2 - RegZ_R1443_HPML_II_201502_omb

Supporting Statement for the
Reporting, Recordkeeping, and Disclosure Requirements associated with
Regulation Z (Truth in Lending) and
Regulation AA (Unfair or Deceptive Acts or Practices)
(OMB No. 7100-0199)
Appraisals for Higher-Priced Mortgage Loans (Exemptions)
(Docket No. R-1443) (RIN 7100-AD90)
Summary
The Board of Governors of the Federal Reserve System, under delegated authority from
the Office of Management and Budget (OMB), proposes to revise the reporting, recordkeeping,
and disclosure requirements of Regulation Z (Truth in Lending Act (TILA)) 1 and Regulation AA
(Unfair or Deceptive Acts or Practices). The Paperwork Reduction Act (PRA) classifies these
requirements as an information collection.
On August 8, 2013, a joint notice of proposed rulemaking (NPRM) was published in the
Federal Register (78 FR 48548) for public comment to amend Regulation Z, which implements
TILA. 2 This NPRM relates to an interagency appraisals final rule issued by the Agencies
effective as of January 18, 2014. 3 The interagency appraisal final rule implements a provision
added to TILA by the Dodd-Frank Wall Street Reform and Consumer Protection Act (DoddFrank Act) requiring appraisals for higher-risk mortgages. For certain mortgages with an annual
percentage rate that exceeds the average prime offer rate by a specified percentage, the Final
Rule requires creditors to obtain an appraisal or appraisals meeting certain specified standards,
provide applicants with a notification regarding the use of the appraisals, and give applicants a
copy of the written appraisals used. The Agencies are proposing amendments to the final rule
implementing these requirements; specifically, the Agencies are proposing exemptions from the
rules for: (1) transactions secured by existing manufactured homes and not land; (2) certain
“streamlined” refinancing; and (3) transactions of $25,000 or less. The NPRM comment period
expired October 7, 2013. The Agencies received 12 comment letters regarding the NPRM from
State credit union trade associations, national credit union trade association, state banking trade
associations, small mortgage lenders, and community banking trade associations. On December
26, 2013, a joint notice of final rulemaking was published in the Federal Register (78 FR
78520). The requirements provided in the final rule are substantially similar to those provided in
the proposed rule. Compliance with this final rule is effective January 18, 2014. 4
TILA and Regulation Z ensure adequate disclosure of the costs and terms of credit to
consumers. For open-end credit, creditors are required to disclose information about the initial
1

Regulation Z implements TILA. TILA was enacted in 1968 and substantially revised in 1980 by the Truth in
Lending Simplification and Reform Act. TILA is codified at 15 U.S.C. 1601 et seq. Regulation Z is located at 12
CFR Part 226.
2
Office of the Comptroller of the Currency, Board of Governors of Federal Reserve System, National Credit Union
Administration, Bureau of Consumer Financial Protection, and Federal Housing Finance Agency (collectively, the
Agencies).
3
See 78 FR 10368 (February 13, 2013)
4
Alternative provisions regarding manufactured home loans in amendatory instructions 3b and 5f (12 CFR
34.203(b)(8) and 12 CFR part 34, appendix C, 34.203(b)(8) entry OCC), 12 CFR 226.43(b)(8) Board, and 12 CFR
1026.35(c)(2)(viii) CFPB, are effective July 18, 2015.

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costs and terms and to provide periodic statements of account activity, notices of changes-interms, and statements of rights concerning billing error procedures. The regulation also requires
specific types of disclosures for credit and charge card accounts, and home-equity plans. For
closed-end loans, such as mortgage and installment loans, cost disclosures are required to be
provided prior to consummation. Special disclosures are required of certain products, such as
reverse mortgages, certain variable-rate loans, and certain mortgages with rates and fees above
specified thresholds. TILA and Regulation Z also contain rules concerning credit advertising.
The information collection pursuant to Regulation Z is triggered by specific events. To
ease the burden and cost of complying with Regulation Z (particularly for small entities), the
Federal Reserve provides model forms, which are appended to the regulation.
Under the PRA, the Federal Reserve accounts for the paperwork burden associated with
Regulation Z for the state member banks (SMBs) and other creditors supervised by the Federal
Reserve that engage in lending covered by Regulation Z and, therefore, are “respondents” under
the PRA. 5 Other federal agencies account for the paperwork burden on other creditors. The
current annual burden for 1,077 respondents 6 is estimated to be 1,525,908 hours. The Federal
Reserve estimates that exemptions would decrease the total annual burden for the Regulation Z
information collection by 86 hours from 1,525,908 hours to 1,525,822 hours.
Background and Justification
TILA and Regulation Z require creditors to disclose certain credit costs and terms to
consumers, using a specified format and terminology, at or before the time consumers enter into
a consumer credit transaction and when the availability of consumer credit on particular terms is
advertised. The purpose of the disclosures is to promote the informed use of consumer credit.
Although TILA does not specifically authorize exemptions for small business, Regulation
Z contains several provisions designed to minimize burdens on these entities. The definition of
creditor, for example, is limited to persons who, in the preceding calendar year, extended credit
more than twenty-five times or extended credit secured by a dwelling more than five times.
In 1994, Congress enacted HOEPA as an amendment to TILA, to address abusive
practices involving certain home-secured loans with high rates or high fees. 7 The Board also
added to a disclosure required three days before the closing of a HOEPA loan a statement of the
total amount of the borrower’s obligation and whether optional credit insurance or debtcancellation coverage is included in that amount. Regulation Z Model Form H-16 illustrates this
revised disclosure, which became mandatory on October 1, 2002.

