Final Reg Z Supporting Statement 2-1

CONSUMER FINANCIAL PROTECTION BUREAU
INFORMATION COLLECTION REQUEST—SUPPORTING STATEMENT
TRUTH IN LENDING ACT (REGULATION Z)
12 CFR 1026
(OMB CONTROL NUMBER: 3170-0028)
The Consumer Financial Protection Bureau (Bureau) is dividing final rules 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 final rule for Regulation X and Regulation
Z. Respondents should continue to use the 3170-0015 control number for Regulation Z and
3170-0016 control number for Regulation X.
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 proposed rule was issued on September 17,
2012 and the final rule was issued on January 17, 2013. Through a final rule, the CFPB is
amending Regulation Z to implement the new TILA mortgage servicing provisions required by
the Dodd-Frank Act and is revising Regulation Z adjustable-rate mortgage rules under current
1026.20(c) and (d).
The amendments to Regulation Z implement DFA sections 1418 (initial rate-adjustment
notice for hybrid 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) implements 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 implements DFA section 1420 by adding § 1026.41 to Regulation Z,
which requires creditors, assignees, and servicers to provide periodic statements for closed-end
residential mortgage loans. The Bureau implements DFA section 1464 by revising existing
§ 1026.36(c) provisions that 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 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 involve information collections.
ARM Disclosures: The rule requires disclosures be provided to consumers with closedend adjustable-rate mortgages secured by their principal dwelling, seven to eight months before
the first payment due after the ARM’s first interest rate adjustment to alert consumers to the
upcoming initial adjustment of their interest rate. The requirements regarding the ARM interest
rate adjustment disclosures apply to creditors, assignees, and servicers.
Periodic Statement: The rule requires that a periodic statement be provided each billing
cycle to consumers with closed-end residential mortgage loans which includes billing
information, a record of the transactions to aid in error detection and resolution, and, if
applicable information of interest to distressed or delinquent borrowers. The requirements
regarding the periodic statements apply to creditors, assignees, and servicers.
Prompt Payment Creditng. Servicers must promptly credit periodic payments from
borrowers as of the day of receipt. A periodic payment consists of principal, interest, and escrow
(if applicable). If a servicer receives a payment that is less than the amount due for a periodic
payment, the payment may be held in a suspense account. When the amount in the suspense
account covers a periodic payment, the servicer must apply the funds to the consumer’s account.
Payoff Statement: The rule requires that a payoff statement be provided to consumers
with mortgages secured by a dwelling no later than seven business days after receipt of a written
request for such a statement. The requirements regarding the payoff statement requirements
apply to creditors, assignees, and servicers.
The CFPB also is revising current rules § 1026.20(c) and (d). The final rule expands the
scope and content of the disclosures currently required by 1026.20(c) for interest rate
adjustments that result in a corresponding payment change to closely track the requirements of
final rule 1026.20(d). The CFPB also is 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 Bureau also is removing current 1026.20(d), which
permits the substitution of disclosures provided by other Federal agencies in place of the
disclosures required by current 1026.20(c).
The final rule described above for ARM interest rate adjustments and periodic statements
2

have model and sample forms and clauses for transactions subject to TILA. See Appendices H-4
and H-30.
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 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
Under the final rule, the Bureau estimates that approximately half of respondents are small
entities.
The Bureau developed model and sample forms and clauses to assist servicers with
complying with the ARM and periodic statement disclosures. The CFPB is further permitting
creditors, assignees, and servicers to provide the periodic statement and ARM disclosures in the
same envelope or email with other statements provided to consumers.
The final rule exempts certain small servicers from the requirements of the periodic
statement. The final rule contains other exemptions from the periodic statement requirement—
for fixed-rate loans where servicers provide borrowers with coupon books, for reverse
mortgages, and for timeshares—that may minimize burden for small entities that service such
loans. The final ARM rules exempt all loans with terms of one year or less; this exemption may
minimize the 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
respondents are the minimum necessary to ensure consumers receive the information required
regarding interest rate adjustment for ARMs, the disclosures required for periodic statements,
3

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
ended on November 16, 2012. The Bureau did not receive any comments on the PRA section
with respect to the burden of the proposed information collection.
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 the Small Business Regulatory
Enforcement Fairness Act. In developing the final rule, the Bureau has considered potential
benefits, costs, and impacts and has addressed general comments regarding costs of the rule in
connection with that analysis.1
The 2012 TILA Servicing Proposal set forth a preliminary analysis of these effects, and
the Bureau requested and received 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 final 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.

