As we previously addressed, the CFPB issued a final rule to expand the definition of “rural areas” under Regulation Z with regard to the authority of small creditors to make certain qualified mortgage loans under the ability to repay rule and avoid the escrow account requirement for certain higher priced mortgage loans. In order to facilitate the designation of additional areas as being “rural,” Congress passed the Helping Expand Lending Practices in Rural Communities Act of 2015 (HELP Rural Communities Act) on December 4, 2015.
The Act requires that within 90 days of the Act’s passage, the CFPB establish an application process for persons or businesses who would like to have a geographic area designated as “rural.” The Act requires that the CFPB take into consideration the following factors which will be used to evaluate applications:
(1) Criteria used by the Director of the Bureau of the Census for classifying geographical areas as rural or urban;
(2) Criteria used by the Director of the Office of Management and Budget (OMB) to designate counties as metropolitan or micropolitan or neither;
(3) Criteria used by the Secretary of Agriculture to determine property eligibility for rural development programs;
(4) The Department of Agriculture rural-urban commuting area codes;
(5) A written opinion provided by the State’s bank supervisor, as defined under section 3(r) of the Federal Deposit Insurance Act (12 U.S.C. 1813(r)); and
(6) Population density.
In its evaluation, the CFPB is not required to consider a designation of “nonrural” of the area subject to review that was previously made by any federal agency identified in these factors and based on any of the criteria set forth in the factors.
Before the CFPB renders its final decision on an application, the public will be given at least 90 days to comment. Within 90 days after the end of the public comment period, the CFPB must grant or deny the application, in whole or in part, and publish its determination in the Federal Register.
To meet the 90 day deadline to establish the application process, the CFPB will issue an enabling procedural rule by March 3, 2016. The CFPB also requests from the OMB by February 29, 2016 emergency processing and approval of a new information collection titled, “Application Process for Designation of Rural Area under Federal Consumer Financial Law.”
The CFPB invites comments on the following:
- Whether the collection of information is necessary for the proper performance of the functions of the CFPB, including whether the information will have practical utility;
- The accuracy of the CFPB’s estimate of the burden of the collection of information, including the validity of the methods and the assumptions used;
- Ways to enhance the quality, utility, and clarity of the information to be collected; and
- Ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments are due by April 18, 2016.