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Appendix I – Federal Enforcement Agencies – of Regulation Z defines the Federal Reserve-regulated institutions
as: State member banks, branches and agencies of foreign banks (other than federal branches, federal agencies, and
insured state branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and
organizations operating under section 25 or 25A of the Federal Reserve Act.
6
The number of Federal Reserve-supervised creditors 1,077 was obtained from numbers published in the Board of
Governors of the Federal Reserve System 97th Annual Report 2010: 829 SMBs, 195 Branches & agencies of
foreign banks, 2 Commercial lending companies, and 51 Edge Act or agreement corporations.
7
15 U.S.C. 1601 et seq.

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In November 2007, the Board published a final rulemaking (72 FR 63462) that amended
Regulation Z to address the timing and delivery of electronic disclosures, consistent with the
requirements of the Electronic Signatures in Global and National Commerce Act (E-Sign Act).
This rule provides that that certain disclosures may be provided to a consumer in electronic form
without regard to the consumer consent and other provisions of the E-Sign Act; and that, when
an advertisement is accessed by the consumer in electronic form, the disclosures must be
provided in electronic form on or with the advertisement.
In July 2008, the Board published a final rulemaking (72 FR 44522) that amended
Regulation Z. The goals of the amendments are to protect consumers in the mortgage market
from unfair, abusive, or deceptive lending and servicing practices while preserving responsible
lending and sustainable homeownership; ensure that advertisements for mortgage loans provide
accurate and balanced information and do not contain misleading or deceptive representations;
and provide consumers transaction specific disclosures early enough to use while shopping for a
mortgage. This final rulemaking was effective on October 1, 2009.
On May 19, 2009, the Board published a final rulemaking (74 FR 23289) that amended
Regulation Z to implement provisions of the Mortgage Disclosure Improvement Act of 2008
(MDIA). MDIA required early, transaction specific disclosures for mortgage loans secured by
dwellings other than the consumer’s principal dwelling and requires waiting periods between the
time when disclosures are given and consummation of the mortgage transaction. This final
rulemaking was effective on July 30, 2009.
On August 14, 2009, the Board published a final rulemaking (74 FR 41194) that amended
Regulation Z to implement provisions of Higher Education Opportunity Act (HEOA). 8 Title X
of the HEOA amends the TILA by adding disclosure and timing requirements that apply to
private educational lenders making private education loans, which are defined as loans made
expressly for postsecondary educational expenses. The HEOA’s definition of private education
loan excludes open-end credit, real estate-secured loans, and loans made, insured, or guaranteed
by the federal government under title IV of the Higher Education Act of 1965 (20 USC 1070 et
seq.). The HEOA also amends TILA by adding limitations on certain practices by private
educational lenders and limitations on co-branding in the marketing of private student loans.
Mandatory compliance with this final rulemaking was effective on February 14, 2010.
On February 22, 2010, the Board published a final rulemaking (75 FR 7658) (Docket No.
R-1370) that amended Regulation Z to implement provisions of the Credit Card Accountability
Responsibility and Disclosure Act of 2009 (Credit Card Act). In general, the amendments: (1)
protect consumers from unexpected increases in credit card interest rates by generally prohibiting
increases in a rate during the first year after an account is opened and increases in a rate that
applies to an existing credit card balance, (2) prohibit creditors from issuing a credit card to a
consumer who is under the age of 21 unless the consumer has the ability to make the required
payments or obtains the signature of a parent or other cosigner with the ability to do so, (3)
require creditors to obtain a consumer's consent before charging fees for transactions that exceed
8

HEOA (Public Law 110-315; Sections 1021-1022) was enacted on August 14, 2008, and reauthorizes the HEA of
1965, as amended. http://frwebgate.access.gpo.gov/cgibin/getdoc.cgi?dbname=110_cong_public_laws&docid=f:publ315.110.pdf

