
consumer advocacy groups.
9. Payments or Gifts to Respondents
Not applicable.
10. Assurances of Confidentiality
There are no assurances of confidentiality provided to respondents.
11. Justification for Sensitive Questions
This information collection does not include questions of a sensitive nature.
12. Estimated Burden of Information Collection
Under the proposed rule, the CFPB would account for the paperwork burden associated
with Regulation Z for the following respondents pursuant to its administrative enforcement
authority: insured depository institutions with more than $10 billion in total assets; their
depository institution affiliates; and specific nondepository institutions. The CFPB estimates
there are 1,518 total respondents (130 depository institutions and affiliates and 1,388
nondepository institutions).1 The CFPB and the FTC generally have joint enforcement authority
over nondepository institutions. To prevent double-counting the same population, the CFPB has
1

The CFPB has administrative enforcement authority over 154 depository institutions and depository affiliates. The
CFPB estimates that 34 of these entities did not service any mortgages in 2010 and excludes these entities for the
purposes of this PRA analysis.

4

allocated to itself half of the estimated burden to nondepository institutions. This equals the
burden on 824 respondents2 under the assumption that the burden on each respondent equals the
average burden across all respondents.
The CFPB calculates labor costs by applying appropriate hourly cost figures to the
burden hours described below. The hourly rates for lawyers and software developers are based
upon the Bureau of Labor Statistics’ national mean hourly wage estimates by occupational
employment. The estimate for customer service agents reflects reports to the Bureau by market
participants. To obtain fully-loaded hourly rates, the CFPB divides hourly wages by 67.5%.3
The fully-loaded hourly labor cost by occupation is given below.

Occupation
Customer Service Agents
Lawyers
Software developer

Hourly Costs to Institutions
$19
$92
$72

During market outreach and the Small Business Regulatory Enforcement Fairness Act
(SBREFA) panel process, the Bureau found the servicing business model to be different between
small and large servicers. For the purposes of this analysis, small servicers are defined as
nondepositories with revenues less than $7 million (400 CFPB respondents in this analysis).
Any institution that does not meet these requirements shall be considered a large servicer (428
CFPB respondents).4 Most servicers rely upon vendor servicing systems because the use of
vendors substantially mitigates the cost of revising software and compliance systems as the
efforts of a single vendor can address the needs of a large number of servicers. Based on
discussions with a leading servicer technology provider, the CFPB believes that updates
necessitated by new regulations would likely be included in regular annual updates for larger and
medium sized institutions. These costs would not be passed on to the client servicers. Based on
information provided by small entity representatives that participated in the Small Business
Review Panel process, the CFPB estimates that vendors who work with smaller servicers will
pass along the costs of any system upgrades. Throughout the following analysis, the Bureau
estimates that new required disclosures will result in one-time charges of $288 per small
servicer, and modified pre-existing disclosures will result in charges of $144.
Although most servicers rely on software and compliance systems provided by outside
vendors, a small number of large entities maintain their own servicing platforms and will require
software and information technology updates. The Bureau estimates that one large entity and
5% of large nondepository respondents (0% of small non-depository respondents) operate inhouse servicing platforms. As such, the Bureau estimates that 15 large nondepositories have
internal servicing systems (5% multiplied by 294 large nondepository institutions). Therefore,
2

130 + (1,388/2) = 824.
Bureau of Labor Statistics data indicate that, in Q4 2010, wages accounted for 67.5% of the total cost of
compensation for credit intermediation and related activities.
4
Pursuant to the Bureau’s administrative enforcement authority, depository respondents under the proposed rule are
only those with more than $10 billion in total assets.
3

