Bureau unveils initiative to address issues of rural America, with focus on banking deserts, discriminatory lending, manufactured housing

Issues facing rural America are the focus of an initiative launched Thursday by the federal consumer financial protection agency, with particular initial emphasis on rural banking deserts, discriminatory and predatory agricultural credit, and manufactured housing, the agency said.

The Consumer Financial Protection Bureau (CFPB) initiative, for now, appears to be in an information-collection mode; the agency gave no other details of what the initiative will entail, such as regulation and enforcement.

However, the agency stated in a blog post that there is no single rural America. “From Appalachia and the Deep South to rural Alaska, rural places have a wide range of diverse people, economies, and ways of life. Rural people are deeply committed to the places they live, but face real challenges in accessing reliable services and good jobs, keeping up with household expenses, maintaining farming, and finding affordable housing,” the blog post stated.

The blog post also asserted that the agency has “has a responsibility to pay attention to the particular challenges rural communities face as they work to build and maintain their financial resiliency.”

The emphases on banking deserts, discriminatory and predatory credit and manufactured credit, the blog post stated, were among the “larger economic trends” identified in conversations hosted by CFPB Director Rohit Chopra last month. According to the blog post, Chopra invited more than 50 people from organizations representing rural people across the country to tell their stories and share their concerns.

The bureau shared some details from the three areas of emphasis, including:

  • Banking deserts: “Stark” declines in the number of rural-area banks have had a particularly negative impact on rural communities. The decline in banks, in turn, has led to non-bank alternatives that charge higher fees and interest rates, which results in more money leaving rural communities. Race is also a factor in rural areas, as counties most deeply affected by bank closures are those with a greater proportion of African American residents, relative to other rural counties.
  • Discriminatory, predatory ag credit: A decline in the number Black farmers, and the land they own, is the result of “long history” of credit providers’ discrimination. Farmers also complained that their obligations to banks can trap them in exploitative arrangements with dominant agriculture firms.
  • Manufactured housing: People depend on manufactured housing in rural areas because quality, affordable housing is hard to come by in rural areas and there are too few rental properties available, particularly for older persons on fixed incomes. Residents typically own the buildings, but just as typically rent the land on which the building is placed. “Manufactured housing residents told us 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. According to the residents we heard from, some feel trapped in the arrangement because they’re still paying off their home-only loan and don’t want to lose the equity they’ve invested,” the blog post stated.

The blog posted noted that the bureau is “concerned about these threats to rural household financial resiliency and committed to using our tools and authorities to ensure that rural communities, and the people who live in them, have opportunities to build wealth and thrive.”

New effort focused on financial issues facing rural communities