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the credit limit, (4) limit the high fees associated with subprime credit cards, (5) ban creditors
from using the "two-cycle" billing method to impose interest charges, and (6) prohibit creditors
from allocating payments in ways that maximize interest charges. This NPRM represents the
second stage of the Federal Reserve's implementation of the Credit Card Act. The mandatory
compliance dates are February 22, 2010, for all provisions related to the Credit Card Act and
July 1, 2010, for all other provisions of this final rule. Also, On February 22, 2010, the Board
published a final rule (75 FR 7925), withdrawing a final rule amending Regulation Z (Docket
No. R-1286) and the staff commentary to the regulation published on January 29, 2009, see (72
FR 5244).
On June 29, 2010, the Board published a final rulemaking (75 FR 37526) that amended
Regulation Z to implement provisions of the Credit Card Accountability Responsibility and
Disclosure Act of 2009. In particular, the final rule required that penalty fees imposed by card
issuers be reasonable and proportional to the violation of the account terms. The final rule also
requires credit card issuers to reevaluate at least every six months annual percentage rates
increased on or after January 1, 2009. Mandatory compliance for the amendments was August
22, 2010 and December 1, 2010.
On September 24, 2010, the Board published a final rulemaking (75 FR 58489) that
amended Regulation Z to implement Section 131(g) of TILA, which was enacted on May 20,
2009, as Section 404(a) of the Helping Families Save Their Homes Act. TILA Section 131(g)
became effective immediately upon enactment and established a new requirement for notifying
consumers of the sale or transfer of their mortgage loans. The purchaser or assignee that
acquires the loan must provide the required disclosures in writing no later than 30 days after the
date on which the loan is sold or otherwise transferred or assigned. Mandatory compliance for
the amendments was January 1, 2011.
On October 28, 2010, the Board published an interim final rulemaking (IFRM) (75 FR
66554) that amended Regulation Z to implement Section 129E of TILA, which was enacted on
July 21, 2010, by Section 1472 of the Dodd-Frank Wall Street Reform and Consumer Protection
Act. TILA Section 129E established new requirements for appraisal independence for consumer
credit transactions secured by the consumer’s principal dwelling. The amendments were
designed to ensure that real estate appraisals used to support creditors’ underwriting decisions
are based on the appraiser’s independent professional judgment, free of any influence or pressure
that may be exerted by parties that have an interest in the transaction. The amendments also
sought to ensure that creditors and their agents pay customary and reasonable fees to appraisers.
Mandatory compliance with this IFRM was April 1, 2011.
On April 4, 2011, the Board published a final rulemaking (76 FR 18354) that amended
Regulation Z to implement Section 1100E of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (Dodd-Frank Act), which was signed into law on July 21, 2010. The
Dodd-Frank Act raises TILA’s $25,000 exemption threshold to $50,000, effective July 21, 2011.
In addition, the Dodd-Frank Act requires that, on or after December 31, 2011, the threshold shall
be adjusted annually for inflation by the annual percentage increase in the Consumer Price Index
for Urban Wage Earners and Clerical Workers (CPI–W), as published by the Bureau of Labor
Statistics. Beginning on January 1, 2012, the $50,000 threshold will be adjusted annually based
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on any annual percentage increase in the CPI–W. Mandatory compliance for the amendments
was July 21, 2011.
On February 13, 2013, a joint notice of final rulemaking was published in the Federal
Register (78 FR 10368) implementing Section 129H of TILA, which was enacted on July 21,
2010, by Section 1400 of the Dodd-Frank Act. 9 TILA Section 129H, sets forth appraisal
requirements applicable to ‘‘higher-risk mortgages.’’ For mortgages with an annual percentage
rate that exceeds the average prime offer rate by a specified percentage, the proposed rule would
require creditors to obtain an appraisal or appraisals meeting certain specified standards, provide
applicants with a notification regarding the use of the appraisals, and give applicants a copy of
the written appraisals used. This final rule was effective on January 18, 2014. Alternative
provisions regarding manufactured home loans are effective July 18, 2015
Description of Information Collection
TILA and Regulation Z distinguish between two types of credit, regarding the specific
disclosure requirements depending on the type of credit involved. Subpart B of the regulation
prescribes disclosures for open-end credit, which includes most revolving credit lines, credit card
accounts, home-equity lines of credit and overdraft lines of credit tied to checking accounts.
Subpart C of the regulation prescribes the disclosures for closed-end credit. This category of
credit refers generally to credit extended in a fixed amount for a specified period, typified by
mortgages, installment loans, and credit sales. Subpart E of the regulation prescribes special
disclosures for certain home mortgage transactions that carry rates or fees above a specified
threshold and for reverse mortgages. Subpart F requires creditors that extend private education
loans must provide disclosures about loan terms and features on or with the loan application and
must also disclose information about federal student loan programs that may offer less costly
alternatives. Subpart G requires public disclosure of contracts or other agreements between card
issuers and institutions of higher education for the purpose of marketing a credit card and
imposes restrictions related to marketing open-end credit to college students.
The disclosure requirements associated with Regulation Z are described below. The
frequency of response varies according to the level of credit activity by a creditor.
Open-end Credit Disclosures (Subpart B)
No other federal law mandates these disclosures and procedures for responding to error
allegations, although some states may have similar requirements.
Initial and Change-in-Term Disclosures (Sections 226.6 and 226.9(c)) - Creditors that
offer open-end credit are required to inform consumers of costs and terms before they use the
accounts and in general to inform them of certain subsequent changes in the terms of the
accounts. Initial information must include the finance charge and other charges, the annual

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Office of the Comptroller of the Currency, Board of Governors of Federal Reserve System, National Credit Union
Administration, Bureau of Consumer Financial Protection, and Federal Housing Finance Agency (collectively, the
Agencies).

