3170-0028 SS for 3170-AA49 (NPRM) Reg Z Final

CONSUMER FINANCIAL PROTECTION BUREAU
INFORMATION COLLECTION REQUEST—SUPPORTING STATEMENT
TRUTH IN LENDING ACT (REGULATION Z)
12 CFR 1026
(OMB CONTROL NUMBER: 3170-0028)
OMB TERMS OF CLEARANCE:
When the Office of Management and Budget (OMB) last reviewed the information
collections inventoried under OMB control number 3170-0028, no terms of clearance were
provided (see OMB Notice of Action dated 04/26/2013).

ABSTRACT:
The Consumer Financial Protection Bureau (the Bureau) is proposing to amend Regulation
Z, which implements the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq., and the official
interpretation of the regulation. Regulation Z 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.

The Consumer Financial Protection Bureau (Bureau) is dividing proposed rules to amend
the Bureau’s Regulations X and Z into separate Information Collection Requests (ICRs) in
OMB’s system (accessible at www.reginfo.gov) to ease the public’s ability to view and
understand the individual proposed rules for Regulation X and Regulation Z. Respondents
should continue to use the 3170-0016 control number for Regulation X and the 3170-0015
control number for Regulation Z.
PART 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, among other things, 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. The CFPB amended Regulation Z to implement
the new TILA mortgage servicing provisions required by the Dodd-Frank Act and revised
Regulation Z’s adjustable-rate mortgage rules under § 1026.20(c) and (d).
Since January 10, 2014, the effective date of the Mortgage Servicing Rules, the Bureau
has continued to engage in ongoing outreach and monitoring with consumer advocacy groups,
industry representatives, housing counselors, and other stakeholders. As a result, the Bureau has
identified further issues. On November 20, 2014, the Bureau issued a proposed rule that
provides several amendments to revise regulatory provisions and official interpretations relating
to the Regulation X and Z mortgage servicing rules. The proposed amendments to Regulation Z
include changes to the treatment of successors in interest, prompt payment crediting, the
requirement to send periodic statements, and the small servicer definition. The proposal
provides that servicers treat a confirmed successor in interest as a “consumer” for purposes of
Regulation Z and apply all of Regulation Z’s mortgage servicing rules to confirmed successors in
interest. With respect to prompt payment crediting, the proposal clarifies how servicers must
treat periodic payments made by consumers who are performing under either temporary loss
mitigation programs or permanent loan modifications. Under the Bureau’s proposal, periodic
payments made pursuant to temporary loss mitigation programs would continue to be credited
according to the loan contract and could, if appropriate, be credited as partial payments, while
periodic payments made pursuant to a permanent loan modification would be credited under the
terms of the permanent loan agreement. With respect to the requirement to send periodic
statements, the proposal: (1) clarifies certain periodic statement disclosure requirements relating
to mortgage loans that have been accelerated, are in temporary loss mitigation programs, or have
been permanently modified, to conform generally the disclosure of the amount due with the
Bureau’s understanding of the legal obligation in each of those circumstances; (2) requires
servicers to send modified periodic statements to consumers who have filed for bankruptcy,
subject to certain exceptions, with content varying depending on whether the consumer is a
debtor in a Chapter 7 or Chapter 13 bankruptcy case; and (3) exempts servicers from the periodic
statement requirement for charged-off mortgage loans if the servicer will not charge any
additional fees or interest on the account and provides a final periodic statement. Finally, the
proposal excludes certain seller-financed transactions from being counted toward the 5,000 loan
limit, allowing servicers that would otherwise qualify for small servicer status to retain their
exemption while servicing those transactions.
The following two proposed requirements involve information collections or changes to
existing information collection requirements in Regulation Z:
Successors in Interest: That servicers treat a confirmed successor in interest as a
“consumer” for purposes of Regulation Z’s mortgage servicing rules.
Consumers in Bankruptcy: That servicers provide periodic statements to consumers in
bankruptcy. To ensure compliance with § 1026.41, the proposal includes proposed sample
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periodic statements forms that servicers could use for consumers in bankruptcy and that the
Bureau intends to consumer test. See Appendices H-30(E) and H-30(F).
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 required disclosures, other than the periodic statements, may be provided to
successors in interest in electronic form, subject to compliance with the consumer consent and
other applicable provisions of the E-Sign Act Section 101(d) The periodic statement disclosures
may be provided to successors in interest and consumers in bankruptcy 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
Under the proposed rule, the Bureau estimates that approximately 80 percent of
respondents are small entities.
The Bureau developed proposed sample forms to assist servicers with complying with the
proposed periodic statement disclosures for consumers in bankruptcy. The CFPB is further
permitting creditors, assignees, and servicers to provide the periodic statement disclosure in the
same envelope or email with other statements provided to consumers.
The existing rule exempts certain small servicers from the requirements of the periodic
statement and contains other exemptions from the periodic statement requirement—for fixed-rate
loans where servicers provide consumers with coupon books, for reverse mortgages, and for
timeshares. The proposed rule contains additional exemptions from the periodic statement
requirement for certain consumers in bankruptcy and for charged-off mortgage loans that may
further minimize burden for small entities that service such loans.
6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction
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
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respondents are the minimum necessary to ensure that successors in interest receive the
information required and that consumers in bankruptcy receive the disclosures required for
periodic statements.
7. Circumstances Requiring Special Information Collection
There are no special circumstances. The collection of information is conducted in a
manner consistent with the guidelines in 5 CFR 1320. 5(d)(2).
8. Consultation Outside the Agency
In accordance with 5 CFR 1320.11, the Bureau has published a notice of proposed
rulemaking in the Federal Register inviting the public to comment on the information collection
requirements contained in the proposed rule. Comments received in response to the notice of
proposed rulemaking will be addressed in the preamble to the final rule.
Prior to issuing the proposed rule, the CFPB consulted with HUD and other Federal
agencies consistent with section 1022 of the Dodd-Frank Act. 1
The proposal sets forth a preliminary analysis of these effects, and the Bureau requested
comments on this topic. In addition, the Bureau has consulted, or offered to consult, with the
prudential regulators, HUD, FHFA, the Federal Trade Commission, and the Federal Emergency
Management Agency, including regarding consistency with any prudential, market, or systemic
objectives administered by such agencies. The Bureau also held discussions with and solicited
feedback from the United States Department of Agriculture Rural Housing Service, the Federal
Housing Administration, Ginnie Mae, and the Department of Veterans Affairs regarding the
potential impacts of the proposed rule on those entities’ mortgage loan insurance or
securitization programs. 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

