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The Truth in Lending statute authorizes the CFPB to depart from the statute in several clauses. Under 15 U.S.C. § 1604(a), the CFPB may implement regulations that “contain such classifications, differentiations, or other provisions, and may provide for such adjustments and exceptions for any class of transactions,” although the statute explicitly carves out high-cost loans from this rule. (A separate statutory provision, 15 U.S.C. § 1639(p), allows the CFPB to exempt specific mortgage products or categories of mortgages from certain high-cost loan restrictions and is discussed later in this subsection.)247 The CFPB may only use this authority if such an action meets the standard set out by the statute: that such a change is “necessary or proper to effectuate the purposes” of the Truth in Lending Act, “to prevent circumvention or evasion” of the statute or to “facilitate compliance” with it.248 Thus, while the CFPB may distinguish among, or set specific rules for, certain classes of transactions, this must be aimed at better implementing the statute or assisting with compliance with what the statute requires (or preventing circumvention of what the statute requires). A regulation that seeks to relieve creditors from compliance obligations squarely set out by statute should not fall within this authority.

In 15 U.S.C. § 1604(f), a narrower exemption authority is set out. The statute provides that, except for high-cost mortgage loans, the CFPB can exempt a “class of transactions” if the CFPB determines that the statute’s coverage “under all or part does not provide a meaningful benefit to consumers in the form of useful information or protection.”249 This authority is narrower because the basis must be related to whether the exemption directly affects the well-being of consumers. The statute provides “factors for consideration” that should guide the CFPB in this analysis, and requires the CFPB to publish its rationale when a proposed exemption is published.

These factors include:

  • • “The amount of the loan and whether the disclosures, right of rescission and other provisions provide a benefit to the consumers who are parties to such transactions”;
  • • “The extent to which the requirements . . . complicate, hinder, or make more expensive the credit process”; and
  • • “The status of the borrower, including: any related financial arrangements of the borrower; the financial sophistication of the borrower relative to the type of transaction; and the importance to the borrower of the credit, related supporting property, and coverage” under the Truth in Lending Act.250

In a more general provision, 15 U.S.C. § 1603(5) provides an exemption from coverage for transactions where the Bureau “by rule, determines that coverage under this subchapter is not necessary to carry out the purposes of this subchapter.”251

When the CFPB is engaged in rulemaking that goes beyond clarifying or interpreting the statute, it generally specifies if it is using its adjustment or exemption authority and the basis for exercising that authority. The FRB and CFPB have used their exemption authority for implementing various provisions. For example, certain small or nonprofit lenders are exempted from the ability-to-repay rules, as are government-sponsored assistance programs.252


  • 247 {247} 15 U.S.C. § 1639(p)(1).

    Note that the exemptions may only apply to prohibitions in 15 U.S.C. § 1639(c) through (i) and that the Bureau must find that the exemption is in the interest of the borrowing public and will apply only to products that maintain and strengthen home ownership and equity protection. Id.

  • 248 {248} 15 U.S.C. § 1604(a).

  • 249 {249} Id.

  • 250 {250} Id.

  • 251 {251} 15 U.S.C. § 1603(5).

  • 252 {252} 12 C.F.R. § 1026.43(a)(3)(iv)–(vi). See §, infra (discussing these exemptions).