5

percentage rate (APR), a description of how balances (on which a finance charge is based) will
be calculated, and any collateral that will secure repayment.
If the creditor changes any term initially disclosed, or increases the minimum periodic
payment, a written change-in-term notice generally must be provided to the consumer at least
fifteen days prior to the effective date of the change. Special rules and restrictions govern
changes in the terms of home-equity plans.
Unfair or deceptive practices involving cosigners (Reg AA, Section 227.14) - A clear
and conspicuous disclosure statement shall be given in writing to the cosigner prior to becoming
obligated. The disclosure statement shall be substantially similar to the following statement and
shall either be a separate document or included in the documents evidencing the consumer credit
obligation.
NOTICE TO COSIGNER
You are being asked to guarantee this debt. Think carefully before you do. If the borrower
doesn’t pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you
want to accept this responsibility. You may have to pay up to the full amount of the debt if the
borrower does not pay. You may also have to pay late fees or collection costs, which increase
this amount. The bank can collect this debt from you without first trying to collect from the
borrower. The bank can use the same collection methods against you that can be used against
the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that
fact may become a part of your credit record. This notice is not the contract that makes you
liable for the debt.
Periodic Statements (Sections 226.7) - A written statement of activity on open-end
accounts must be provided each billing cycle (typically monthly). The statement must be
provided for each account that has a debit or credit balance of more than $1 or on which a
finance charge is imposed, and it must include a description of activity on the account, opening
and closing balances, finance charges imposed, and payment information.
Amendments to section 226.3(b)(1)(i) and its accompanying commentary raise the
threshold for exempt consumer credit transactions from $25,000 to $50,000. In addition, under
section 226.3(b)(1)(ii), the threshold amount must be adjusted annually by any annual percentage
increase in the CPI-W. As a result, changes to an open-end account or the threshold amount may
result in an account no longer qualifying for the exemption in Section 226.3(b). In these
circumstances the creditor must, within a reasonable period of time after the account ceases to be
exempt (except as otherwise noted), provide the disclosures required by Section 226.6 reflecting
the current terms of the account and begin to provide periodic statements consistent with Section
226.7.
Error Resolution Rules (Sections 226.13) - Creditors must notify consumers about their
rights and responsibilities regarding billing problems. Creditors may provide either a complete
statement of billing rights each year, or a summary on each periodic statement. The paperwork
burden for the summary is included in the estimated burden for periodic statements.
When a consumer alleges a billing error, the creditor must provide an acknowledgment,
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within 30 days of receipt, that the creditor received the consumer’s error notice, and must report
on the results of its investigation within 90 days. If a billing error did not occur, the creditor
must provide an explanation as to why the creditor believes an error did not occur and provide
documentary evidence to the consumer upon request. The creditor must also give notice of the
portion of the disputed amount and related finance or other charges that the consumer still owes
and notice of when payment is due.
Credit and Charge Cards (Sections 226.5(a)) - Generally, card issuers must provide
additional disclosures with solicitations, when an annual fee is to be charged, and when the
issuer changes its credit insurance carrier.
Solicitations and applications. When offering cards to consumers by direct mail
solicitation, card issuers must disclose in a highly-structured table key of terms of the account,
such as the APR, information about variable rates, and fees such as annual fees, minimum
finance charges, and transactions fees for purchases. Similar disclosure rules apply in telephone
solicitations, and for “take-one” and magazine or catalog applications. Special rules apply for
charge cards.
Annual fee. TILA also requires card issuers that charge an annual fee to notify a
consumer at least 30 days before payment of the fee is due. The notice must include basic cost
information for continued use of the card and how the consumer may close the account and avoid
paying any fee.
Changes to insurance carriers. Card issuers that change credit insurance carriers must
provide an advance notice to cardholders if increased cost or substantially decreased coverage
would result from the switch in carriers. The notice must inform consumers about their right to
cancel the insurance.
Home-Equity Plans (Sections 226.5(b)) - Creditors offering home-equity lines of credit
must provide additional disclosures at application, when the credit plan is opened, and when
consumers’ use of the plan is restricted.
Applications. Lenders must provide, on or with applications for home-equity plans,
generic disclosures about the plan, including the possibility of negative amortization, draw
requirements, and the method of determining the minimum periodic payment. Additional
disclosures about variable-rate plans, including information about interest rate caps and an
historical example showing what the APR and payments would have been for the preceding 15
years.
Account opening. Some of the information given with the application must be repeated
when the consumer opens the account. The paperwork burden associated with this second round
of disclosures is considered negligible, since it involves disclosures that were previously made to
the consumer.
Restricting use of the plan. A creditor may prohibit additional credit extensions or reduce
the credit limit in certain instances, such as if there is a drop in the value of the loan security.
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However, in these instances, the creditor must give the consumer written notice not later than
three business days after the action takes effect, explaining why the action was taken.
Closed-end Credit Disclosures (Subpart C, Section 226.17)
The requirements of Subpart C apply to any creditor that extends consumer credit (unless
over $25,000 and not secured by a dwelling) if the credit is payable in more than four
installments or is subject to a finance charge, and is not open-end credit. The required
disclosures include credit terms such as the APR and finance charge, which reflect the total
credit cost in percentage and dollar terms, respectively. Key information is highlighted for
consumers through the use of certain terminology and a specific format.
For certain variable-rate mortgages, generic disclosures similar to those required for
home-equity lines of credit must be provided at application. In addition, creditors must send
periodic statements when payments change or at least annually if rates change without changes
to payment amounts.
Interest Rate and Payment Summary for Mortgage Transactions (Sections 226.18(s)
& (t)) -- Section 226.18(s), provides requirements for disclosure of the contract interest rate and
the periodic payment for most transactions secured by real property or a dwelling. The
information required by Section 226.18(s)(2)–(4) must be in the form of a table, as provided in
Section 226.18(s)(1), substantially similar to Model Clause H–4(E), H–4(F), H–4(G), or H–4(H)
in Appendix H. Section 226.18(t)(1) requires creditors to disclose that there is no guarantee that
the consumer will be able to refinance the loan to obtain a lower interest rate and payment.
Advertising and Notification Requirements (Subparts B and C)
Advertising Rules (Subpart B, Section 226.16) (Subpart C, Section 226.24) -- These
requirements apply to all persons who promote the availability of open-end or closed-end credit
through commercial messages in any form, including print or electronic media, direct mailings,
and displays. With some variations, Subparts B (for open-end credit) and C (for closed-end
credit) both require advertisers to include certain basic credit information if the advertisement
refers to specified credit terms or costs. The purpose of the advertising rules is to provide
potential credit shoppers with accurate information that they can use in deciding among various
credit sources. The frequency of response varies according to the level of credit advertising by a
creditor. No other federal law requires advertisers of credit to include these specific credit terms
and costs, although some states may have similar requirements.
Special Rules for Certain Home Mortgage Transactions (Subpart E)
Certain types of mortgage products trigger special disclosures, such as reverse and highcost mortgages; the requirements have a minimal effect on the paperwork burden for SMBs.
Reverse Mortgages (Section 226.33) – Creditors offering reverse mortgages must
provide rate disclosures and a notice to consumers at least three days before loan consummation
or before the first transaction in an open-end plan. A reverse mortgage transaction is a loan
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secured by the equity in a home. Disbursements are made to homeowners until the homeowner
dies, moves permanently, or sells the home. The creditor relies on the home’s future value for
repayment. Creditors must disclose the projected total cost of credit for specified loan periods
(short-term, life-expectancy, or long-term). Creditors must also furnish a notice to consumers
that receiving disclosures or applying for the loan does not obligate the consumer to complete the
transaction.
Home Ownership and Equity Protection Act (HOEPA) Mortgages (Section 226.34)
Creditors offering mortgages with rates or fees above thresholds outlined in the HOEPA must
provide cost disclosures and a notice at least three days before consummation. The cost
disclosures include the APR, regular payment amount, the total amount borrowed and whether
the total amount borrowed includes the cost of optional insurance. A notice warns consumers
about losing their home and reminds consumers that they are not obligated to complete the
transaction. In addition, if the creditor changes any terms that are to be reflected on the
disclosures, the creditor must generally provide the consumer with new disclosures and allow the
consumer another three days to consider the transaction before consummation.
Notification of the Sale or Transfer of Mortgage Loans Amendment (Section 226.39)
The disclosure requirements in Section 226.39 apply only to persons that acquire more than one
consumer mortgage transaction in any 12-month period. The disclosure must identify the loan
that was acquired or transferred and, consistent with the statute, contain the following: (1) The
identity, address, and telephone number of the covered person that owns the mortgage loan; (2)
the date of the acquisition or transfer; (3) contact information that the consumer can use to reach
an agent or party having authority to act on behalf of the covered person; (4) the location of the
place where the transfer of the ownership of the debt is recorded. The disclosure must be mailed
or delivered to the consumer on or before the 30th calendar day following the date that the
covered person acquires the loan.
Valuation Independence (Subpart E, Section 226.42(g)(1)) 10 - Mandatory Reporting Any covered person that reasonably believes an appraiser has not complied with the Uniform
Standards of Professional Appraisal Practice (USPAP) or ethical or professional requirements for
appraisers under applicable state or federal statutes or regulations shall refer the matter to the
appropriate state agency if the failure to comply is material. For purposes of this paragraph
(g)(1), a failure to comply is material if it is likely to significantly affect the value assigned to the
consumer's principal dwelling.

