Christian Gonzalez

Regulatory Relief for Small Creditors on the Way

February 3, 2015Articles

On January 29, 2015, the Consumer Financial Protection Bureau (CFPB) announced a proposed rule that would, if implemented, provide some regulatory relief to a broader base of small creditors. The proposed rule reflects the CFPB’s attempt to address recent feedback from industry stakeholders regarding the CFBP’s very narrow definitions of small creditor and rural and underserved areas. The proposed rule would, amongst other changes:

(i) increase the loan origination limit secured by a first lien mortgage to qualify for “small creditor” status from 500 loans to 2,000 loans annually;

(ii) include certain mortgage affiliates in the calculation of small-creditor status;

(iii) adjust the time period used in determining whether small lender is operating in “predominately rural or underserved area” from a three year look back period to a one year look back period;

(iv) expand the definition of “rural” to include census blocks that are not in an urban area; and

(v) extend the transition period in which small lenders can make qualified mortgages with balloon payments, regardless of location, to April 1, 2016.

A link to the proposed rule can be found here. Comments on the proposed rule are due by March 30. If you have any questions regarding how this rule may impact your financial institution please contact your Dinsmore lawyer.