Home lenders that have lesser assets, fewer loan originations or rural locations will benefit from rules that have been finalized.
A final rule published in the Federal Register expands the definition of a “small creditor” to institutions that originate no more than 2,000 loans. The threshold was raised from 500 loans.
In addition, excluded from the limitations will be
loans held in the portfolio of the creditor and its affiliates.
Finalization of the rule, announced Monday by the Consumer Financial Protection Bureau, is intended to increase the number of financial institutions able to offer certain types of mortgages in rural and under-served areas.
In addition, the final rule is designed to gives small creditors time to adjust their business practices to comply with the rules.
The CFPB said that the $2 billion asset limitation for small-creditor status will include assets
the creditor’s mortgage-originating affiliates.
The
National Association of Federal Credit Unions issued a statement indicating concern over the addition of affiliate assets towards the $2 billion threshold. The trade group is analyzing the potential impact.
The definition of “rural areas has been expanded to include census blocks that are not in an urban area as defined by the Census Bureau. In addition, if a creditor falls outside the rural definition, they will be given a grace period.
A statement from the Independent Community Bankers Association praised the expanded small-creditor definition and the expanded access to credit for rural customers.
Finally, the bureau is giving small creditors additional time to implement
balloon-payment Qualified Mortgages and balloon-payment high-cost mortgages regardless of where they operate, until April 1, 2016. The move is intended to give creditors more time to understand how any changes will affect their status, and to adjust their business practices.
“The financial crisis was not caused by community banks and credit unions, and our mortgage rules reflect the fact that small institutions play a vital role in many communities,” CFPB Director Richard Cordray said in the statement.
The final rule goes into effect on Jan. 1, 2016.
