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CFPB Rule Broadens QM Coverage for Rural, Underserved Areas

Posted on 3/23/2016

The Consumer Financial Protection Bureau yesterday issued an interim final rule broadening the availability of certain special provisions for small creditors operating in rural or underserved areas. The rule implements a regulatory relief measure that Congress passed in December.

Under the interim rule, small creditors -- or banks that made no more than 2,000 first-lien covered transactions and have less than $2 billion in assets -- will be eligible for special Qualified Mortgage provisions if they originate at least one covered mortgage loan on a property located in a rural or underserved area in the prior calendar year. Specifically, it allows small creditors to make certain balloon payments, which are otherwise not allowed under the QM rules.

Previously, small creditors were only eligible for these provisions if they operated predominantly in rural or underserved areas. This new rule significantly enlarges that rural and underserved carve-out.

The CFPB will accept comments on the interim rule for 30 days after its publication in the final register.

To read the rule visit: http://files.consumerfinance.gov/f/201603_cfpb_operations-in-rural-areas-under-the-truth-in-lending-act-regulation-z-interim-final.pdf



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