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.

Preliminary list of counties

We will publish the official list of rural or underserved counties for 2013 when we finalize the Escrows rule. View or download a preliminary list in any of these formats: CSV | XLS | PDF

Note: On May 16, 2013, we published the final list of counties.

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.

Under the Ability to Repay and Qualified Mortgage Standards Under the Truth in Lending Act rule, which is effective January 10, 2014, mortgage loans with balloon payments do not meet the qualified mortgage (QM) standard in most cases. However, certain small creditors that operate predominantly in rural or underserved counties will be eligible to originate balloon-payment QMs. These same creditors will be exempt from restrictions on balloon payments for certain high-cost mortgages under the Bureau’s High-Cost Mortgage and Homeownership Counseling Amendments to the Truth in Lending Act rule (HOEPA rule), which also goes into effect on January 10, 2014. Also, certain HPMLs will be exempt from new second appraisal requirements if they are originated in rural counties under the interagency Appraisals for Higher-Priced Mortgage Loans rule, which goes into effect on January 18, 2014.

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.