WASHINGTON (3/13/14)--The rural county designations determined by regulators can impact the types of products credit unions may offer their members in those areas, and the Credit Union National Association this week welcomed consideration of a bill that would alter the Consumer Financial Protection Bureau's approach to this definition.
In a letter sent to House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Rep. Maxine Waters (D-Calif.), the committee's ranking Democrat, CUNA thanked the committee for its planned consideration of H.R. 2672 today. That bill would direct the CFPB to establish an application process determining whether a county should be designated as a rural area if the CFPB has not designated it as one.
The CFPB currently uses the U.S. Department of Agriculture Economic Research Services' urban influence codes to define a "rural" area. While the bureau is scheduled to reexamine the definition of "rural" over the next two years, CUNA welcomed Rep. Andy Barr's (R-Ky.) bill "because it would allow a person who lives in or does business in a state, to apply to the CFPB to have designated the county in which the business is located as a rural area for purposes of a federal consumer financial law."
The CUNA letter cited two examples of how rural area definitions impact credit union business practices:
Escrow requirements under the Truth in Lending Act require certain lenders to create an escrow account for at least five years for higher-priced mortgage loans. If those loans are made by small lenders that operate predominately in rural or underserved counties, they are exempt from this requirement; and
Ability to Repay and Qualified Mortgage (QM) Standards which generally exclude mortgage loans with balloon payments from the QM standard, but allow small lenders that operate predominately in rural areas to originate balloon payment QMs.
It is expected that an amendment may be offered during today's markup session that would allow part of a county to be given a "rural" designation even if the whole county did not qualify.
The amendment is targeted to opponents of the Barr bill who think it does not go far enough to help people in rural areas get access to financial services.
For CUNA letters to Congress, use the resource link.