CFPB issues rule on 'rural' application process, more to come

March 3, 2016

WASHINGTON (3/3/16)--The Consumer Financial Protection Bureau (CFPB) announced Wednesday an application process for areas not currently deemed “rural” to receive that designation under federal consumer financial law. President Barack Obama signed the Fixing America’s Surface Transportation (FAST) Act into law in December 2015, and the bill contained a number of pieces of credit union regulatory relief, including this one.

However, the final rule does not contain language helpful to credit unions by removing Truth in Lending Act requirements that lenders prove they "predominately" operate in rural or underserved areas.

Per the FAST Act, lenders will no longer have to prove they predominately operate in rural or underserved areas, they will now be required to show only they operate in the respective rural or underserved area, which will be defined by CFPB rule.

According to the bureau, this part of the rule will be issued before March 31.

The CFPB was required to establish the rural application process within 90 days of the bill enactment. According to the bureau’s Wednesday announcement, this application process will open March 31, and 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.

According to the CFPB, it will soon issue another notice concerning the amendments addressing expanded eligibility among small rural creditors to originate balloon-payment qualified mortgages and for exemptions from the required escrow account for higher-priced mortgage loans.