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Exemption from escrow requirement for small creditors in rural or underserved counties


On June 1, 2013, the Bureau’s Escrow Requirements under the Truth in Lending Act rule (Escrows Rule) will go into effect, which require certain creditors to create escrow accounts for a minimum of 5 years for higher-priced mortgage loans (HPMLs). The rule exempts HPMLs made by certain small creditors that operate predominantly in rural or underserved counties from this requirement.

In our new Escrows Rule, rural counties are defined by using the USDA Economic Research Service’s urban influence codes, and underserved counties are defined by reference to data collected under the Home Mortgage Disclosure Act. As provided in the rule, the Bureau will publish a list of such counties. The Bureau will be publishing in the near future some proposed minor technical changes to the rule. You can download a preliminary list based on the proposed revisions in CSV, XLS, or PDF format. We expect to finalize that rule before June 1, 2013, and will publish the official list of “rural” and “underserved” counties for 2013 at that time.

We also have several rules that will that take effect in January 2014 that have provisions that affect mortgage loans made by creditors that operate predominantly in rural or underserved counties.

Some counties’ status as rural or non-rural may change from the 2013 list to the 2014 list because of updated information from the 2010 Census. This updated information is still being analyzed by the Economic Research Service, but we’ll post the 2014 list of rural or underserved and rural counties for escrow, qualified mortgage, HOEPA, and appraisal rules as soon as possible.

See a full table of the regulatory sections involved.

  • Gehant Bank

    Dear CFPB: I comment as a Vice President of a small community bank for which I serve in lending and compliance capacities. We greatly appreciate your update on this important rule, particularly regarding your list of rural counties based on proposed revisions. At the same time, we are greatly dismayed at the continued narrow scope of the rural county listing. I know you received many comments regarding the unfortunate impacts this aspect of the new lending rules will have upon the majority of small community banks. If we do not gain exemption from Ability to Pay and Qualified Mortgage requirements in regard to balloon mortgage loans and escrow requirements, our industry will be materially impacted in several negative ways. Once again, we urge you to expand the list of rural counties or, better yet, to eliminate this aspect of the rules. Thank you for your thorough and thoughtful consideration. Gehant Bank, West Brooklyn, IL

    • CFPB Web Team

      Thank you for your thoughtful comment. We spend a lot
      of time working to monitor and mitigate negative impact on small businesses
      such as yours, and really appreciate you reaching out.

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