The Credit Union National Association expressed support on Wednesday for legislation could potentially increase the number of areas designated as “rural” under the CFPB’s ability-to-repay and qualified mortgage rules.
S. 1916, the HELP Rural Communities Act introduced by Sen. Mitch McConnell (R-Ky.) in January, would require the CFPB to set up an application process through which a county could request designation as a rural area if the agency has not already assigned it as such.
In a letter to Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho), the chairman and ranking member of the Senate Banking Committee, respectively, CUNA said the rural designation has “many implications” for credit unions and the products they offer members.
CUNA pointed to the Truth in Lending Act’s (TILA) escrow requirements, which require certain lenders to set up an escrow account with a minimum five-year term for higher-priced mortgages, though smaller lenders that operate in rural and underserved areas are exempt from the rule.
Additionally, CUNA said small lenders that operate in rural areas are eligible to originate balloon payment qualified mortgages.
“Senator McConnell’s legislation is welcomed because it would provide a way for a person or business that resides or operates within a rural region to apply to the CFPB to get that area designated as rural,” CUNA said, adding that the CFPB must take into account numerous criteria used by other agencies in its definition of rural.