CFPB Problems Amendments to Payday, Car Title, and Certain High-Cost Installment Loans Rule

CFPB Problems Amendments to Payday, Car Title, and Certain High-Cost Installment Loans Rule

REGULATORY ALERT

NATIONWIDE CREDIT UNION MANAGEMENT 1775 Duke Street, Alexandria, VA 22314

Dear Panels of Directors and Ceos:

On July 22, 2020, the buyer Financial Protection Bureau issued a final rule (opens brand new screen) amending components regarding the Payday, car Title, and Certain High-Cost Installment Loans Rule, 12 CFR component 1041 (CFPB Payday Rule). Though the CFPB Payday Rule became effective on January 16, 2018, the conformity times are currently stayed pursuant to a court purchase issued due to pending litigation. 1 because of this, loan providers aren’t obliged to conform to the guideline before the stay that is court-ordered lifted.

The July 2020 amendment to your guideline rescinds the next:

  • Dependence on a loan provider to determine a borrower’s ability prior to making a loan that is covered
  • Underwriting requirements in making the ability-to-repay determination; and
  • Some reporting and recordkeeping requirements.
  • The CFPB Payday Rule’s provisions relating to cost withdrawal limitations, notice needs, and associated recordkeeping requirements for covered short-term loans, covered longer-term balloon repayment loans, and covered longer-term loans are not changed by the July last guideline. As noted below, some loans made underneath the NCUA’s Payday Alternative Loan (PALs) regulations are susceptible to the CFPB Payday Rule. 2

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