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Last Day to Comment on CFPB's Small Dollar, Vehicle Title, Payday Loan Proposal
Friday, October 7, 2016 7:00 AM

Today is the deadline for commenting on the CFPB's most recent proposal on small-dollar, vehicle, title, and payday loans. We anticipate that if the rule were to pass as written, it would greatly impact many loan products, especially short-term, small loans, and those that refinance existing vehicle loans. Cornerstone is calling on all credit unions to send their comments by close of business.  

Need help? Visit our compliance site here.

The proposed rule would heavily regulate most loans under 45 days and certain loans with a term of more than 45 days (that exceed a rule-determined “all-in APR” of 36 percent). Loans covered by this rule would be subject to an ability-to-repay analysis during the underwriting process, along with certain collections, tracking, and reporting requirements. The rule provides several limited exceptions for loans over 45 days, including a partial but not complete exemption for National Credit Union Administration’s payday alternative lending (PAL) program. 

National Credit Union Administration Board Chairman Rick Metsger says NCUA’s payday alternative loan rules protect consumers, and he has asked the Consumer Financial Protection Bureau to fully exempt these loans from its final payday lending rule.

“We respectfully request the Bureau exempt FCUs completely from its final rule for loans made under and consistent with NCUA’s PALs regulation,” Metsger said in his letter. “As the prudential regulator for federal credit unions, NCUA already ensures that members receive the type of protections the Bureau is seeking to address. The Bureau should therefore defer to determinations of the FCU prudential regulator about this product.

“The National Credit Union Administration fully supports the goals of the proposed rule,” Metsger said. “NCUA continues to review its existing regulations and may consider enhancements to the PALs regulation. Additional rules from sister agencies will unnecessarily increase compliance burdens.”

Only a small percentage of 500 credit unions in the region, including one unaffiliated credit union, have sent comment letters, which are due to the CFPB on Friday, Oct. 7. We offer our sincere thanks to those credit unions.

More information on the proposal can be found in CUNA’s detailed analysis of the proposal and through a recording of CUNA’s webinar on the rule, free for members. 

If you need help in crafting comment letters, or if you have questions about this proposal, please contact Cornerstone Credit Union League SVP Regulatory Compliance Suzanne Yashewski at syashewski@cornerstoneleague.coop or 512-853-8516.