CFPB Launches New Effort Focused on Financial Issues in Rural Communities

The CFPB has launched a new initiative focusing on financial issues in rural America.  CFPB observes that rural America includes a wide range of diverse people, economies and ways of life, but the term generally refers to non-urban areas in the U.S. where people face struggles in accessing reliable financial services, finding good job opportunities, and obtaining affordable housing.  The Bureau cites increasing corporate consolidation across the economy as having a disproportionately negative impact on rural areas, suppressing wages and resulting in fewer employment options.

The CFPB has identified certain issues, proposed solutions and questionable practices (which the Bureau indirectly hints may violate applicable law), including the following:

• Rural Banking Deserts. There has been a significant decline in the number of banks in rural areas which has had a particularly negative impact on rural communities, especially those with a greater proportion of African American residents.  CFPB views both the promotion of Community Development Financial Institutions and the enforcement of Community Reinvestment Act requirements as playing an essential role in providing greater access to financial services in these areas.   

• Discriminatory and Predatory Agricultural Credit. CFPB observes that farmers in rural areas, particularly Black farmers, have been struggling with access to agricultural credit.  Farmers have also cited that their obligations to banks can leave them tied in exploitative arrangements with dominant agricultural firms.  The Bureau describes how consolidated poultry integrators may steer farmers to take out large loans of nearly a million dollars while chicken farmers only get paid on short-term 60-day contracts providing inconsistent and unpredictable pay. 

• Manufactured Housing. Residents living in rural areas have complained that affordable housing is difficult to find and the quality of such homes can be lacking.  Rental properties are also relatively scarce.  This circumstance has particular application to manufactured home parks, which CFPB states are being increasingly purchased by private equity firms.  The Bureau reports that in certain cases, such private equity firms have dramatically increased rents and fees over a short period of time.  Residents who can no longer afford the rent are forced to move and leave their manufactured home behind because it is cost-prohibitive to move.  In some instances, CFPB advises the private equity firm takes possession of the manufactured home as abandoned property, without paying the owner.