5

the total number of internally-operated and designed servicing platforms in this analysis is 16.
All respondents will have ongoing production and distribution costs from providing new
or modifying pre-existing disclosures. Production costs include deriving and assembling the
information needed for disclosure, while distribution costs consist of printing and mailing. The
CFPB believes that most large servicers (both depository and nondepository) handle production
costs internally and employ vendors for distribution. The Bureau estimates each disclosure
requires 0.003 hours of internal labor to produce. Based upon talks with large servicers, the
Bureau estimates the per response distribution cost for large servicers is approximately 30 cents.
On the other hand, smaller servicers are more likely to rely on vendors for their production costs
while employing in-house labor for printing. As smaller nondepositories comprise the majority
of the CFPB’s respondent nondepository entities, and for simplicity purposes, the Bureau
allocates all ongoing nondepository production expenses as vendor costs and the distribution
expenses as labor burden. This will not impact the aggregate costs as the production costs
remain $0.20 and distribution costs remain $0.030 per disclosure, regardless of whether they are
apportioned as labor or vendors expenses. Through industry outreach, the Bureau estimates perdisclosure production costs of $0.20, while per disclosure distribution costs are 0.004 hours per
response.
A. New Initial Rate Adjustment Notice for Adjustable-Rate Mortgages
The New Initial Rate Adjustment Notice for Adjustable-Rate Mortgages (ARM) would
result in certain one-time and ongoing costs to respondents. Under the proposed rule, servicers
would be required to send a new initial rate-adjustment disclosure at least 210, but not more than
240, days before the due date of the first payment after the initial rate adjustment. The new
disclosure includes, among other things, information regarding the calculation of the new interest
rate and information to assist borrowers in the event the borrower requires alternative financing.
i. One-time burden
Reviewing the regulation
The CFPB estimates that, for each respondent, one lawyer would take approximately
half-an-hour to read and review the sections of the proposed rule that describe the contents of the
New Initial Rate Adjustment Notice for Adjustable-Rate Mortgage requirements, based on the
length of the sections. The burden allocated to the CFPB institutions is therefore 0.45*824=370
hours.
Software and information technology
Respondents who maintain their own software and compliance systems would incur onetime costs to adapt their software and compliance systems to produce the new forms. The
sixteen larger servicers with proprietary systems would need to revise their compliance software
and systems. Based on information from servicers and the software vendors, the CFPB estimates
each firm will require 80 hours of software and IT to create compliant systems for the New
Initial Rate Adjustment Notice for Adjustable-Rate Mortgages. Multiplying the estimated hours
6

by the sixteen respondents with in-house servicing platforms gives aggregate one-time labor
costs of 1,280 hours. As mentioned previously, small servicers (all of which are nondepositories
in this analysis) will incur one-time costs from software updates. As the Initial Rate Adjustment
Notice for Adjustable-Rate Mortgages is a new disclosure, the 400 smaller covered entities are
each expected to incur one-time charges of $288. As a result, the Bureau estimates the one-time
vendor costs for all nondepositories as $115,000.
ii. Ongoing burden
Using the FHFA’s Historical Loan Performance (HLP) database, which covers over half
of the outstanding U.S. mortgage market, the Bureau derived an annual estimate of 212,000
initial ARM rate resets at covered depository entities.5 Therefore, vendor costs to distribute the
new disclosure at large depositories are $0.30*212,000=$63,000. These large depositories will
also incur internal production costs of approximately 0.003 hours per disclosure, for an
additional annual burden of 600 hours.
Considering most nondepositories are smaller servicers that will incur additional vendor
costs with new disclosures, the Bureau anticipates the annual vendor productions costs will be
$3,400 (17,000 * $0.20). Smaller servicers are more likely internally to print and mail their own
disclosures, and the Bureau estimates it take 0.004 hours of labor to distribute each disclosure.
Therefore, the annual labor from distribution incurred by nondepositories is 17,000*0.004=70
hours.
New Initial ARM Rate Adjustment Notice
CFPB Depository
Institutions
CFPB share of respondents
130
CFPB share of responses
212,976
Average frequency per response
1,638
Annual Burden (hrs):
Time per response (hours)
Total (hours)
Annual Burden ($):
Vendor Costs

CFPB Share of NonDepository Institutions
694
17,235
25

0.003
600

0.004
70

$63,000

$3,400

B. Changes in the Regulation Z Disclosure for Adjustable Rate Mortgages
The proposed rule would change the minimum time for providing advance notice to
consumers from 25 days to 60 days before payment of a new mortgage rate is due. Servicers
would be required to provide certain information that they may not currently disclose, but would
no longer be required to notify consumers of a rate adjustment if the payment is unchanged.
5

To calculate, the Bureau extrapolated the initial ARM reset rates from a representative sample of FHFA loan-level
data.

