In anticipation of the June 1, 2013 effective date of the rule on escrow requirements for higher-priced mortgage loans under Regulation Z (see January 22, 2013 Alert), the CFPB released a preliminary list of rural and underserved areas. Under the escrows rule, creditors are required to establish and maintain escrow accounts for at least 5 years after originating a higher-priced mortgage loan. However, small creditors meeting certain conditions and operating in predominately rural or underserved areas are exempt from the escrow requirements. "Rural" counties are determined using the United States Department of Agriculture Economic Research Service’s urban influence codes; whereas "underserved" counties are determined by reference to the data collected under the Home Mortgage Disclosure Act. Small creditors meeting certain conditions and operating in predominately rural and underserved areas are also exempt from certain requirements in the ability-to-repay rule and qualified mortgage standard (see January 10, 2013 Alert), the rule on appraisals for higher-priced mortgage loans (see January 22, 2013 Alert), and the HEOPA rule; all of which are effective in January 2014. The list of rural and underserved areas will be updated yearly.
Alert March 19, 2013