The CFPB has released a final list of “rural” or “underserved” counties for use in 2014. The CFPB has indicated that creditors may rely on this list as a safe harbor to determine whether a county is “rural” or “underserved” for loans made during a given calendar year. (In May 2013, the CFPB released the list for loans made from June 1, 2013, through December 31, 2013).
The following CFPB rules have provisions that relate to mortgage loans made by creditors operating predominately in rural or underserved counties:
The final ability-to-repay rule allows certain small creditors that operate predominately in rural or underserved counties to make balloon payment qualified mortgages. An amendment to the rule adopted by the CFPB in May 2013 created a transition period that ends on January 10, 2016 in which certain small creditors may make balloon qualified mortgages even if they do not operate predominately in rural or underserved areas. (During the transition period the CFPB plans to assess whether the definitions of rural and underserved should be modified.)
The final HOEPA rule includes an exemption from the balloon payment prohibition on high-cost mortgages for creditors operating predominately in “rural” or “underserved” counties. Last month, the CFPB proposed a change to the rule that would permit the same small creditors to make balloon high-cost mortgages even if they do not operate predominately in rural or underserved areas, as long as the loan meets certain requirements for a small creditor balloon qualified mortgage.
The final mortgage escrow account rule exempts certain creditors operating primarily in rural or underserved counties from the requirement to establish mandatory escrow accounts on higher-priced mortgage loans (HPML). The CFPB has proposed to broaden this exemption to cover a small creditor that extended more than 50 percent of its total covered first-lien loans in rural or underserved counties in any of the three preceding calendar years (instead of in the preceding calendar year).
The interagency final appraisal rule includes an exemption from the requirement to obtain a second appraisal for certain HPMLs originated in rural counties. Because this exemption is based only on rural status, the CFPB has also published a list that includes only rural counties (counties that are only underserved are excluded).