In early 2013, the CFPB proposed a definition of rural areas that expanded the previously adopted definition, but fell short of providing the relief needed for the country’s rural mortgage markets. For years, IBAT has advocated an exemption for in-portfolio mortgage loans. IBAT staff recognized the importance of providing thoughtful feedback on the proposed rural areas definition. After studying the proposal carefully, determining that it didn’t provide the relief needed for the country’s rural mortgage markets, IBAT’s research led it to the Census Bureau’s definition of urbanized areas (densely populated areas of over 50,000). If all areas outside of urbanized areas were considered rural areas, it would provide as much relief as could be garnered without an in-portfolio exemption.
On May 2, 2013, IBAT submitted a comment letter proposing just this—the CFPB expand the definition of rural areas to include all areas outside of the country’s urbanized areas. A few days later, IBAT President and CEO Chris Williston and Deputy General Counsel Shannon Phillips Jr. travelled to CFPB headquarters to discuss IBAT’s proposal with CFPB staff. At that meeting, the CFPB commended IBAT for suggesting a solution that it wasn’t acquainted with previously. Soon after that meeting, CFPB announced a two-year grace period while it studied the issue. During that two years, IBAT asserted its solution to CFPB at every opportunity—in another comment letter, at several meetings with CFPB staff and briefly during a banker meeting in Dallas with CFPB Director Cordray.
On January 29, 2015, the CFPB issued proposed rules that contained several positive advances and included a definition of rural areas that was undeniably based on IBAT’s proposal. Unfortunately, instead of adopting IBAT’s definition in whole, the CFPB’s proposal retained the same rural designated counties and additionally provided that first lien mortgage loans made in areas outside of the urban areas (densely populated areas of 2,500 or more) of non-rural counties would also be considered rural loans. In response, IBAT submitted a comment letter that commended the advances made in the proposal, but, in great detail, described how the proposed rural areas definition would continue to depress mortgage lending nationwide, create two classes of loans in rural America and create inequities between loans secured by similarly situated properties.