The Consumer Financial Protection Bureau (CFPB) has issued a list of counties determined to have been "rural" or "underserved" during 2012. The list updates one issued by CFPB on May 16 and contains the names of 1642 areas. Rural counties are generally defined by using the USDA Economic Research Service's urban influence codes, and underserved counties are defined by reference to data collected under the Home Mortgage Disclosure Act.
Creditors can rely on this list to determine which counties provide "safe harbors" for provisions in and exemptions from some of the rules posted by CFPB that go into effect this year and next. Rules with provisions relating to rural or underserved counties include:
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Escrow Requirements under the Truth in Lending Act (TILA) rule (Escrows Rule) which took effect on June 1, 2013. The rule requires certain creditors to create escrow accounts for a minimum of 5 years for higher-priced mortgage loans (HPMLs). Exemptions exist for certain small creditors that operate predominantly in rural or underserved counties.
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The Ability to Repay and Qualified Mortgage Standards under Under TILA (ATR Rule), effective January 10, 2014, disqualifies mortgages with balloon payments from the definition of qualified mortgages (QM). This rule also exempts some small creditors under the rural and underserved provision.
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A temporary exemption will exist in the balloon payment rule for certain high-cost mortgages under High-Cost Mortgage and Homeownership Counseling Amendments to TILA which go into effect on January 10, 2014.
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Certain HPMLs will be exempt from new second appraisal requirements if they are originated in rural counties under the interagency Appraisals for Higher-Priced Mortgage Loans rule which goes into effect on January 18, 2014. Because this rule does not apply to underserved counties, CPFB has published a second list including only "rural" designees.
The memo from CFPB said the agency had received considerable feedback on the definitions for "rural" and "underserved" and it is also aware that the status of some counties has changed between the 2013 and 2014 list. The agency intends to consider refining these definitions over the next two years and has posted several additional exemptions to the rules for those counties who have lost status with the new list. The lists as well as additional exemptions are available here.