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Specifically, section 1022(b)(2)(A) of the Dodd-Frank Act calls for the Bureau to consider the potential benefits
and costs of a regulation to consumers and covered persons, including the potential reduction of access by
consumers to consumer financial products or services; the impact on depository institutions and credit unions with
$10 billion or less 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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There is no information of a sensitive nature being requested.
12. Estimated Burden of Information Collection
The Bureau’s previous estimate of the ongoing hourly costs for each information
collection prior to application of the proposed rules are listed below.

Disclosures
Per
Respondent

Respondents

Hours burden
per disclosure

Total burden
hours

Ongoing:
ARM 20(c) Notice………………………………

824

600

0.00290

1,000

ARM 20(d) Notice………………………………

824

300

0.00290

1,000

Periodic Statements…………………………….

424

42,400

0.00286

52,000

Prompt Crediting & Payoff Statements……

824

800

0.00290

2,000

Total

824

44,100

0.00289

56,000 2

The estimated one-time and ongoing costs attributed to the information collections in the
proposed rules are listed below.
Disclosures
per Bureau
Respondent

Bureau
Respondents

Hours
Burden per
Disclosure

Total Burden
Hours for
Bureau
Respondents

Ongoing
Successors in Interest—Regulation Z
Periodic Statements in Bankruptcy
Sub-Total

814
157
814

24
29,521
5,718

0.003
0.002
0.002

56
8,247
8,303

One-Time
Successors in Interest—Regulation Z
Periodic Statements in Bankruptcy
Sub-Total

814
157
814

1
1

0.05
17.835

41
2,791
2,832

New Burden Total (Bureau):

814

11,134

Total Burden Hours: Existing 66,509 + New 11,134 = 77,643
Under the final rule, the Bureau accounts 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 Bureau estimates there are
1,508 total respondents (120 depository institutions and affiliates and 1,388 nondepository

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The current OMB inventory is 66,509 hours. The differenced will be reconciled when this information collection
request is resubmitted to OMB at the final rule stage.