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The Federal Reserve estimated that 567 respondents (Based on loan transactions reported for 2009 under the
Home Mortgage Disclosure Act (HMDA), 12 U.S.C. 2801 et seq.; 12 CFR part 203, the Federal Reserve estimates
that 567 institutions engaged in such mortgage transactions are supervised by the Federal Reserve) supervised by
the Federal Reserve will take, on average, 40 hours (one business week) to update their systems, internal procedure
manuals, and provide training for relevant staff to comply with the new reporting requirements in § 226.42(g)(1).
This revision is estimated to result in a one-time increase in burden by 22,680 hours. The Federal Reserve believes
that, on a continuing basis, since financial institutions are familiar with the existing provisions Title XI of FIRREA
(12 U.S.C. 3348) and the Interagency Guidelines (SR letter 94– 55) which require similar reporting, implementation
of requirements in § 226.42(g) should not be overly burdensome (Docket # R-1394).

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Subpart E—Special Rules for Certain Home Mortgage Transactions
Appraisals for Higher-Priced Mortgage Loans (HPML) (Section 226.43)
Section 226.43(c)(1) (Initial Written Appraisal) – In General, a creditor shall not
extend a higher-risk mortgage loan to a consumer without obtaining, prior to consummation, a
written appraisal performed by a certified or licensed appraiser who conducts a physical visit of
the interior of the property that will secure the transaction. This is consistent with TILA section
129H(a) and (b)(1).
Section 226.43(c)(2) (Safe Harbor) – In General, to qualify for the safe harbor provided
under the final rule, a creditor is required to review the Written Appraisal as specified in the text
of the rule and Appendix N.
Section 226.43(d) (Additional Written Appraisal) – In General, a creditor is required to
obtain an additional appraisal for a HPML that is subject to 12 CFR 226.34(c) if (1) the seller
acquired the property securing the loan 90 or fewer days prior to the date of the consumer’s
agreement to acquire the property and the resale price exceeds the seller’s acquisition price by
more than 10 percent; or (2) the seller acquired the property securing the loan 91 to 180 days
prior to the date of the consumer’s agreement to acquire the property and the resale price exceeds
the seller’s acquisition price by more than 20 percent. The Additional Written Appraisal must
meet the requirements described in the final rule and also analyze: (1) the difference between the
price at which the seller acquired the property and the price the consumer agreed to pay, (2)
changes in market conditions between the date the seller acquired the property and the date the
consumer agreed to acquire the property, and (3) any improvements made to the property
between the date the seller acquired the property and the date on which the consumer agreed to
acquire the property.
Section 226.43(e)(1) (Required Disclosure) – In General, within three business days of
an application, a creditor is required to provide a disclosure that informs consumers of the
purpose of the appraisal, that the creditor will provide the consumer a copy of any appraisal, and
that the consumer may choose to have a separate appraisal conducted at the expense of the
consumer (Initial Appraisal Disclosure). If a loan is a HPML subject to 12 CFR 226.43(c), then
the creditor is required to obtain a written appraisal prepared by a certified or licensed appraiser
who conducts a physical visit of the interior of the property that will secure the transaction
(Written Appraisal), and provide a copy of the Written Appraisal to the consumer.
Section 226.43(f)(1) (Copy of Appraisals) - A creditor is required to provide a copy of
the Additional Written Appraisal to the consumer.

