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CFPB: Exemption from Escrow Requirement for Small Creditors in Rural or Underserved Counties

by Ken Anderson | Mar 14, 2013
On June 1, 2013, the Consumer Financial Protection Bureau's (CFPB) 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

On June 1, 2013, the Consumer Financial Protection Bureau’s (CFPB) 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 the agency’s 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. Those interested can download a preliminary list based on the proposed revisions in CSV, XLS, or PDF format.

The CFPB expects to finalize that rule before June 1, 2013, and will publish the official list of “rural” and “underserved” counties for 2013 at that time.

The CFPB also has 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.