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CFPB Expands Rural & Small Creditor Definitions

Friday, January 30, 2015

As it said it would, the Consumer Financial Protection Bureau (CFPB) has taken steps to assist small lenders, particularly those in rural areas, comply more easily with the new mortgage rules that took effect at the beginning of last year.  Changes were proposed on Thursday to the ability-to-repay rule and its category of loans called Qualified Mortgages (QM) which CFPB said would, if enacted, increase the number of financial institutions able to offer certain types of mortgages in rural and underserved areas and help small creditors adjust their business practices to comply with the new rules.

Ability-to-repay requires that lenders generally make a reasonable and good faith determination that a borrower is able to pay back a loan.  Loans that qualify as QMs are presumed to comply with ability-to-repay requirements because of that category's laundry list of prohibited risky loan features.

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