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Special Rules for Private Education Loans (Subpart F) 11
Disclosures for private education loans must be given at different times in the loan
origination process.
Application or Solicitation Disclosures (Section 226.46(d)(1)) – Specifies the
disclosures required by section 226.47(a) shall be provided on or with any application or
solicitation. For purposes of this subpart, the term solicitation means an offer of credit that does
not require the consumer to complete an application. The creditor may, at its option, disclose
orally the information in a telephone application or solicitation. Alternatively, if the creditor does
not disclose orally the information, the creditor must provide the disclosures or place them in the
mail no later than three business days after the consumer has applied for the credit, except that, if
the creditor either denies the consumer's application or provides or places in the mail the
disclosures no later than three business days after the consumer requests the credit, the creditor
need not also provide the §226.47(a) disclosures.
Approval Disclosures (Section 226.46(d)(2)) – Requires that the disclosures specified in
§ 226.47(b) be provided before consummation on or with any notice to the consumer that the
creditor has approved the consumer’s application for a loan. If the creditor provides approval to
the consumer by mail, the disclosures have to be mailed at the same time as the approval. If the
creditor provides approval by telephone, the creditor must place the disclosures in the mail
within three business days of the approval. The creditor may provide the disclosures solely in
electronic form if the creditor has complied with the consumer consent and other applicable
provisions of the E-Sign Act (15 U.S.C. § 7001 et seq.); otherwise, the creditor must place the
disclosures in the mail within three business days.
Final Disclosures (Section 226.46(d)(3)) – Requires the final disclosures to be provided
to the consumer after the consumer accepts the loan, but does not base the timing on when the
private education loan funds are disbursed. Section 226.48(d) prohibits the creditor from
disbursing funds until at least three business days after the consumer receives the final
disclosures.
Special Rules Applicable to Credit Card Accounts and Open-End Credit Offered to
College Students (Subpart G)
TILA Section 140(f), as added by Section 304 of the Credit Card Act, requires the public
disclosure of contracts or other agreements between card issuers and institutions of higher
education for the purpose of marketing a credit card and imposes restrictions related to marketing
open-end credit to college students. 15 U.S.C. 1650(f). The Federal Reserve implemented these
provisions in Section 226.57.

11

Model forms for each of the following three disclosures are available in Appendix H-17 for the application or
solicitation disclosures required in § 226.38(a), Appendix H-18 for the approval disclosures required in § 226.38(b),
and Appendix H-19 for the final disclosures required in § 226.38(c).

11

Reporting and Marketing Rules for College Student Open-End Credit (Section
226.57(d)) 12 – Requires card issuers that are a party to one or more college credit card
agreements to submit annual reports to the Board regarding those agreements. Card issuers must
submit annual reports by the first business day on or after March 31 of each calendar year. The
annual report must include the method or formula used to determine the amount of payments
from an issuer to an institution of higher education or affiliated organization during the reporting
period. In addition, each annual report must include a copy of any memorandum of
understanding that directly or indirectly relates to the college credit card agreement or that
controls or directs any obligations or distribution of benefits between any such entities.
Internet Posting of Credit Card Agreements (Section 226.58) – Requires that card
issuers post on their web sites the credit card agreements they offer to the public. Card issuers
must also submit these agreements to the Board quarterly for posting on the Board’s public Web
site. This requirement is applicable to any card issuer that issues credit cards under a credit card
account under an open-end (not home-secured) consumer credit plan, as defined in Section
226.2(a)(15). 13

Amendments to Subpart E
Special Rules for Certain Home Mortgage Transactions Appraisals
for Higher-Priced Mortgage Loans (HPML) (Section 226.43)
Section 226.43(d)(7) (Additional Written Appraisal) - Exemptions from the additional
appraisal requirement. The additional appraisal required under paragraph (d)(1) of this section
shall not apply to extensions of credit that finance a consumer's acquisition of property:
i.
From a local, State or Federal government agency;
ii.
From a person who acquired title to the property through foreclosure, deed-in-lieu of
foreclosure, or other similar judicial or non-judicial procedure as a result of the
person's exercise of rights as the holder of a defaulted mortgage loan;
iii. From a non-profit entity as part of a local, State, or Federal government program
under which the non-profit entity is permitted to acquire title to single-family
properties for resale from a seller who acquired title to the property through the
process of foreclosure, deed-in-lieu of foreclosure, or other similar judicial or nonjudicial procedure;
iv.
From a person who acquired title to the property by inheritance or pursuant to a court
order of dissolution of marriage, civil union, or domestic partnership, or of partition
of joint or marital assets to which the seller was a party;
v.
From an employer or relocation agency in connection with the relocation of an
employee;

12

Attachment I – Consumer and College Credit Card Agreement in final rulemaking (75 FR 7658) contains the
submission technical specifications document and initial submission requirements. Note – Attachment I does not
appear in the Code of Federal Regulations.
13
A de minimis exception from the requirement to post on issuers’ publicly available Web sites, and submit to the
Board for posting on the Board’s public web site, agreements applies to issuers with fewer than 10,000 open credit
card accounts.