7

i. One-time burden
Reviewing the regulation
The CFPB estimates that, for each respondent, one attorney would take approximately
0.65 hours to read and review the sections of the proposed regulation that describe the changes to
regulation Z § 1026.20(c), based on the length of the section. The burden allocated to the CFPB
for depository and nondepository institutions is therefore 0.65*824= 540 hours. Based on the
respective labor cost of attorneys and compliance officers, the associated labor cost is roughly
$49,000.
Software and information technology
Respondents who maintain their own software and compliance systems would incur onetime costs to adapt their software and compliance systems to produce the new forms. The
Bureau estimates that the 15 large nondepositories and one large depository institution with their
own servicing platforms will each require 14 hours to update their systems. Therefore, the
aggregate one-time hourly burden from software and information technology updates is 16*14=
230 hours.
Many of the Bureau’s respondents operate vendor servicing platforms. Within this
group, the Bureau estimates the smaller nondepository services will incur one-time vendor costs
of $144 per institution associated with the regulatory changes. The aggregate one-time cost to
these institutions is $144*400=$58,000.
ii. Ongoing burden
Servicers emphasized in discussions the incentive they face to collect the proper amount from
consumers. Thus, the Bureau believes it would be usual and customary for servicers to inform consumers
about a new payment amount whenever the payment amount changes. The Bureau therefore believes
there is no burden from distribution costs for the purposes of PRA from the proposed § 1026(c)
disclosure.

Thus, the Bureau believes there is no burden from distribution costs for purposes of PRA
from the proposed § 1026.20(c) disclosure. The Bureau recognizes that there is content in the
proposed disclosure beyond what may be usual and customary to provide. Bureau respondents
that do not use vendors and certain small respondents that use vendors will incur production
costs associated with this extra content, and this is burden for purposes of PRA.
The Bureau estimates that large depositories will incur internal production costs of
approximately 0.003 hours per disclosure, 496,000*0.003=1,400 hours. The Bureau estimates
nondepositories will incur vendor production costs on the order of $0.20 per disclosure. Thus,
the $0.20 is multiplied by the estimated annual number of ARM resets, or 40,000, for total
vendor production costs of $8,000. Additionally, nondepositories will spend 0.004 hours to
distribute each disclosure for an aggregate annual burden of 110 hours.

8

Changes in Regulation Z Disclosure for Adjustable Rate Mortgages
CFPB Depository
CFPB Share of NonInstitutions
Depository Institutions
CFPB share of respondents
130
694
CFPB share of responses
496,564
40,183
Average frequency per response
3,820
58
Annual Burden (hrs):
Time per response (hours)
Total (hours)
Annual Burden ($):
Vendor Costs

0.003
1,400

0.004
110

$0

$8,000

C. New Periodic Statement
The new periodic statement would result in certain one-time and ongoing costs to
respondents. The required periodic statement content would include: billing information, such as
the amount due, payment due date, and information on any late fees; information on recent
transaction activity and how payments were applied; general loan information, such as the
interest rate and when it may be subject to the next adjustment, outstanding principal balance,
etc.; and other information that may be helpful to troubled borrowers. Certain small servicers
(those servicing less than 1,000 mortgages and that own or originated all the loans they are
servicing) would be exempt from this requirement. Fixed-rate mortgages would be exempt if the
servicer provides the consumer with a coupon book that contained certain information, and
makes other information available to the consumer.
i. One-time burden
Reviewing the regulation
The CFPB estimates that, for each respondent, one attorney would take approximately
0.7 hours to read and review the sections of the proposed regulation that describe the changes to
regulation Z § 1026.41(c), based on the length the section. The Bureau estimates that 520 small
nondepositories are exempt from the proposed rule, which reduces the number of covered
entities from 824 to 564. The burden allocated to the CFPB for depository and nondepository
institutions is therefore 0.7*564= 395 hours.
Software and information technology
Covered persons who maintain their own software and compliance systems would incur
one-time costs to adapt their software and compliance systems to produce the new forms. The
Bureau estimates that the 15 large nondepositories and one large depository institution with their
own servicing platform will each require 24 hours to update their systems. Therefore, the

