CFPB Rule Broadens QM Coverage for Lenders in Rural, Underserved Areas

The Consumer Financial Protection Bureau today issued an interim final rule broadening the availability of certain special provisions for small creditors operating in rural or underserved areas. The rule implements a regulatory relief measure, long advocated by ABA, that Congress passed in December.

Under the interim rule, small creditors — or banks that made no more than 2,000 first-lien covered transactions and have less than $2 billion in assets — will be eligible for special Qualified Mortgage provisions if they originate at least one covered mortgage loan on a property located in a rural or underserved area in the prior calendar year. Specifically, it allows small creditors to make certain balloon payments, which are otherwise not allowed under the QM rules.

Previously, small creditors were only eligible for these provisions if they operated predominantly in rural or underserved areas. This new rule significantly enlarges that rural and underserved carve-out.

“We commend the bureau for this rulemaking and for its quick actions to immediately implement these important provisions,” said ABA President and CEO Rob Nichols. The interim final rule is the second rule this year the CFPB has issued to address the rural and underserved measures included in the December legislation.

Earlier this month, the bureau issued an ABA-advocated rule establishing a process by which businesses and individuals could appeal the bureau’s designation of a rural area. The CFPB will accept comments on the interim rule for 30 days after its publication in the final register. For more information, contact ABA’s Rod Alba.