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CFPB amends its regulations governing payday, vehicle title, and certain high-cost installment loans
Bureau of Consumer Financial Protection amends its regulations governing payday, vehicle title, and certain high-cost installment loans.
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SUMMARY:
The Bureau of Consumer Financial Protection (Bureau) is issuing this final rule to amend its regulations governing payday, vehicle title, and certain high-cost installment loans. Specifically, the Bureau is revoking provisions of those regulations that: Provide that it is an unfair and abusive practice for a lender to make a covered short-term or longer-term balloon-payment loan, including payday and vehicle title loans, without reasonably determining that consumers have the ability to repay those loans according to their terms; prescribe mandatory underwriting requirements for making the ability-to-repay determination; exempt certain loans from the mandatory underwriting requirements; and establish related definitions, reporting, recordkeeping, and compliance date requirements. The Bureau is making these amendments to the regulations based on its re-evaluation of the legal and evidentiary bases for these provisions.
DATES:
This rule is effective October 20, 2020.
FOR FURTHER INFORMATION CONTACT:
Joseph Baressi, Lawrence Lee, or Adam Mayle, Senior Counsels, Office of Regulations, at 202-435-7700. If you require this document in an alternative electronic format, please contact CFPB_Accessibility@cfpb.gov.
{snip}
{snip}
SUMMARY:
The Bureau of Consumer Financial Protection (Bureau) is issuing this final rule to amend its regulations governing payday, vehicle title, and certain high-cost installment loans. Specifically, the Bureau is revoking provisions of those regulations that: Provide that it is an unfair and abusive practice for a lender to make a covered short-term or longer-term balloon-payment loan, including payday and vehicle title loans, without reasonably determining that consumers have the ability to repay those loans according to their terms; prescribe mandatory underwriting requirements for making the ability-to-repay determination; exempt certain loans from the mandatory underwriting requirements; and establish related definitions, reporting, recordkeeping, and compliance date requirements. The Bureau is making these amendments to the regulations based on its re-evaluation of the legal and evidentiary bases for these provisions.
DATES:
This rule is effective October 20, 2020.
FOR FURTHER INFORMATION CONTACT:
Joseph Baressi, Lawrence Lee, or Adam Mayle, Senior Counsels, Office of Regulations, at 202-435-7700. If you require this document in an alternative electronic format, please contact CFPB_Accessibility@cfpb.gov.
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Pew: Consumer Financial Protection Bureau Abandons Payday Loan Safeguards
PRESS RELEASES AND STATEMENTS
July 7, 2020
WASHINGTON— The Pew Charitable Trusts expressed disappointment with today’s decision by the Consumer Financial Protection Bureau (CFPB) to rescind its 2017 payday loan rule, saying the move could leave millions of Americans at high risk of becoming trapped in a cycle of debt.
The 2017 rule was based on years of extensive research and was carefully designed to limit harmful lending practices while keeping credit available to consumers. It put in place safeguards for single-payment loans and encouraged lenders to offer affordable small installment loans that—according to Pew’s research—could have saved millions of borrowers billions of dollars annually.
The new rule the CFPB adopted today eliminates the 2017 rule’s central consumer protection measure, its ability-to-repay provision, which curbed unaffordable loan terms by requiring lenders to determine a borrower’s capacity for repaying loans all at once.
{snip}
PRESS RELEASES AND STATEMENTS
July 7, 2020
WASHINGTON— The Pew Charitable Trusts expressed disappointment with today’s decision by the Consumer Financial Protection Bureau (CFPB) to rescind its 2017 payday loan rule, saying the move could leave millions of Americans at high risk of becoming trapped in a cycle of debt.
The 2017 rule was based on years of extensive research and was carefully designed to limit harmful lending practices while keeping credit available to consumers. It put in place safeguards for single-payment loans and encouraged lenders to offer affordable small installment loans that—according to Pew’s research—could have saved millions of borrowers billions of dollars annually.
The new rule the CFPB adopted today eliminates the 2017 rule’s central consumer protection measure, its ability-to-repay provision, which curbed unaffordable loan terms by requiring lenders to determine a borrower’s capacity for repaying loans all at once.
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That's odd. I can't find any gushing tweets announcing this. Take it away, Kathy Kraninger.
As we come to a close on Consumer Financial Protection Week, the CFPB remains dedicated to using all of the tools Congress provided to protect consumers. Hear more from
@CFPBDirector
Kraninger in her #CFPW2020 closing remarks.
Link to tweet