9

aggregate one-time hourly burden from software and information technology updates is 16*24=
384 hours.
The Bureau estimates that 280 small nondepositories are non-exempt from this provision,
140 of which the CFPB accounts for in this analysis. The Bureau believes most covered entities
currently provide some type of monthly billing statement. Therefore, the Bureau estimates the
vendor costs to small nondepositories are $144 per entity for one-time disclosure updates. The
aggregate one-time vendor cost is 280*$144=$20,000.
ii. Ongoing burden
Covered persons will have ongoing production and distribution costs from providing the
new disclosure. Regarding ongoing burden, consumers who currently receive a periodic
statement or billing statement are receiving these disclosures in the normal course of business.
The Bureau believes that most other consumers with mortgages receive a coupon book or other
type of payment medium, such as a passbook. The statute provides that servicers do not have to
provide the periodic statement disclosure to consumers who have both a fixed-rate mortgage and
a coupon book. Thus, the only consumers who are not already receiving a billing statement or
periodic disclosure to whom servicers will have to begin providing the periodic statement
disclosure under the proposed rule are those with both an adjustable-rate mortgage and a coupon
book. The burden of distributing the proposed periodic statement disclosure to these consumers
is, for purposes of PRA, the ongoing burden from distribution costs from the proposed periodic
statement disclosure. The Bureau estimates there are approximately 1.5 million mortgages at
large depositories and 120,000 mortgages at nondepositories that fit these characteristics, and
will now be required to provide monthly periodic statements.
The Bureau estimates that large depositories will incur internal production costs of
approximately 0.003 hours per disclosure. Multiplying by 18.7 million disclosures (1.5 million
mortgages*12 monthly statements) gives 52,000 hours. Large depositories will also incur
distribution costs of $0.30 per response from their print vendors for the distribution of the
periodic statements, for an annual aggregate cost of $5,600,000.
The Bureau estimates nondepositories will incur vendor production costs on the order of
$0.20 per disclosure. Thus, the $0.20 is multiplied by the estimated annual number of responses,
1.5 million, for total vendor production costs of $302,000. Additionally, nondepositories will
spend 0.004 hours to distribute each disclosure for an aggregate annual burden of 6,300 hours.

10

New Periodic Statement
CFPB Depository
Institutions
CFPB share of respondents
130
CFPB share of responses
18,704,396
Average frequency per response
143,880
Annual Burden (hrs):
Time per response (hours)
Total (hours)
Annual Burden ($):
Vendor Costs

CFPB Share of NonDepository Institutions
434
1,513,613
3,488

0.003
52,000

0.004
6,300

$5,600,000

$300,000

D. Prompt crediting of payments and response to requests for payoff amounts
The prompt crediting of payments and response to requests for payoff amounts would
result in certain one-time and ongoing costs to covered persons. The proposed rule would make
changes to the existing requirements on servicers to promptly credit borrower payments that
satisfy payment rules specified by a servicer. The provision also changes the existing
requirements on creditors and servicers to provide an accurate payoff balance upon request. An
information collection is created by the proposed requirement to provide accurate payoff
statements.
i. One-time burden
Reviewing the regulation
The CFPB estimates that, for each respondent, one attorney would take approximately
0.25 hours to read and review the sections of the proposed regulation based solely on the length
the section. The burden allocated to the CFPB for depository and nondepository institutions is
therefore 0.25*824= 174 hours.
Software and information technology
Respondents who maintain their own software and compliance systems would incur onetime costs to adapt their software and compliance systems to produce the new forms. As
discussed previously in section A, the Bureau estimates 16 covered entities maintain their own
servicing platforms, which require internal costs to update. The Bureau estimates each institution
will require 27 hours to upgrade their software and information technology in response to the
provision. Therefore, the aggregate burden is 16*27= 432 hours.

11

The Bureau estimates the smaller nondepository services will incur one-time vendor costs
of $288 per institution associated with the regulatory changes. The aggregate one-time cost to
these institutions is (288*400=$115,000.)
ii. Ongoing burden
Bureau respondents will have ongoing production and distribution costs from providing
the new disclosure. The Bureau believes that the proposed payoff statement will replace a preexisting disclosure that respondents are currently providing in the normal course of business.
The Bureau does not believe that proposed changes to the content and timing of the existing
disclosure will significantly change the ongoing production or distribution costs of the notice
currently provided in the normal course of business.
The Bureau estimates that large depositories will incur internal production costs of
approximately 0.003 hours per disclosure, multiplied by 596,000 disclosures, resulting in 1,650
hours. Large depositories will also incur distribution costs of $0.30 per response from their print
vendors for the distribution of the periodic statements, for an annual aggregate cost of $178,000.
The Bureau estimates nondepositories will incur vendor production costs on the order of
$0.20 per disclosure. Thus, the $0.20 is multiplied by the estimated annual number of responses,
48,000, for total vendor production costs of $9,600. Additionally, nondepositories will spend
0.004 hours to distribute each disclosure for an aggregate annual burden of 9,600 hours.

