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CUNA Urges Care In CFPB 'Rural,' 'Underserved' Definitions
WASHINGTON (5/7/13)--In advance of the Consumer Financial Protection Bureau's June 1 effective date for its escrow rule adopted in January, the Credit Union National Association has urged the bureau to get its definition of "rural" and "underserved" areas right because it affects so many other rules that have an impact on credit unions.

The CFPB has proposed amending the escrow rule to clarify how to determine whether a county is "rural" or "underserved."

In a new comment letter, CUNA notes that four CFPB mortgage rules approved in January include provisions for special treatment under various Regulaton Z requirements for credit transactions made by creditors operating predominantly  in "rural" or "underserved" areas.These provisions are:

  • An exemption from the escrow rule's escrow requirement for higher-priced mortgage loans (HPML);
  • An allowance to originate balloon-payment qualified mortgages under the 2013 ability-to-repay final rule;
  • An exemption from the balloon-payment prohibition on high-cost mortgages under the 2013 HOEPA final rule; and
  • An exemption from the requirement to obtain a second appraisal for certain HPMLs under the 2013 interagency appraisals final rule.
While CUNA supports some aspects of the CFPB proposal, there are also aspects that prompt concerns.

"For example, the proposal would amend the Escrow Rule's commentary regarding the term 'adjacent' in the context of determining whether an area is 'rural,' wrote Luke Martone, CUNA assistant general counsel.  "However, since the proposal does not include any relevant data on the impact of this proposed change, we ask that the CFPB refrain from finalizing this aspect of the rule without first making such data available and allowing for informed input from the public."

The new comment letter is highlighted in CUNA's newest Regulatory Advocacy Report, published Monday. CUNA members can use the resource link below to access that publication.
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