Alert May 28, 2013

CFPB Finalizes List of Rural and Underserved Counties

In conjunction with the finalization of the escrows rule, the CFPB announced that it finalized the list of rural and underserved counties for use in the second half of 2013. The list is identical to the preliminary list issued in March 2013 (see March 19, 2013 Alert). The designation creates exemptions from various rules that are effective in June 2013 and January 2014 for certain creditors. In particular, under the escrows rule, higher-priced mortgage loans made by small creditors in predominantly rural or underserved counties are exempt from the 5-year escrow account requirement that goes into effect on June 1, 2013. According to the CFPB, for purposes of applying the exemption under the escrows rule, creditors may rely on the list as a safe harbor to determine whether a county is "rural" or "underserved" for loans made from June 1, 2013 through December 31, 2013. In addition, small creditors meeting certain conditions and operating in predominantly rural or underserved counties 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 HOEPA rule; all of which are effective in January 2014. The CFPB also noted that the final list for 2014 could be different due to changes in a county’s rural versus non-rural status based on 2010 census information.