12

vi.

vii.

viii.

From a service member, as defined in 50 U.S.C. App. 511(1), who received a
deployment or permanent change of station order after the service member purchased
the property;
Located in an area designated by the President as a federal disaster area, if and for as
long as the Federal financial institutions regulatory agencies, as defined in 12 U.S.C.
3350(6), waive the requirements in title XI of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, as amended (12 U.S.C. 3331 et seq.), and
any implementing regulations in that area; or
Located in a rural county, as defined in 12 CFR 1026.35(b)(2)(iv)(A).

Time Schedule for Information Collection
Information collection pursuant to these recordkeeping and disclosure requirements is
event-generated and must be provided to the borrower within the time periods established by the
law and regulation as discussed above. Creditors must keep evidence of compliance for 24
months.
Consultation Outside of the Agency
On August 8, 2013, a joint NPRM was published in the Federal Register (78 FR 48548)
for public comment to amend Regulation Z, which implements TILA. The comment period
expired October 7, 2013. The Agencies received twelve comments; however, none specifically
addressed the paperwork burden estimates. On December 26, 2013, a joint NFRM was
published in the Federal Register (78 FR 78520). The requirements provided in the final rule are
substantially similar to those provided in the proposed rule. Compliance with this final rule is
effective January 18, 2014.
The Agencies conducted a public outreach in the first half of 2013 to inform the Agencies
in drafting the 2013 NPRM. In addition to reviewing public comments on the 2013
Supplemental Proposed Rule, Agency staff conducted limited public outreach in September and
October to inform the Agencies in drafting the NFRM. 14
Sensitive Questions
This information collection contains no questions of a sensitive nature, as defined by
OMB guidelines.
Legal Status
The Board’s Legal Division has confirmed that title I of the Consumer Credit Protection
Act authorizes the Board to issue regulations to carry out the provisions of that Act (15 USC §§
1601, 1604(a)). The information collections are mandatory. Since the Federal Reserve does not
collect any information, no issue of confidentiality arises. Transaction- or account-specific
disclosures and billing error allegations are not publicly available and are confidential between
14

Information about these meetings is available at:
http://www.federalreserve.gov/newsevents/rrcommpublic/industry-meetings-20131001.pdf

13

the creditor and the consumer. General disclosures of credit terms that appear in advertisements
or take-one applications are available to the public.
As stated in Section IV. Legal Authority of the NFRM, the TILA section 129H(b)(4)(A),
added by the Dodd-Frank Act, authorizes the Agencies jointly to prescribe regulations
implementing section 129H. 15 U.S.C. 1639h(b)(4)(A). In addition, TILA section
129H(b)(4)(B) grants the Agencies the authority jointly to exempt, by rule, a class of loans from
the requirements of TILA section 129H(a) or section 129H(b) if the Agencies determine that the
exemption is in the public interest and promotes the safety and soundness of creditors. 15 U.S.C.
1639h(b)(4)(B).
Estimate of Respondent Burden
The current total annual burden, for the recordkeeping, reporting, and disclosure
requirements, is estimated to be 1,525,908 hours as shown in the table below. The table provides
the estimated annual burden for the 1,077 creditors regulated by the Federal Reserve to which
Regulation Z applies. The Federal Reserve estimates that exemptions would decrease the total
annual burden for the Regulation Z information collection by 86 hours from 1,525,908 hours to
1,525,822 hours. The estimated number of appraisals per respondent for the Federal Reserve has
been updated to account for the exemption for qualified mortgages adopted in the January 2013
Final Rule, which had not been accounted for in the table published at that time, as discussed in
the PRA section of the Final Rule. See 78 FR 10368, 10430-31 (February 13, 2013). This total
estimated burden decrease represents averages for all respondents supervised by the Federal
Reserve. The Federal Reserve expects that the amount of time required to implement the change
for a given institution may vary based on the size and complexity of the respondent. These
recordkeeping, reporting, and disclosure requirements represent 9.55 percent of total Federal
Reserve System paperwork burden.

