Proposal Aimed at Small Creditors Serving Rural and Underserved Areas
On January 29, the Consumer Financial Protection Bureau (CFPB) issued a proposal changing rules, which would increase the number of financial institutions that could offer mortgages in rural and underserved areas. Comments on the proposed rule are due March 30, 2015. The 106-page proposal includes the following changes:
- Increase from 500 first-lien mortgage loans to 2,000 the loan origination limit for small-creditor status. It would not include loans held in portfolio by the financial institution and affiliates.
- Expand the definition of “rural” to include census blocks that are not in an urban area as defined by the Census Bureau.
- Adjust the time period used in determining whether a financial institution is operating predominately in rural or underserved areas, from any of the three preceding calendar years to the preceding calendar year.
- Include the assets of the financial institution’s mortgage-originating affiliates in calculating whether a financial institution is under the asset limit for small-creditor status ($2 billion).
- Provide a grace period for financial institutions that were acting as small creditors in the previous year but subsequently exceed the origination or asset-size limit.
- Extend the temporary exemption schedule for small creditors making balloon-payment qualified mortgages and balloon-payment high-cost mortgages regardless of where they operate. Currently set to expire on January 10, 2016, the proposal would extend that period to include balloon-payment mortgage transactions with applications received before April 1, 2016.
CLA’s financial institution regulatory compliance team assists banks and credit unions nationwide in establishing regulatory compliance programs, conducting compliance testing, and training staff on regulations. Justin Robinson is a member of CLA’s regulatory compliance team and can be reached at justin.robinson@CLAconnect.com.
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