1

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.

4

11. Justification for Sensitive Questions
There is no information of a sensitive nature being requested.
12. Estimated Burden of Information Collection
Under the final rule, the CFPB 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 CFPB estimates there are 1,518
total respondents (130 depository institutions and affiliates and 1,388 nondepository
institutions).2 The CFPB and the FTC generally have joint enforcement authority over
nondepository institutions. To prevent double-counting the same population, the CFPB has
allocated to itself half of the estimated burden to nondepository institutions. This equals the
burden on 824 respondents3 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%.4
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).5 Most servicers rely upon vendor servicing systems because the use of
vendors substantially mitigates the cost of revising software and compliance systems as the
2

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.
3
130 + (1,388/2) = 824.
4
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.
5
Pursuant to the Bureau’s administrative enforcement authority, depository respondents under the final rule are only
those with more than $10 billion in total assets.

5

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,
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 Bureau recognizes that there is content in the 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 considered a burden for purposes of PRA. The Bureau estimates the ongoing burden to be
530 hours and $57,000 for Bureau depository respondents and 80 hours and $5,600 for Bureau
non-depository respondents.
i. One-time burden

6

Reviewing the regulation
The CFPB estimates that, for each covered person, one lawyer would take 0.5 hours to
read and review the sections of the rule that describe the new initial rate adjustment notice, based
on the length of the sections. The burden allocated to the CFPB respondents 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
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.6 Therefore, vendor costs to distribute the
new disclosure at large depositories are $0.30*192,000=$58,000. These large depositories will
also incur internal production costs of approximately 0.003 hours per disclosure, for an
additional annual burden of 575 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
$3,800 (19,000 * $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 19,000*0.004=76
hours.

6

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

7

New Initial ARM Rate Adjustment Notice
CFPB Depository
Institutions
CFPB share of respondents
130
CFPB share of responses
192,000
Average frequency per response
1,475
Annual Burden (hrs):
Time per response (hours)
Total (hours)
Annual Burden ($):
Vendor Costs

CFPB Share of NonDepository Institutions
694
19,000
27

0.003
575

0.004
76

$58,000

$3,800

B. Changes to the Current Regulation Z Disclosure for Adjustable-Rate Mortgages
The final rule changes the minimum time for providing advance notice to consumers
from 25 days to 60 days before payment at a new level is due when a rate adjustment causes the
payment to change. Servicers are required to provide certain information that they may not
currently disclose, but would no longer be required to notify consumers of any rate adjustment
which does not cause a change in payment.
i. One-time burden
Reviewing the regulation
The CFPB estimates that, for each covered person, one lawyer would take 0.65 hours to read and
review the sections of the rule that describe the revised rate adjustment notice, based on the
length of the sections. The burden allocated to the CFPB respondents is therefore 0.65*824=535
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
Bureau estimates that the 15 large nondepositories and one large depository institution with their
own servicing platforms will each require 40 hours to update their systems. Therefore, the
aggregate one-time hourly burden from software and information technology updates is 16*40=
640 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
8

Regarding ongoing burden, the Bureau is requiring the disclosure only when the interest
rate adjustment results in a corresponding change in the required payment. The Bureau believes
it would be usual and customary to provide consumers with a disclosure under these
circumstances. Thus, the Bureau believes there is no burden from distribution costs for purposes
of PRA from the § 1026.20(c) disclosure. The Bureau recognizes that there is content in the
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 considered a burden for purposes of PRA. The Bureau
estimates the ongoing burden to be 1,250 hours for Bureau depository respondents and 180 hours
and $8,700 for Bureau non-depository respondents.

