[Congressional Record (Bound Edition), Volume 160 (2014), Part 5]
[House]
[Pages 6892-6894]
[From the U.S. Government Publishing Office, www.gpo.gov]




       HELPING EXPAND LENDING PRACTICES IN RURAL COMMUNITIES ACT

  Mrs. CAPITO. Madam Speaker, I move to suspend the rules and pass the 
bill (H.R. 2672) to provide for an application process for interested 
parties to apply for a county to be designated as a rural area, and for 
other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 2672

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Helping Expand Lending 
     Practices in Rural Communities Act''.

     SEC. 2. DESIGNATION OF RURAL AREA.

       (a) Application.--Not later than 90 days after the date of 
     the enactment of this Act, the Bureau of Consumer Financial 
     Protection shall establish an application process under which 
     a person who lives or does business in a State may, with 
     respect to an area identified by the person in such State 
     that has not been designated by the Bureau as a rural area 
     for purposes of a Federal consumer financial law (as defined 
     under section 1002 of the Consumer Financial Protection Act 
     of 2010), apply for such area to be so designated.
       (b) Evaluation Criteria.--When evaluating an application 
     submitted under subsection (a), the Bureau shall take into 
     consideration the following factors:
       (1) Criteria used by the Director of the Bureau of the 
     Census for classifying geographical areas as rural or urban.
       (2) Criteria used by the Director of the Office of 
     Management and Budget to designate counties as metropolitan 
     or micropolitan or neither.
       (3) Criteria used by the Secretary of Agriculture to 
     determine property eligibility for rural development 
     programs.
       (4) The Department of Agriculture rural-urban commuting 
     area codes.
       (5) A written opinion provided by the State's bank 
     supervisor, as defined under section 3(r) of the Federal 
     Deposit Insurance Act (12 U.S.C. 1813(r)).
       (6) Population density.
       (c) Public Comment Period.--
       (1) In general.--Not later than 60 days after receiving an 
     application submitted under subsection (a), the Bureau 
     shall--
       (A) publish such application in the Federal Register; and
       (B) make such application available for public comment for 
     not fewer than 90 days.
       (2)  Limitation on additional applications.--Nothing in 
     this section shall be construed to require the Bureau, during 
     the public comment period with respect to an application 
     submitted under subsection (a), to accept an additional 
     application with respect to the area that is the subject of 
     the initial application.
       (d) Decision on Designation.--Not later than 90 days after 
     the end of the public comment period under subsection (c)(1) 
     for an application, the Bureau shall--
       (1) grant or deny such application, in whole or in part; 
     and
       (2) publish such grant or denial in the Federal Register, 
     along with an explanation of what factors the Bureau relied 
     on in making such determination.
       (e) Subsequent Applications.--A decision by the Bureau 
     under subsection (d) to deny an application for an area to be 
     designated as a rural area shall not preclude the Bureau from 
     accepting a subsequent application submitted under subsection 
     (a) for such area to be so designated, so long as such 
     subsequent application is made after the end of the 90-day 
     period beginning on the date that the Bureau denies the 
     application under subsection (d).
       (f) Sunset.--This section shall cease to have any force or 
     effect after the end of the 2-year period beginning on the 
     date of the enactment of this Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from 
West Virginia (Mrs. Capito) and the gentlewoman from California (Ms. 
Waters) each will control 20 minutes.
  The Chair recognizes the gentlewoman from West Virginia.


