The Consumer Financial Protection Bureau (CFPB) has published the 2019 list of rural and underserved counties and a separate 2019 list that includes only rural counties. The CFPB has also updated the Rural and Underserved Areas Tool (Tool) for 2019. The lists and the tool help creditors determine whether a property is located in a rural or underserved area for purposes of applying certain regulatory provisions related to mortgage loans. A creditor that makes a first-lien mortgage loan secured by a property located in a rural or underserved area during 2019 meets the requirements to be a creditor that operates in rural or underserved areas during 2020 and for loan applications received before April 1, 2021.
The Tool is maintained by the CFPB to help creditors determine which properties are located in a “rural” or “underserved” area as defined in 12 CFR 1026.35(b)(2)(iv)(A) and (B) for purposes of the Small Creditor Exemption from the HPML escrow rules and for purposes of the Balloon Payment Qualified Mortgage.
- A creditor may rely on this Tool to provide a safe harbor determination that a property is located in a rural or underserved area.
- However, the Tool is not applicable to the exemption from the § 1026.35(c)(4) requirement for an additional appraisal, which is based on “rural county” and not “rural area.” The CFPB publishes a list of counties that are entirely rural to facilitate compliance with the exemption in § 1026.35(c)(4)(vii)(H).
In a presentation yesterday at a policy forum at Mississippi Valley State University, Federal Reserve Board Chairman Powell discussed the challenges and opportunities in poor rural communities, education and workshop development, entrepreneurship and small business development, and access to financial services.
Mr. Powell noted, “Poverty remains a challenge in many rural communities. Indeed, 70 percent of the 473 ‘persistent poverty’ counties in the United States are rural. Unemployment and mortality rates remain high in these communities. Along with lower incomes and wealth, the rate of business start-ups in these areas is lower. And their residents have less access to financial services.”
He concluded, “To summarize my main points today, people in rural communities who are struggling with persistent poverty need access to high-quality education from preschool through college. They need support for their aspirations to own their own businesses. And they need access to safe and affordable credit.”
Where there are problems, there are opportunities. In this case their is an opportunity to make profound improvements in rural areas, and an opportunity to earn a little CRA credit for your effort. Remember that that community development credit is available for loans, investments and services that revitalize or stabilize:
- Low- or moderate-income geographies (regardless of location); and
- Distressed or underserved nonmetropolitan middle-income geographies designated by the Board of Governors of the Federal Reserve System, FDIC, and Office of the Comptroller of the Currency.