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
445,000
44,000
Average frequency per response
3,425
63
Annual Burden (hrs):
Time per response (hours)
Total (hours)
Annual Burden ($):
Vendor Costs

0.003
1,250

0.004
180

$0

$8,700

C. New Periodic Statement
The new periodic statement will require certain one-time and ongoing costs to
respondents. The required periodic statement content includes: 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 the date after which it will next adjust, outstanding principal balance, etc.; and,
where applicable, other information that may be helpful to troubled borrowers. Certain small
servicers (those servicing less than 5,000 mortgages and that own or originated all the loans they
are servicing) are exempt from this requirement. Fixed-rate mortgages are exempt if the servicer
provides the consumer with a coupon book that contains 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 regulation that describe the changes to regulation
9

Z § 1026.41(c), based on the length the section. The Bureau estimates that 799 small
nondepositories are exempt from the rule (the Bureau assumes half of the total nondepository
burden, so the number of institutions for this analysis drops by 400 entities), which reduces the
number of covered entities from 824 to 424. The burden allocated to the CFPB for depository
and nondepository institutions is therefore 0.7*424= 300 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
aggregate one-time hourly burden from software and information technology updates is 16*24=
384 hours.
The Bureau estimates that there is one small nondepository that is non-exempt from this
provision, and 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 1*$144=$144.
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 rule are those with both an adjustable-rate mortgage and a coupon book.
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 there are approximately 1.4 million mortgages at large depositories and 92,000
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 16.8 million disclosures (1.4 million
mortgages*12 monthly statements) gives 50,000 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 $5,040,000.
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,
10

1.1 million, for total vendor production costs of $220,000. Additionally, nondepositories will
spend 0.004 hours to distribute each disclosure for an aggregate annual burden of 4,400 hours.
New Periodic Statement
CFPB Depository
Institutions
CFPB share of respondents
130
CFPB share of responses
16,800,000
Average frequency per response
129,000
Annual Burden (hrs):
Time per response (hours)
Total (hours)
Annual Burden ($):
Vendor Costs

CFPB Share of NonDepository Institutions
294
1,100,000
3,750

0.003
50,000

0.004
4,400

$5,040,000

$220,000

D. Prompt crediting of payments and response to requests for payoff amounts
The prompt crediting of payments and response to requests for payoff amounts results in
certain one-time and ongoing costs to covered persons. The final rule makes 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 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 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 80 hours to upgrade their software and information technology in response to the
provision. Therefore, the aggregate burden is 16*80= 1,280 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 payoff statement will replace a pre-existing
disclosure that respondents are currently providing in the normal course of business. The Bureau
does not believe that 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 1.5 percent of mortgages will request a payoff statement in a
given year. The Bureau estimates that large depositories will incur internal production costs of
approximately 0.003 hours per disclosure, multiplied by 592,000 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,
58,000, for total vendor production costs of $11,600. Additionally, nondepositories will spend
0.004 hours to distribute each disclosure for an aggregate annual burden of 240 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
592,000
58,000
Average frequency per response
4,555
84
Annual Burden (hrs):
Time per response (hours)
Total (hours)
Annual Burden ($):
Vendor Costs

0.003
1,650

0.004
240

$178,000

$11,600

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

12

Respondents

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

Disclosures Per
Respondent

Hours burden per
disclosure

Total burden
hours

Total vendor
costs

824

600

0.00290

1,000

22,000

824

300

0.00290

1,000

64,000

424

42,400

0.00286

52,000

5,397,000

824

800

0.00290

2,000

195,000

824

1

1.47524

1,000

58,000

824

1

2.00340

2,000

115,000

424

1

2.30357

1,000

0

824

1

1.80340

1,000

115,000

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 $49,0007 for the New Initial Rate Adjustment Notice for AdjustableRate Mortgages, $247,0008 for the Changes in the Regulation Z Disclosure for Adjustable Rate
Mortgages, $8.9 million9 for periodic statements, and $330,00010 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
The CFPB is making adjustments to disclosures currently required by 1026.20(c) for
interest rate adjustments that result in a corresponding payment change, among other reasons, to
closely track the requirements of 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).
Deriving the annual costs for the ARM 20(d) notice: 247,000 annual responses multiplied by $0.20 a disclosure.
8
Deriving the annual costs for the ARM 20(c) notice: 494,000 annual responses multiplied by $0.50 a disclosure.
9
Deriving the annual costs for the Periodic statement: 18 million annual responses multiplied by $0.50 a disclosure.
10
Deriving the annual costs for the prompt crediting of payments and response to requests for payoff amounts:
659,000 annual responses multiplied by $0.50 a disclosure.

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The information collections for the Bureau’s ARM initial interest rate disclosures,
periodic statements, and payoff statements are new requirements under the final rule. 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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