The CFPB said the decision was made in the hopes of helping smaller lenders.
“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,” said CFPB Director Richard Cordray. “These changes will help consumers in rural or underserved areas access the mortgage credit they need, while still maintaining these important new consumer protections.”
It’s often smaller lenders who lend in these areas, and the rule will make it possible for more clients to qualify for mortgages in these underserved areas.
The new rule will include the following:
- Expand the definition of “small creditor”
- Include mortgage affiliates in calculation of small-creditor status
- Expand the definition of “rural” areas
- Provide grace periods for small creditor and rural or underserved credit status
- Create a one-year qualifying period for rural or underserved creditor status
- Provide additional implementation time for small creditors
“Since issuing the mortgage rules, the CFPB has continued to monitor the mortgage market and seek public feedback,” CFPB says in a release. “The changes finalized today reflect the Bureau’s ongoing study of the market and extensive outreach to stakeholders, including consumer advocates and industry groups.”
To view the new rule in its entirety, click here
The Consumer Financial Protection Bureau has finalized rules, set to go into effect January 1, 2016, which will increase the number of institutions able to offer certain mortgages in smaller markets.