The CFPB Issues Clarification on 2013 HPML Escrow Rule

On May 16, 2013, the Consumer Financial Protection Bureau (CFPB) issued a final rule clarifying and making technical amendments to the 2013 Escrows for Higher Priced Mortgages Rule.

The final rule has two primary provisions. The first is maintaining consumer protections, and the second is clarifying how to determine whether a county is considered ‘rural’ or ‘underserved.’

Maintaining Consumer Protections

The 2013 Escrows Final Rule amends an existing rule that provides protections regarding assessments of consumers’ ability to repay and prepayment penalties on certain “higher-priced” mortgage loans. The Dodd-Frank Act and certain of the other new mortgage rules the CFPB issued in January expand and strengthen the requirements concerning ability to repay and prepayment penalties. However, the 2013 Escrows Final Rule as adopted in January can be read to cut off the old protections before the new expanded protections take effect. This would create a six-month period when those consumer protections would not apply. This final rule establishes a temporary provision to ensure existing protections remain in place for higher-priced mortgage loans until the expanded provisions take effect in January 2014.

“Rural” and “Underserved” Definitions

The CFPB is also clarifying how to determine whether or not a county is considered “rural” or “underserved” for purposes of applying an exemption in the 2013 Escrows Final Rule and special provisions adopted in three other Dodd-Frank Act mortgage rules the Bureau issued in January. The CFPB also provides illustrations of how to do the determinations to facilitate compliance. The determinations are made based on currently applicable Urban Influence Codes or UICs, which are established by the USDA’s Economic Research Service (for “rural”), or based on HMDA data (for “underserved”).

In addition, the CFPB has used the changes to compile the final 2013 rural and underserved counties list.


Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Compliance News.