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institutions). 3 The Bureau and the FTC generally have joint enforcement authority over
nondepository institutions. To prevent double-counting the same population, the Bureau has
allocated to itself half of the estimated burden to nondepository institutions. This equals the
burden on 814 respondents 4 under the assumption that the burden on each respondent equals the
average burden across all respondents.
The Bureau 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 Bureau divides hourly wages by 67.5%. 5
The fully-loaded hourly labor cost by occupation is given below.

Occupation
Lawyers
Software developer
Compliance officer

Hourly Costs to Institutions
$93
$74
$47

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 for the 2013 TILA Servicing Final Rule, the Bureau estimates that vendors that work
with smaller servicers will pass along the costs of any system upgrades.
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 29
large nondepository respondents operate in-house servicing platforms. As such, the Bureau
estimates that 15 Bureau respondents have internally-operated and designed servicing platforms.
All respondents will have ongoing production and distribution costs from providing new
disclosures. Production costs include deriving and assembling the information needed for
disclosure, while distribution costs consist of printing and mailing. The Bureau believes that
most large servicers (both depository and nondepository) handle production costs internally and
3

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 2011 and excludes these entities for the
purposes of this PRA analysis.
4
120 + (1,388/2) = 814.
5
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.

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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.
A. Successors in Interest
The proposed rule would apply the servicing rules in Regulation Z to loans secured by
homes that have been transferred to successors in interest. Therefore, the number of disclosures
required by the TILA servicing rules would increase as a result of the requirement to provide
disclosures to a larger number of consumers.
i. One-time burden
Reviewing the regulation
The Bureau estimates that, for each covered person, one lawyer and one compliance
officer would each take 0.05 hours to read and review the sections of the rule that describe the
successors in interest provisions, based on the length of the sections. The burden allocated to the
Bureau respondents is therefore 0.05*814*2=81.4 hours.
Software and information technology
The proposed rule would require servicers to provide the same disclosures to successors
in interest that they already provide to other consumers, including any consumer that transfers
interest in a property to a successor in interest. As a result, the Bureau does not expect that
servicers will incur software and information technology costs in connection with the proposal.
ii. Ongoing burden
Based on discussions with servicers and its knowledge of the industry, the Bureau
estimates that each year the number of successors in interest covered by the rule is 0.1% of all
mortgage loans covered by Regulation Z. The Bureau has previously estimated that the annual
burden of complying with the servicing rules in Regulation Z is 56,000 hours. Because the
successors in interest proposal would increase this burden by 0.1%, the estimated annual burden
of the successors in interest proposal is 0.001*56,000=56 hours.

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Successors in Interest
Bureau share of respondents
Bureau share of responses
Average frequency per response
Annual Burden (hrs):
Time per response (hours)
Total (hours)