14

Number
of
respondents 15

Estimated
annual
frequency

Subpart B Open-end Credit (226.5-226.16):
Credit and Charge cards
Application and Solicitations (Section 226.5(a))

226

12

8 hours

21,696

Home-Equity Plans (Section 226.5(b)):
Application disclosure
Restriction disclosure

651
651

790
10

1.5 min
3 min

12,857
326

Account opening disclosures (Section 226.6)
Reg AA Cosigner disclosure (Section 227.14(b))

878
878

1,150
1,150

1.5 min
1 min

25,243
16,828

Change-in-terms disclosures (Section 226.9(c))

878

3,750

1 min

54,875

1,077

12

8 hours

103,392

1,077

1

8 hours

8,616

226

145

30 min

16,385

30 min

1,077

6.5 min
120 hours
40 hours

288,421
129,240
516,960

Current

Periodic statements (Section 226.7)
Periodic statements (Section 226.7)
(for exempt transactions (226.3(b)(1)(i)))
Error resolution (Section 226.13):
Credit cards
Other Open-end credit

Estimated
response
time

Estimated
annual
burden hours

1,077

2

Subpart C:
Closed-end Credit Disclosures (Section 226.17)
Section 226.18 (s)&(t)(1) One-time (R-1366)
Section 226.18 (s)&(t)(1) Ongoing (R-1366)

1,077
1,077
1,077

2,472
1
12

Subparts B & C (Sections 226.16 & 226.24):
Advertising rules

1,077

5

25 min

2,244

30
68

250
12

3 min
8 hours

375
6,528

567

1

40 hours

22,680

418
418
418
418

1
24
24
1

8 hours
15 min
15 min
15 min

3,344
2,508
2,508
105

Subpart F:
Private student loan disclosures (Section 226.46) 16

1,075

12

17 hours

219,300

Subpart G:
Reporting and Marketing Rules for College Student
Open-End Credit (Section 226.57(d)) and Internet
posting of credit card agreements (college) Section
226.58

2,200

4

8 hours

70,400

Subpart E:
Pre-closing disclosure (Sections 226.31-226.45)
Mortgage transfer disclosure (Section 226.39)
Valuation Independence
(Section 226.42) One-time R-1394
Section 226.43 (R-1443)
One-time update
Initial appraisal
Investigate & verify additional appraisal
Review & provide a copy of additional appraisal

Total

1,525,908

15
Appendix I – Federal Enforcement Agencies – of Regulation Z defines the Federal Reserve-regulated institutions
as: SMBs, branches and agencies of foreign banks (other than federal branches, federal agencies, and insured state
branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations
operating under section 25 or 25A of the Federal Reserve Act (Edge Act or agreement corporations).
16
This count excludes the two Commercial lending companies.

15

Number
of
respondents 17

Estimated
annual
frequency

Subpart B Open-end Credit (226.5-226.16):
Credit and Charge cards
Application and Solicitations (Section 226.5(a))

226

12

8 hours

21,696

Home-Equity Plans (Section 226.5(b)):
Application disclosure
Restriction disclosure

651
651

790
10

1.5 min
3 min

12,857
326

Account opening disclosures (Section 226.6)
Reg AA Cosigner disclosure (Section 227.14(b))

878
878

1,150
1,150

1.5 min
1 min

25,243
16,828

Change-in-terms disclosures (Section 226.9(c))

878

3,750

1 min

54,875

1,077

12

8 hours

103,392

1,077

1

8 hours

8,616

226

145

30 min

16,385

30 min

1,077

6.5 min
120 hours
40 hours

288,421
129,240
516,960

Proposed

Periodic statements (Section 226.7)
Periodic statements (Section 226.7)
(for exempt transactions (226.3(b)(1)(i)))
Error resolution (Section 226.13):
Credit cards
Other Open-end credit

Estimated
response
time

Estimated
annual
burden hours

1,077

2

Subpart C:
Closed-end Credit Disclosures (Section 226.17)
Section 226.18 (s)&(t)(1) One-time (R-1366)
Section 226.18 (s)&(t)(1) Ongoing (R-1366)

1,077
1,077
1,077

2,472
1
12

Subparts B & C (Sections 226.16 & 226.24):
Advertising rules

1,077

5

25 min

2,244

30
68

250
12

3 min
8 hours

375
6,528

567

1

40 hours

22,680

418
418
418
418

1
24
24
0.18

8 hours
15 min
15 min
15 min

3,344
2,508
2,508
19

Subpart F:
Private student loan disclosures (Section 226.46) 18

1,075

12

17 hours

219,300

Subpart G:
Reporting and Marketing Rules for College Student
Open-End Credit (Section 226.57(d)) and Internet
posting of credit card agreements (college) Section
226.58

2,200

4

8 hours

70,400

Subpart E:
Pre-closing disclosure (Sections 226.31-226.45)
Mortgage transfer disclosure (Section 226.39)
Valuation Independence
(Section 226.42) One-time R-1394
Sections 226.43(c)(1),(c)(2),(d), (e), and (f) (R-1443)
One-time update
Initial appraisal
Investigate & verify additional appraisal
Review & provide a copy of additional appraisal

Total
Change

1,525,822
-86

17
Appendix I – Federal Enforcement Agencies – of Regulation Z defines the Federal Reserve-regulated institutions
as: SMBs, branches and agencies of foreign banks (other than federal branches, federal agencies, and insured state
branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations
operating under section 25 or 25A of the Federal Reserve Act (Edge Act or agreement corporations).
18
This count excludes the two Commercial lending companies.

16

With the new exemptions, the total estimated annual cost to respondents would decrease by
$4,377, from $77,668,717 to $77,664,340. 19
Estimate of Cost to the Federal Reserve System
The cost to the Federal Reserve System is considered negligible.

19
Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $18, 45% Financial Managers at
$61, 15% Lawyers at $63, and 10% Chief Executives at $86). Hourly rate for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2013, published April 1, 2014 www.bls.gov/news.release/ocwage.nr0.htm. Occupations are defined using the
BLS Occupational Classification System, www.bls.gov/soc/

17