                             General Leave

  Mrs. CAPITO. Madam Speaker, I ask unanimous consent that all Members 
have 5 legislative days within which to revise and extend their remarks 
and submit extraneous materials for the Record on H.R. 2672, as 
amended, currently under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from West Virginia?
  There was no objection.
  Mrs. CAPITO. Madam Speaker, I yield myself such time as I may 
consume.
  Madam Speaker, the legislation before us this afternoon makes an 
important improvement to the Consumer Financial Protection Bureau's 
qualified mortgage rule that went into effect this past January. Under 
the Bureau's proposed rule, a community bank or credit union operating 
in a rural community would be afforded some flexibility to underwrite 
mortgages that otherwise would not be deemed a qualified mortgage. 
These products, sometimes referred to as balloon loans, are a critical 
source of mortgage credit in rural and agricultural communities. 
Although the Bureau has recognized the importance of this type of 
credit in rural communities, the definition that they used for a rural 
community will result in fewer mortgage options for consumers in rural 
communities.
  The Bureau relied on the U.S. Department of Agriculture's Urban 
Influence Codes to define a rural community. Under this definition, 
half of the counties in the State of West Virginia are considered 
urban. Well, I think those of us who have driven through West Virginia 
would find that hard to believe. According to the Bureau, Clay County, 
West Virginia, which has a population density of 30 people per square 
mile, is urban. Similarly, neighboring Calhoun County, which has a 
population density of 27 people per square mile, is also deemed urban 
by the Bureau. These examples demonstrate a complete lack of 
understanding of rural America.
  Mr. Barr's legislation sets up a process by which a community can 
petition the Bureau to be reclassified as rural. This commonsense 
approach strikes an appropriate balance that will allow consumers in 
rural areas to continue to have access to mortgage credit. I commend 
Mr. Barr of Kentucky for authoring this legislation and deftly 
navigating it through the House Financial Services Committee, where it 
passed 55-1.
  I urge my colleagues to support this critical piece of legislation. 
Obviously, it will have a great impact on rural America, which is where 
I live and where many of us do, too. I reserve the balance of my time.
  Ms. WATERS. Madam Speaker, I yield myself such time as I may consume.
  Madam Speaker and Members, I rise in support of H.R. 2672, the CFPB 
Rural Designation Petition and Correction Act. I want to thank the 
distinguished gentleman from Texas (Mr. Hinojosa) and the gentleman 
from Massachusetts (Mr. Lynch) for working with the gentleman from 
Kentucky (Mr. Barr) to introduce this bipartisan legislation.
  The Consumer Financial Protection Bureau has recognized the 
challenges rural communities with limited access to banking services 
face and are appropriately reconsidering how to designate rural 
counties.
  However, some large counties can have both large urban centers and 
rolling farmland within their borders, preventing them from being 
considered rural. This measure would direct the Consumer Financial 
Protection Bureau to establish an application process so that a lender 
who lives or does business in a county that does not meet the rural 
definition can still apply to serve

[[Page 6893]]

as a rural lender under the CFPB's qualified mortgage rule.
  While balloon payments were a feature of many of the risky and 
predatory loans that ended in financial disaster for American families, 
there are some specific places and times when they may make sense, 
especially in rural communities.
  I am pleased that this legislation is narrowly tailored to ensure the 
kinds of institutions that would be allowed to make these loans are 
truly community banks--small institutions that play an active role in 
their communities, with personal knowledge of their customers and their 
needs.
  As we have learned from flood insurance reform, applying map-based 
standards uniformly across the diverse geography of the U.S. is 
incredibly challenging. This legislation would ensure that in areas 
that may not fit the standard, but where common sense shows them to be 
rural, the local community would have input into the process.
  I also want to acknowledge the CFPB for acting very quickly in the 
face of the feedback it received on the rural definition it initially 
proposed, making certain that credit continued to flow to borrowers by 
offering a 2-year waiver for all small creditors during the process of 
re-proposing its rural definition.
  Madam Speaker, I urge my colleagues to support this measure, and I 
reserve the balance of my time.
  Mrs. CAPITO. Madam Speaker, I now would like to yield as much time as 
he may consume to the gentleman from Kentucky, Congressman Barr, the 
author and sponsor of this legislation.
  Mr. BARR. Madam Speaker, I want to thank the chairman of the 
Financial Institutions Subcommittee for her leadership on this 
important legislation. I want to thank also my colleagues on the other 
side of the aisle who have joined us in a bipartisan way to advance 
this sensible legislative correction.
  Madam Speaker, obviously, government bureaucrats don't always know 
best, and they certainly don't know our local communities better than 
we do. That is why I introduced H.R. 2672, the Helping Expand Lending 
Practices in Rural Communities Act, or HELP Rural Communities Act, 
which would help remedy a bizarre situation created by a flawed, one-
size-fits-all government regulation that is making life harder for 
millions of Americans, including my constituents in central and eastern 
Kentucky.
  My legislation, the HELP Rural Communities Act, is about making the 
Federal Government more responsive to the people who know their 
communities better than regulators in Washington, D.C. It is a simple, 
pragmatic, and bipartisan solution that says that if Federal 
bureaucrats are going to impose different rules based on the localized 
characteristics of an area, then they actually need to listen to the 
input of the people in the communities who know those characteristics 
of those communities.
  A few weeks ago, I was visiting with constituents in a rural county 
in my district, Bath County, in a country general store. And when I was 
sitting there talking to my constituents, a horse-drawn buggy passed 
by. Now, this is far from an uncommon occurrence. This was just another 
reminder that Bath County, Kentucky, in my district, is very much a 
rural area.
  Amazingly, however, the Consumer Financial Protection Bureau in 
Washington does not recognize Bath County as rural. Instead, the 
bureaucrats at the CFPB improperly designated Bath County as nonrural. 
Now, there are plenty of similar examples throughout the country of the 
CFPB oddly and incorrectly designating undeniably rural areas as 
nonrural, which is why H.R. 2672, the HELP Rural Communities Act, 
enjoys broad, bipartisan support and passed out of the Financial 
Services Committee by a vote of 55-1.
  You may be wondering why this rural versus nonrural distinction 
matters. Well, here is why: the CFPB imposes more stringent lending 
rules and restrictions on local financial institutions based in 
nonrural communities than it does on financial institutions in rural 
communities. So when the Bureau gets these rural designations wrong all 
throughout the country, the consequence is that it constrains the 
availability of credit, including for balloon loans, to rural customers 
of community banks and community credit unions.
  But don't just take it from me. Charles Vice, who is the top banking 
regulator in the Commonwealth of Kentucky, the commissioner of the 
Kentucky Department of Financial Institutions and the chairman of the 
Conference of State Bank Supervisors, has emphasized the importance of 
preserving balloon loans in rural communities.
  In his testimony before our committee, the Financial Services 
Committee, in the House in June, Commissioner Vice stated:

