Removing Barriers Blog

CFPB Finalizes Application Process for Rural Designation
Posted March 03, 2016 by CUNA Advocacy

The Consumer Financial Protection Bureau (CFPB) announced Wednesday an application process for areas not currently deemed “rural” to receive that designation under federal consumer financial law. President Barack Obama signed the Fixing America’s Surface Transportation (FAST) Act into law in December 2015, and the bill contained a number of pieces of credit union regulatory relief, including this one.

However, the final rule does not contain language helpful to credit unions by removing Truth in Lending Act requirements that lenders prove they "predominately" operate in rural or underserved areas.  According to the CFPB, this part of the rule will be issued before March 31.  We previously sent a letter to the CFPB asking for them to reduce the current threshold to only 1 loan for purposes of allowing credit unions to take advantage of the reduced restrictions for escrow accounts and certain balloon mortgages.

The CFPB currently designates areas for purposes of certain regulations related to Mortgage Lending.  The rule is effective March 3, 2016.

An application under the rule must contain the following sections:

  1. Area Identified (County, Census block, etc…);
  2. Justification for Designation as Rural Area:
    • Whether the Census Bureau identifies the area as rural;
    • Whether OMB identifies the area as a metropolitan area or micropolitan area
    • Whether the Department of Agriculture identifies areas eligible for programs of the Rural Development Office of the Dept. of Agriculture;
    • The most recent primary and secondary ruralurban commuting codes from the Department of Agriculture;
    • Whether a State bank supervisor has issued an opinion on whether the area should be designated a rural area;
    • The Population Density; and
  3. The applicant name/contact information.

The CFPB will publish the applications in the Federal Register and allow for a 90 day comment period after which it will act on the application.

Our final rule summary can be found here.