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Rural, Small Creditor Exemptions Expanded

Thursday, March 24, 2016

Eligibility for specific exemptions to the Qualified Mortgage (QA) that apply to small creditors operating in rural or underserved areasEligibility for specific exemptions to the Qualified Mortgage (QA) that apply to small creditors operating in rural or underserved areas has been expanded by the Consumer Financial Protection Bureau (CFPB) effective March 31. The change came in an interim final rule that CFPB says it has issued to implement recent congressional legislation.  According to CFPB Director Richard Cordray. "This rule provides broader eligibility for lenders serving those areas to originate balloon-payment qualified and high-cost mortgages."

Under the Ability to Repay rule which went into effect in January 2014, a category of loans called Qualified Mortgages, which cannot include certain risky loan features for consumers, are presumed to comply with ability-to-repay requirements. Several provisions affect certain small creditors, including those operating in rural or underserved areas including allowing origination of mortgages with balloon payments and higher-priced mortgages without escrow accounts.

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