814
19,400
23.8

0.003
56

B. Periodic Statements for Certain Consumers in Bankruptcy
The requirement to send periodic statements to certain consumers in bankruptcy will
require certain one-time and ongoing costs to respondents. Certain small servicers (those
servicing less than 5,000 mortgages, all of which the servicer owns or originates) are exempt
from this requirement. The existing rule contains other exemptions from the periodic statement
requirement—for fixed-rate loans where servicers provide consumers with coupon books, for
reverse mortgages, and for timeshares—and the proposed rule contains other exemptions from
the periodic statement requirement for certain consumers in bankruptcy and for charged-off
mortgage loans.
i. One-time burden
Reviewing the regulation
The CFPB estimates that, for each respondent, one attorney and one compliance officer
would each take approximately 1.25 hours to read and review the sections of the regulation that
describe the changes to Regulation Z § 1026.41(c) related to periodic statements for consumers
in bankruptcy, based on the length the sections. The Bureau estimates that all but 73 small
nondepositories are exempt from the rule (the Bureau assumes half of the total nondepository
burden, so the number of institutions for this analysis includes 37 nondepositories), which
reduces the number of covered entities that are Bureau respondents from 814 to 157. The burden
allocated to the CFPB for depository and nondepository institutions is therefore 1.25*2*157=
391 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 institutions with their own servicing platforms will each require 160
hours to update their systems. Therefore, the aggregate one-time hourly burden from software
and information technology updates is 15*160= 2,400 hours.
ii. Ongoing burden

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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 estimates that 30% of the consumers in bankruptcy who are entitled to periodic
statements under the proposed rule currently receive periodic statements. For servicers that do
not currently provide periodic statements to consumers in bankruptcy, the burden of distributing
the periodic statement disclosure to these consumers is, for purposes of PRA, the ongoing burden
from distribution costs from the periodic statement disclosure. The Bureau estimates that there
are approximately 328,000 mortgage loans serviced by large servicers for consumers in
bankruptcy that would be entitled to statements under the proposal and that, of these, 229,000
loans are serviced by servicers that currently do not provide periodic statements to consumers in
bankruptcy.
The Bureau estimates that large servicers will incur internal production costs of
approximately 0.003 hours per disclosure. Multiplying by 2,748,000 disclosures (229,000
million mortgages*12 monthly statements) yields 8,247 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 $824,670.

Periodic Statements for Certain Consumers in Bankruptcy
Bureau share of respondents
157
Bureau share of responses
2,748,900
Average frequency per response
29,521
Annual Burden (hrs):
Time per response (hours)
Total (hours)

0.003
8,247

13. Estimated Total Annual Cost Burden to Respondents or Recordkeepers

The Bureau estimates that covered persons will incur total vendor costs of $830,000
associated with producing and mailing the aforementioned disclosures. The Bureau has
previously estimated that the annual vendor costs of complying with certain of the servicing rules
in Regulation Z is $5,678,000. Because the successors in interest proposal would increase this
burden by an estimated 0.1%, the estimated vendor costs of the successors in interest proposal is
0.001*$5,678,000 =$5,678. For periodic statements to consumers in bankruptcy, the Bureau
estimates that large servicers incur a cost of $0.30 per disclosure to distribute the statements.
The estimated total annual cost burden to respondents is therefore approximately
$0.30*2,748,900=$824,670.
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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
Summary of Burden Changes

Total Annual Hours
Requested
Current OMB
Inventory
Difference (+/-)
Program Change
Discretionary
New Statute
Violation
Adjustment

Total
Respondents
824

Annual
Responses
26,284,297

Burden Hours
77,643

Cost Burden
(O & M)
$10,355,994

824

21,629,964

66,509

9,526,000

0

+4,654,333

+11,134

+$830,000

+4,654,333

+11,134

+$830,000

The CFPB is proposing to make adjustments to disclosures currently required by
Regulation Z’s mortgage servicing rules. 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 disclosures with respect to successors in
interest and periodic statements for consumers in bankruptcy are new requirements under the
proposed rule. This Collection adds 8,000 burden hours and $830,000 in on time and ongoing
costs to those required to comply with this information collection. For a more detailed
explanation of these adjustments, see the previous response to A.1 (Justification).

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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 OMB number will be displayed in the PRA section of the notice of final rulemaking and
in the codified version of the Code of Federal Regulations. Further, the OMB control number
and expiration date will be displayed on OMB’s public PRA docket at www.reginfo.gov.
18. Exceptions to the Certification Requirement
The Bureau certifies that this collection of information is consistent with the requirements of
5 CFR 1320.9, and the related provisions of 5 CFR 1320.8(b)(3) and is not seeking an exemption
to these certification requirements.

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