Some areas outside of 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, under a new application process by the Consumer Financial Protection Bureau. The CFPB started taking applications as of March 31.
“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,” CFPB Director Richard Cordray said in a news release. “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 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 state where it is located. 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 Act, passed by Congress in December 2015.
The application process will be open through Dec. 4, 2017. However, applications submitted after April 8, 2017 will be considered only if the bureau determines the designation decision process for those applications can be completed by the sunset date of Dec. 4, 2017, based on the time remaining, complexity of the application and other 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, according to the release. The CFPB will soon issue another notice regarding those amendments.
The notice is available in the Federal Register at http://files.consumerfinance.gov/f/201603_cfpb_application-process-for-designation-of-rural-area-under-federal-consumer-financial.pdf.
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