WASHINGTON (5/22/14)--The designation of an area as "rural" by the Consumer Financial Protection Bureau has many implications for credit unions, the Credit Union National Association told key senators in a May 21 letter. The letter declared CUNA's support for a bill that would increase the number of counties that could receive such designation.
The HELP Rural Communities Act (S. 1916), introduced by Sen. Mitch McConnell (R-Ky.), would direct the CFPB to establish an application process by which a county could request to be designated as a rural area if the CFPB has not already assigned it that status.
Credit unions operating in "rural" areas may be exempt for some regulatory burdens, such as an escrow requirements under the Truth in Lending Act that requires certain lenders to create an escrow account for at least five years for higher-priced mortgage loans. They may also be exempt from standards under the Ability-to-Repay and Qualified Mortgage (QM) rules that disqualify mortgage loans with balloon payments from meeting the QM standard.
Being exempt from such requirements, CUNA noted in its letter, can beneficially affect the types of products a credit union can offer their members in what can be underserved areas.
The letter was sent to Senate Banking Committee Chairman Tim Johnson (D-S.D.) and its ranking member, Mike Crapo (R-Idaho) and signed by CUNA President/CEO Bill Cheney. Cheney closed the letter by saying CUNA and credit unions look forward to working with the legislators to see the bill's enactment.