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Financial Services Law Insights and Observations


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  • CFPB examines finances and debt in Appalachia

    Federal Issues

    On September 1, the CFPB released a report detailing family finances and debt in rural Appalachia, intended to provide a starting point in better understanding the needs and challenges of these consumers. The report—which is the first in a series regarding the finances of consumers living in rural areas—focuses on rural Appalachians, who, according to the Bureau, tend to earn less than consumers in other rural areas and have higher rates of subprime credit. According to the report, of the 26 million people living in the Appalachian region, 33 percent live in rural counties. Over 2 million Appalachians live in Persistent Poverty Counties (PPCs), which are defined as counties that have had poverty rates of 20 percent or higher for the past 30 years. Nearly one-in-four Appalachians are carrying some amount of medical debt, according to the report, compared with 17 percent of people nationally. Those people in the region with medical debt have more than double the rate of delinquency on their credit report compared to people without medical debt. Other findings of the report include, among other things, that: (i) 71 percent of rural Appalachians and 63 percent of those living in PPCs have an active credit card, compared to 80 percent of consumers nationally; (ii) auto loan balances equal 31 percent of household annual income for rural Appalachians, compared to 21 percent nationally; (iii) denial rates for mortgage applications in rural Appalachia were almost twice the rate of mortgage applications nationally; and (iv) though the high school graduation rate for individuals in Appalachia is higher than the national average, the percentage of individuals who attended some college is significantly lower than the national average. According to the Bureau, these circumstances have “led to disproportionately high levels of distress in rural Appalachians’ consumer financial lives.”

    Federal Issues Consumer Finance CFPB Credit Report Medical Debt Rural Communities

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  • CFPB reports on rural banking deserts

    Federal Issues

    On April 19, the CFPB released a report regarding the challenges faced by Americans in rural communities. According to the report, in 2012, over 600 counties “had no other physical banking offices except those operated by community banks.” The report also noted that bank consolidation has contributed to the expansion of “rural banking deserts,” which the Federal Reserve Bank of St. Louis defines as “census tracts in which there are no branches within a 10-mile radius from the tracts’ centers.” The CFPB report identified lack of broadband access and lower access to smartphones as limiting factors to banking access. It also provided a snapshot of economic challenges facing rural people and communities, including: (i) rural communities have lower incomes and higher poverty rates than the rest of the country; (ii) lower likelihood of having a credit record; and (iii) nearly 1-in-5 U.S. households have past-due medical bills.

    Federal Issues CFPB Consumer Finance Rural Communities

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  • CFPB launches initiative to address financial issues facing rural communities

    Federal Issues

    On March 10, the CFPB launched an initiative focusing on financial issues facing rural communities in the U.S. Citing economic trends that have disproportionately affected rural communities over the past several decades, the Bureau stated its initial focus will center around banking deserts, discriminatory and predatory agricultural credit, and manufactured housing. Last month, CFPB Director Rohit Chopra hosted an event where individuals from organizations representing rural communities shared consumer financial concerns and discussed issues affecting the financial resilience of rural families. Among other things, attendees highlighted the issue of banking deserts caused by “stark declines in the number of banks in rural areas,” which has “led to non-bank alternatives that charge higher fees and interest rates.” Bank consolidation has also caused the loss of institutional knowledge, which in turn, has resulted in the disappearance of banking relationships, credit, small businesses, and jobs. Attendees stressed the need for Community Reinvestment Act requirements that would serve rural banking deserts, particularly in persistent poverty counties, most of which are overwhelmingly rural. Additionally, attendees raised issues related to discriminatory and predatory agricultural credit, with stakeholders pointing out that a long history of credit discrimination against Black farmers has contributed to the decline of Black farmers and Black land loss. Other stakeholders raised concerns that farmers’ obligations to banks can make them more vulnerable to exploitative arrangements with dominant agriculture firms. Manufactured housing concerns were also raised by attendees, who spoke about the lack of affordable housing in rural communities, explaining that “manufactured home parks are increasingly being bought up by private equity firms that have, in some cases, dramatically increased rents and tacked on fees in short periods of time.” The Bureau emphasized that it is “concerned about these threats to rural household financial resiliency” and has launched this initiative “to ensure that rural communities, and the people who live in them, have opportunities to build wealth and thrive.”

    Federal Issues CFPB Consumer Finance CRA Rural Communities Manufactured Housing

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