The Consumer Financial Protection Bureau (CFPB) recently announced an application process for requests that areas not currently deemed “rural” receive that designation under federal consumer financial law. Under this process, those now outside rural counties or census blocks can apply to be designated as rural and may be eligible for specific exemptions and provisions for certain mortgage lenders. The CFPB will accept applications starting March 31, 2016.
“This step will allow the Bureau to consider whether there are smaller institutions that merit a designation as ‘rural’ lenders but do not qualify under current guidelines,” says CFPB Director Richard Cordray. “The Bureau is taking quick action to fulfill our responsibility to Congress and implement the law.”
In January 2013, the CFPB issued a rule that designated rural areas on a county-by-county basis using definitions developed by the Office of Management and Budget. In September 2015, the CFPB expanded the definition of “rural” to include census blocks the U.S. Census Bureau defines as being outside of urban areas. The application process announced today provides an avenue for additional areas to be considered rural.
To request a rural designation by the CFPB, applicants need to identify the area and the state in which it is located. As set out in the application process, they must then provide information that will allow the CFPB to evaluate the application under the parameters of the Helping Expand Lending Practices in Rural Communities (HELP) Act, passed by Congress in December 2015. The application process will be open through Dec. 4, 2017. However, any application submitted after April 8, 2017, will be considered only if the Bureau determines the designation decision process for that application can be completed by the sunset date of Dec. 4, 2017, based on the time remaining, the complexity of the application, and any other relevant factors.
The HELP Act also amended the Truth in Lending Act and authorized the CFPB to expand eligibility among small rural creditors to originate balloon-payment qualified mortgages and for exemptions from the required escrow account for higher-priced mortgage loans. The CFPB will soon issue another notice concerning those amendments.
The notice submitted to the Federal Register is available here.