       When used responsibly, balloon loans are a useful source of 
     credit for borrowers in all areas. Properly underwritten 
     balloon loans are tailored to the needs and circumstances of 
     the borrower, including situations where the borrower or 
     property is otherwise ineligible for standard mortgage 
     products.

  So the need for this legislation has been made clear by the 
regulators themselves. But it has also been made clear to me by a 
community banker in Bath County, a community banker who has been part 
of his local institution for multiple generations. His father was the 
president of the community bank, his grandfather was the president of 
the community bank and, before that, his great-grandfather. This young 
man, Thomas Richards, testified before our committee in December.
  He said:

       Unnecessary restrictions on balloon loans will lead to some 
     qualified borrowers not receiving the credit that they 
     deserve, and from a small community's standpoint, these 
     restrictions would be devastating to the livelihood of that 
     area.

  It was really interesting to hear Mr. Richards testify because he 
said that his small, little community bank in Bath County, Kentucky, 
had survived the great economic changes over the centuries. It had 
survived the Great Depression, it survived the stagflation of the late 
1970s and the early 1980s, and it even survived the financial crisis in 
2008. But he said that the greatest single threat facing his small, 
community bank in rural Bath County, Kentucky, was the avalanche of red 
tape coming out of Washington in 2013 and 2014.

                              {time}  1700

  If left unfixed, these rules will block customers in rural 
communities from obtaining responsibly underwritten balloon loans. 
These are loans which Kentucky bankers throughout my district commonly 
use to provide credit to local customers who may not fit perfectly into 
Washington-dictated lending straitjackets.
  These loans are vital to all kinds of individuals in rural America, 
from businessowners on Main Street, who simply seek to preserve their 
business, to farmers preparing for the next planting season.
  A balloon loan can be the lifeline that finally helps a young family 
purchase a home; or it can help an individual repair their car, so they 
can get to work each day. At its core, balloon loans are common 
throughout rural America because they offer consumers flexibility and 
help community banks and community credit unions mitigate interest rate 
risk.
  As you can see, these loans are tailored to the credit needs of the 
customer, which is why they are so popular throughout Kentucky. The 
tradition of community backing in Kentucky has always been about 
relationship banking. It is about truly knowing your customer and 
having that development of trust, so that the banker knows whether or 
not the customer can repay that loan.
  H.R. 2672 is necessary because it preserves the best traditions of 
rural community banking, which are now being jeopardized by the 
Consumer Financial Protection Bureau's incorrect rural designations 
throughout the country.
  Really quickly, what does the bill exactly do? This bill creates a 
petition process in which individuals within a State could petition the 
Bureau to have it reconsider an improper designation of nonrural status 
for an area that is plainly rural.

[[Page 6894]]

