The Consumer Financial Protection Bureau recently proposed amendments to regulations that would broaden the definition of “small creditor” in an attempt to increase mortgage lending to rural and underserved markets. Currently, small creditors are able to make loans with slightly less restriction than larger creditors. The proposed changes would make this exemption available to a greater number of creditors.
The CFPB’s proposal would expand the definition of “rural” to include census blocks not in urban areas. The proposal would also expand the definition of small creditor to include those creditors that originated no more than 2,000 first-lien mortgage loans during the previous years, not including loans held in portfolio. This is a substantial increase from the current limit of 500 first-lien mortgage loans. However, the proposal would also require small creditors to have less than $2 billion in assets at the end of the previous year, including the assets of all mortgage-lending affiliates. Currently, the assets of affiliates are not included in the asset total. The proposal also makes changes to the time period used to determine whether a creditor qualifies as operating in an underserved area and provides a grade period for creditors whose operations grow beyond the definition of a small creditor.
More information from the CFPB is available here. The deadline for comments to these amendments is March 30, 2015.