The Consumer Financial Protection Bureau has implemented a new rule that broadens the ability of lenders in rural and underserved areas to originate qualified mortgages.
The CFPB's interim final rule, approved Tuesday, effectively implements the Helping Expand Lending Practices in Rural Communities Act, also known as the HELP Act. The new rule will take effect March 31.
"This rule provides broader eligibility for lenders serving those areas to originate balloon-payment qualified and high-cost mortgages," CFPB Director Richard Cordray said in a news release.
Congress' approval of the HELP Act broadens the category of rural small lenders that can qualify to make loans under the Truth in Lending Act.
The CFPB has previously taken steps to provide more flexibility to community banks operating in rural and underserved areas.
Credit unions applauded this latest measure.
NAFCU President and CEO Dan Berger said credit unions welcome the rule because it “allows more credit unions to take advantage of special benefits for small creditors within the QM rules." In particular, Berger said credit unions appreciate Cordray’s clarification that the CFPB “interprets the rural or underserved element as being met when a small creditor makes a single covered loan to a rural or underserved area."
CUNA President and CEO Jim Nussle was also quick to laud the bureau’s efforts in this area. "This is an important win for credit unions and consumers alike," he said. "The rule reduces the burden of recent CFPB mortgage lending rules on more credit unions, and these member-owned, community-based financial institutions will be able to provide more credit to consumers in rural and underserved areas. Our thanks to Director Cordray for getting this needed change into the rulebook quickly."