  Instead of limiting applicants to only being able to challenge a 
designation based on county lines, H.R. 2672 would give the applicant 
the flexibility to define the specified and bounded area that they 
would like to see switched from nonrural to rural.
  In other words, we don't want to lock people into using counties when 
they don't have to. This is important because county sizes can vary 
significantly throughout the country, particularly in Western States, 
and I want to thank my colleague and friend on the other side of the 
aisle, Congressman Hinojosa, for his contribution to this feature of 
the legislation.
  The legislation specifies a number of commonsense factors that CFPB 
must consider when evaluating an application. In addition to the local 
input of the applicant, these factors include population density; a 
written opinion provided by the State's bank supervisor; and criteria 
used by the Census, OMB, and the Department of Agriculture for properly 
classifying geographic areas as either rural or urban.
  Upon receiving an application, the CFPB is to provide for a 90-day 
public comment period and then grant or deny such applications within 
an additional 90 days. The Bureau shall then publish in the Federal 
Register an explanation of the factors it relied on in making its 
ultimate determination.
  Once again, I am pleased that this is a bipartisan bill. I want to 
thank especially Congressman Hinojosa for his input in helping to 
improve this legislation. I also want to thank all of the other 
cosponsors of the bill, which is endorsed by a broad coalition, 
including the Kentucky Bankers Association, the Conference of State 
Bank Supervisors, the Kentucky Credit Union League, the Credit Union 
National Association, the National Association of Federal Credit 
Unions, the American Bankers Association, the Independent Community 
Bankers of America, the National Association of Realtors, and the 
chairman of the Kentucky Department of Financial Institutions--again, 
the top banking regulator in Kentucky, Commissioner Charles Vice.
  This is a commonsense and simple bill, and I appreciate the 
opportunity to present it here today. I urge my colleagues to support 
this simple reform piece of legislation, and I urge the support and 
immediate passage of this legislation.
  Ms. WATERS. Madam Speaker, I yield such time as he may consume to the 
gentleman from Texas (Mr. Hinojosa), a cosponsor of H.R. 2672.
  Mr. HINOJOSA. Madam Speaker, I rise today to urge my colleagues on 
both sides of the aisle to support H.R. 2672, the Helping Expand 
Lending Practices in Rural Communities Act, as amended. I would like to 
thank my distinguished colleague, Congressman Barr of Kentucky, for 
your leadership on this bill.
  As the chairman of the Congressional Rural Housing Caucus, I have 
dealt with the varying definitions of rural for many years. Given that 
the definitions promulgated by the USDA are problematic on many counts, 
I was very concerned when I learned that the CFPB originally used them 
as a guide for their rule.
  The original rule by the CFPB would exclude Hidalgo County in my 15th 
Congressional District in deep south Texas. Hidalgo County includes 
some urban areas, but much of it is also rural.
  It is home to the most colonias in the Nation. Colonias often lack 
basic infrastructure, such as indoor plumbing and electricity. They are 
rural by definition. We need to ensure that community banks and credit 
unions are not prevented from investing in such rural communities.
  The CFPB's new mortgage rules discourage risky mortgage lending 
practices that sparked the financial crisis. However, community banks 
and credit unions did not cause the crisis and have legitimate reasons 
for flexibility when it comes to serving rural America.
  Rural community bankers know their customers by name; often, they are 
the only option for credit within hundreds of miles. They understand 
the unique financial needs of their community and how best to serve the 
farmers, to serve the ranchers and small businesses that rely on them.
  I appreciate that the CFPB has heard our concerns and has responded 
by offering a short exemption. I believe the petition process enacted 
by this legislation will only strengthen the CFPB's final rule.
  This is an important opportunity given that rural is not easily 
defined and looks different by region. It makes good sense for the CFPB 
to follow the USDA's lead and for communities to be able to petition 
their rural status.
  I thank Congressman Barr for his outstanding work on this bill and 
for including the changes that I proposed. Defining rural on a county-
level basis is too arbitrary, given the large size of counties in Texas 
and other Western States. I do not believe the bill undermines the 
CFPB's commitment to consumer protection, and I ask my colleagues to 
support H.R. 2672.
  Mrs. CAPITO. Madam Speaker, I have no further speakers, and I reserve 
the balance of my time to close.
  Ms. WATERS. Madam Speaker, I would simply like to ask all of my 
colleagues to support this important legislation, and I would like to 
commend Mr. Hinojosa and Mr. Barr, and I would also like to commend 
Mrs. Capito and all who have worked so well together to ensure that we 
pay attention to the problems of rural communities, and this bill 
certainly does that.
  I yield back the balance of my time.
  Mrs. CAPITO. Madam Speaker, I yield myself the balance of my time.
  I echo the comments of the ranking member, and I thank her for her 
help on this bill. I thank Mr. Hinojosa and Mr. Barr for their good, 
hard work.
  As I said earlier in my opening statement, rural America does have a 
different way of trying to access credit and to make sure that 
homeownership becomes the reality that many of us hope for our 
families. I would like to congratulate the sponsors, and I urge passage 
of the bill.
  I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentlewoman from West Virginia (Mrs. Capito) that the House suspend the 
rules and pass the bill, H.R. 2672, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  The title of the bill was amended so as to read: ``A bill to amend 
the Dodd-Frank Wall Street Reform and Consumer Protection Act to 
provide for an application process for interested parties to apply for 
an area to be designated as a rural area, and for other purposes.''.
  A motion to reconsider was laid on the table.

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