On March 12, 2013 the Consumer Financial Protection Bureau (CFPB) announced the availability of a preliminary list of rural and underserved counties. The final list will be available before June 1, 2013.
The list has significant impact on several regulatory requirements, as follows:
- On June 1, 2013, the CFPB’s Escrow Requirements under the Truth in Lending Act rule (Escrows Rule) will go into effect, which require certain creditors to create escrow accounts for a minimum of 5 years for higher-priced mortgage loans (HPMLs). The rule exempts HPMLs made by certain small creditors that operate predominantly in rural or underserved counties from this requirement.
- Under the Ability to Repay and Qualified Mortgage Standards Under the Truth in Lending Act rule, which is effective January 10, 2014, mortgage loans with balloon payments do not meet the qualified mortgage (QM) standard in most cases. However, certain small creditors that operate predominantly in rural or underserved counties will be eligible to originate balloon-payment QMs.
- These same creditors will be exempt from restrictions on balloon payments for certain high-cost mortgages under the CFPB’s High-Cost Mortgage and Homeownership Counseling Amendments to the Truth in Lending Act rule (HOEPA rule), which also goes into effect on January 10, 2014.
- Also, 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.
The preliminary list is available here.