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March 22, 2016
CFPB broadens QM coverage for lenders in rural, underserved areas
The CFPB today issued an interim final rule that broadens the availability of certain qualified-mortgage rule exceptions for small creditors that operate in rural or underserved areas.
The interim rule implements the recently enacted, NAFCU-supported Helping Expand Lending Practices in Rural Communities Act.
CFPB Director Richard Cordray, in a phone call to NAFCU President and CEO Dan Berger, pointed out that the expanded rural lender coverage applies to any credit union (defined as a "small creditor") that makes at least one covered loan in an area designated as rural or underserved.
The interim rule, effective March 31, will allow more small creditors operating in rural and underserved areas to originate balloon-payment qualified and high-cost mortgages. It also expands availability to those lenders of an escrow account exemption related to high-cost loans. "We appreciate the CFPB issuing an interim final rule that allows more credit unions to take advantage of special benefits for small creditors within the QM rules," said Berger.
The interim rule provisions apply to CFPB's ability-to-repay mortgage rule, which prescribes QM requirements; its rule implementing the Home Ownership Equity Protection Act; and its escrow rule.
The March 31 effective date is aimed at avoiding confusion due to current, temporary exemptions already set to expire April 1.
The interim rule implements the recently enacted, NAFCU-supported Helping Expand Lending Practices in Rural Communities Act.
CFPB Director Richard Cordray, in a phone call to NAFCU President and CEO Dan Berger, pointed out that the expanded rural lender coverage applies to any credit union (defined as a "small creditor") that makes at least one covered loan in an area designated as rural or underserved.
The interim rule, effective March 31, will allow more small creditors operating in rural and underserved areas to originate balloon-payment qualified and high-cost mortgages. It also expands availability to those lenders of an escrow account exemption related to high-cost loans. "We appreciate the CFPB issuing an interim final rule that allows more credit unions to take advantage of special benefits for small creditors within the QM rules," said Berger.
The interim rule provisions apply to CFPB's ability-to-repay mortgage rule, which prescribes QM requirements; its rule implementing the Home Ownership Equity Protection Act; and its escrow rule.
The March 31 effective date is aimed at avoiding confusion due to current, temporary exemptions already set to expire April 1.
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