The Helping Expand Lending Practices in Rural Communities Act () is a United States bill that would amend the Dodd-Frank Wall Street Reform and Consumer Protection Act to direct the

Consumer Financial Protection Bureau The Consumer Financial Protection Bureau (CFPB) is an independent agency of the United States government responsible for consumer protection in the financial sector. CFPB's jurisdiction includes banks, credit unions, securities firms, Payday lo ...

(CFPB) to establish an application process that would allow a person to get their county designated as "rural" for purposes of a federal consumer financial law. One practical effect of having a county designated "rural" is that people can qualify for some types of mortgages by getting them exempted from the CFPB's qualified mortgage rule. The bill was introduced in the

United States House of Representatives The United States House of Representatives is a chamber of the Bicameralism, bicameral United States Congress; it is the lower house, with the U.S. Senate being the upper house. Together, the House and Senate have the authority under Artic ...

during the

113th United States Congress The 113th United States Congress was a meeting of the legislative branch of the United States federal government, from January 3, 2013, to January 3, 2015, during the fifth and sixth years of Presidency of Barack Obama, Barack Obama's presiden ...

Background

The Consumer Financial Protection Bureau (CFPB) is an

independent agency of the United States government In the United States federal government, independent agencies are agencies that exist outside the federal executive departments (those headed by a Cabinet secretary) and the Executive Office of the President. In a narrower sense, the term re ...

responsible for

consumer protection Consumer protection is the practice of safeguarding buyers of goods and services, and the public, against unfair practices in the marketplace. Consumer protection measures are often established by law. Such laws are intended to prevent business ...

in the

financial sector Financial services are economic services tied to finance provided by financial institutions. Financial services encompass a broad range of service sector activities, especially as concerns financial management and consumer finance. The financ ...

. Its jurisdiction includes

bank A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...

credit union A credit union is a member-owned nonprofit organization, nonprofit cooperative financial institution. They may offer financial services equivalent to those of commercial banks, such as share accounts (savings accounts), share draft accounts (che ...

s, securities firms,

payday lender A payday loan (also called a payday advance, salary loan, payroll loan, small dollar loan, short term, or cash advance loan) is a short-term unsecured loan, often characterized by high interest rates. These loans are typically designed to cover ...

s, mortgage-servicing operations, foreclosure relief services,

debt collector Debt is an obligation that requires one party, the debtor, to pay money borrowed or otherwise withheld from another party, the creditor. Debt may be owed by a sovereign state or country, local government, company, or an individual. Commerc ...

s and other financial companies operating in the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

. The CFPB's creation was authorized by the Dodd–Frank Wall Street Reform and Consumer Protection Act, whose passage in 2010 was a legislative response to the

2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...

and the subsequent

Great Recession The Great Recession was a period of market decline in economies around the world that occurred from late 2007 to mid-2009.

Provisions of the bill

''This summary is based largely on the summary provided by the

Congressional Research Service The Congressional Research Service (CRS) is a public policy research institute of the United States Congress. Operating within the Library of Congress, it works primarily and directly for members of Congress and their committees and staff on a ...

, a

public domain The public domain (PD) consists of all the creative work to which no Exclusive exclusive intellectual property rights apply. Those rights may have expired, been forfeited, expressly Waiver, waived, or may be inapplicable. Because no one holds ...

source.'' The CFPB Rural Designation Petition and Correction Act would amend the Dodd-Frank Wall Street Reform and Consumer Protection Act to direct the

(CFPB) to establish an application process under which a person who lives or does business in a state may apply to have a

county A county () is a geographic region of a country used for administrative or other purposesL. Brookes (ed.) '' Chambers Dictionary''. Edinburgh: Chambers Harrap Publishers Ltd, 2005. in some nations. The term is derived from the Old French denoti ...

designated as a rural area for purposes of a federal consumer financial law. The bill would prescribe criteria for the CFPB to consider when evaluating such an application. The bill would require the CFPB to enter each such application into a sortable, downloadable database publicly accessible through its website.

Procedural history

The CFPB Rural Designation Petition and Correction Act was introduced into the

on July 11, 2013 by Rep. Garland "Andy" Barr (R, KY-6). The bill was referred to the

United States House Committee on Financial Services The United States House Committee on Financial Services, also referred to as the House Banking Committee and previously known as the Committee on Banking and Currency, is the United States congressional committee, committee of the United States ...

and the

United States House Financial Services Subcommittee on Financial Institutions and Consumer Credit The United States House Financial Services Subcommittee on Financial Institutions and Monetary Policy is a subcommittee of the House Committee on Financial Services. Jurisdiction over domestic monetary policy was transferred to it at the start of t ...

. The bill was scheduled to be voted on under

suspension of the rules In United States parliamentary procedure, a suspension of the rules allows a deliberative assembly to set aside its normal rules to do something that it could not do otherwise. However, there are rules that cannot be suspended. Explanation of use ...

on May 6, 2014.

Debate and discussion

The

National Association of Federal Credit Unions The National Association of Federally-Insured Credit Unions (NAFCU) is a U.S. trade organization representing the nation's federally-insured credit unions. The NAFCU hosts conferences, publishes original research on issues relating to the credit ...

(NAFCU) supported the bill, arguing that the bill "would be helpful to small creditors, including credit unions, offering mortgages with balloon-payment features in underserved areas, because it would allow them to satisfy the rule’s 'ability to repay' requirements." The NAFCU thought that the application process described by this bill would make "the process for obtaining a rural designation fairer and more transparent." The

Conference of State Bank Supervisors A conference is a meeting, often lasting a few days, which is organized on a particular subject, or to bring together people who have a common interest. Conferences can be used as a form of group decision-making, although discussion, not always d ...

(CSBS) wrote a letter in support of the bill, arguing that "certain aspects of lending should not be regulated with a nationwide, broad brush approach, and must necessarily provide for local flexibility." According to the CSBS, the current method of designating a county as "rural" is "formulaic" and is "inflexible when applied to counties with atypical population distributions or geographic boundaries" thus necessitating a more nuanced approach.

References

External links