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ICBA Survey: New Mortgage Rules for Balloon, Rural Lenders Would Limit Access to Credit in Rural Areas


May 10 - Many residents in rural America would have reduced access to mortgage credit despite accommodations included in new Consumer Financial Protection Bureau mortgage rules, according to survey results released by the Independent Community Bankers of America. ICBA’s Community Bank Qualified Mortgage Survey found that provisions for balloon-payment mortgage loans and rural community banks in the CFPB’s ability-to-repay and qualified mortgage regulations need to go further to adequately protect the customers of many Main Street community bank lenders.
“Community banks are responsible mortgage lenders that did not participate in the abuses that contributed to the financial crisis,” said Bill Loving, ICBA chairman and president and CEO of Pendleton Community Bank in Franklin, W.Va. “Nevertheless, ICBA’s survey shows that some Main Street communities could be cut off from a critical source of mortgage credit without adjustments to the CFPB’s new mortgage rules.”
Community banks help borrowers in rural communities where non-traditional loans such as balloon mortgages are prevalent due to the unique nature of rural properties. These loans are not eligible to be sold into the secondary market, and are kept in portfolio, which gives community banks a vested interest in the loans and allows them to work out a solution if repayment problems arise. Because of the nature of community bank mortgage loans and their vested interest in loan performance, restrictions on community bank balloon loans are unnecessary regulatory burdens. While balloon loans made by small creditors that operate predominantly in rural or underserved areas are deemed to be qualified mortgages under the CFPB mortgage rules, the bureau’s definition of rural is too narrow, leaving out too many communities and unnecessarily cutting off access to credit.
ICBA conducted the Community Bank Qualified Mortgage Survey to gather data on the impact of the accommodations for community banks in the CFPB’s new ability-to-repay and qualified mortgage rules. The survey found that:

To address concerns with the CFPB’s mortgage rules, ICBA is encouraging the bureau to:

The survey, which was conducted Feb. 7-14, received 380 responses, a response rate of approximately 8 percent. For more information, visit