Prompt crediting of payments and response to requests for payoff amounts
CFPB Depository
CFPB Share of NonInstitutions
Depository Institutions
CFPB share of respondents
130
694
CFPB share of responses
596,097
48,238
Average frequency per response
4,585
70
Annual Burden (hrs):
Time per response (hours)
Total (hours)
Annual Burden ($):
Vendor Costs

0.003
1,650

0.004
200

$178,000

$9,600

E. Summary
The ongoing and one-time hourly costs for each information collection are list below.
Respondents

12

Disclosures
per
Respondent

Hours
Burden per
Disclosure

Total
Burden
Hours

Total
Vendor
Costs

Ongoing
ARM 20(d) Notice
ARM 20(c) Notice
Periodic Statements
Prompt Crediting & Payoff Statements
One-Time
ARM 20(d) Notice
ARM 20(c) Notice
Periodic Statements
Prompt Crediting & Payoff Statements

824
824
564
824

279
651
35,848
782

0.00257
0.00278
0.00288
0.00288

592
1,491
58,263
1,857

$63,893
$8,037
$5,611,319
$178,829

824
824
564
824

1
1
1
1

2.0
0.9
1.4
0.8

1,627
763
769
633

$115,200
$57,600
$20,160
$115,200

13. Estimated Total Annual Cost Burden to Respondents or Recordkeepers
Covered persons will incur costs associated with producing and mailing the
aforementioned disclosures. The CFPB estimates the cost per disclosure, whether directly
incurred through vendors or costs associated with in-house labor or some combination, as $0.50
per disclosure (except for Changes in the Regulation Z Disclosure for Adjustable Rate
Mortgages which incur only production costs of $0.20). The total annual cost burden to
respondents are roughly $115,0006 for the New Initial Rate Adjustment Notice for AdjustableRate Mortgages, $116,7207 for the Changes in the Regulation Z Disclosure for Adjustable Rate
Mortgages, $10 million8 for periodic statements, and $320,0009 for prompt crediting of payments
and response to requests for payoff amounts.
14. Estimated Cost to the Federal Government
Because the CFPB does not collect any information, the cost to the CFPB is negligible.
15. Program Changes or Adjustments

6

Deriving the annual costs for the New Initial Rate Adjustment Notice for Adjustable-Rate Mortgages: Vendor
production costs for nondepositories is $3,400, vendor distribution costs for large depositories is $63,000, the 70
hours of distribution labor at nondepositories at $72 an hour results in $5,040, the estimated 600 hours of production
labor at large depositories at $72 an hour results in $43,200. $3,400 + $63,000 + $5,040 + $43,200=$114,640.
7
Deriving the annual costs for the Changes in the Regulation Z Disclosure for Adjustable Rate Mortgages: Vendor
production costs for nondepositories is $8,000, vendor distribution costs for large depositories are zero, the 110
hours of distribution labor at nondepositories at $72 an hour results in $7,920, the estimated 1,400 hours of
production labor at large depositories at $72 an hour results in $100,800. Aggregating these items results in, $8,000
+ $7,920 + $100,800=$116,720.
8
Deriving the annual costs for the Periodic statement: Vendor production costs for nondepositories is $300,000,
vendor distribution costs for large depositories is $5,600,000, the 6,300 hours of distribution labor at nondepositories
at $72 an hour results in $453,600, the estimated 52,000 hours of production labor at large depositories at $72 an
hour results in $3,744,000. $300,000 + $5,600,000 + $453,600 + $3,744,000=$10,097,600.
9
Deriving the annual costs for the prompt crediting of payments and response to requests for payoff amounts:
Vendor production costs for nondepositories is $9,600, vendor distribution costs for large depositories is $178,000,
the 200 hours of distribution labor at nondepositories at $72 an hour results in $14,400, the estimated 1,650 hours of
production labor at large depositories at $72 an hour results in $118,800. $9,600 + $178,000 + $14,400 +
$118,800=$320,800.

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The CFPB is proposing to make adjustments to disclosures currently required by
1026.20(c) for interest rate adjustments that result in a corresponding payment change in order to
closely track the requirements of proposed 1026.20(d). As described above, this collection is an
existing information collection under Regulation Z. For a more detailed description, see the
previous response to A.1 (Justification).
The information collections for the Bureau’s proposed requirements for ARM
disclosures, periodic statements, and payoff statements would be new requirements under the
Bureau’s proposal. For a more detailed explanation of these adjustments, see the previous
response to A.1 (Justification).
16. Plans for Tabulation, Statistical Analysis, and Publication
The information collections are third-party disclosures. There is no publication of the
information.
17. Display of Expiration Date
The CFPB believes that displaying the OMB expiration date is inappropriate because it
could cause confusion by leading consumers to believe that the regulation sunsets as of the
expiration date. Consumers are not likely to be aware that the CFPB intends to request renewal
of OMB approval and obtain a new expiration date before the old one expires.
18. Exceptions to the Certification Requirement
None.

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