CFPB Creates Application Process for Rural Designation

On March 3, 2016, the CFPB issued a final rule to create an application process by which creditors may apply to have areas not identified as “rural” to be so designated for the purposes of federal consumer financial law. The final rule implements a regulatory relief measure in the Helping Expand Lending Practices in Rural Communities Act that Congress passed on December 4, 2015, which was intended to facilitate additional areas to be designated as rural under federal law.

According to the CFPB, this application process “will allow the Bureau to consider whether there are small institutions that merit a designation as ‘rural’ lenders but do not qualify under current guidelines.”

To request designation as a rural area, a creditor must submit an application containing certain information regarding the area requested to be designated as a “rural area,” specific classification or eligibility information from federal and state agencies, including the U.S. Census Bureau, the Office of Management and Budget, the Department of Agriculture, and the applicable state bank supervisor, and the area’s population density in comparison with any other nearby area that has been designated by the Bureau as a rural area. Applications will be published in the Federal Register and open for public comments, and final determinations (i.e., whether the Bureau has granted or denied the application in whole or in part) also will be published in the Federal Register.

The final rule became effective March 3, 2016. Due to a required two year-sunset period on the application process that was included in the legislation, applications for rural designation must generally be received before April 8, 2017.

The final rule is available here: https://www.gpo.gov/fdsys/pkg/FR-2016-03-03/pdf/2016-04643.pdf.