The Consumer Financial Protection Bureau this week released alist of U.S. counties it will define as rural and underserved for2014, qualifying lenders that operate predominantly in those areasfor exemptions from some of its mortgage rules.

The list, posted on the CFPB's website along with a blog entry, includes some counties whosestatus has changed due to updated information from the 2010 Census.That means some small lenders will lose exemption status, the CFPBsaid.

However, the bureau proposed some modifications to its mortgage rules on June 24 that willprovide a transition period for affected lenders.

For example, under the proposed change, small lenders thatqualified for a rural and underserved exemption from a requirementto create escrow accounts for five years for higher-priced mortgageloans – a rule that took effect June 1 – would be allowed to usethe CFPB's 2012 counties list when making loans in 2014, even iftheir counties were removed from the new 2014 list released onTuesday.

Comments on that proposal change are due to the CFPB by July22.

The CFPB also reminded lenders in the blog post that all smalllenders, regardless of whether they operate in rural or underservedcounties, will be allowed to continue originating balloon loans and count them as qualifiedmortgages until Jan. 10, 2016. That exemption, which has alreadybeen finalized by the CFPB, intends to allow small lenders totransition their mortgage lending programs away from balloon loans,which are prohibited under qualified mortgage rules. A permanent QMballoon loan exemption for lenders that operate in predominatelyrural or underserved counties will not change.

The CFPB also proposed on June 24 to extend that QM exemption tosmall lenders making high-cost balloon mortgages, regardless oftheir rural or underserved status. Comments on that proposal arealso due to the CFPB by July 22.

“We will work to issue a final rule as quickly as possible thissummer so that creditors' status will be clear in advance of theJanuary effective dates of the affected rules,” said CFPBregulatory attorney Paul Mondor in the July 2 blogpost.