Final CFPB Payday Rule Expected in April
The Consumer Financial Protection Bureau (CFPB) said that it plans to issue its long-awaited final rule in April that would roll back underwriting requirements for payday lenders by eliminating a provision from 2017 mandating that lenders verify borrowers’ repayment ability.
In 2019, the CFPB proposed reevaluating the rigid 2017 payday lending regulation issued under previous Bureau director Richard Cordray. According to American Banker, in the agency’s fall rulemaking agenda, it said that the “comment period for the [proposal] closed in May 2019 and the Bureau is carefully reviewing the approximately 190,000 comments it received. The Bureau expects to take final action in April 2020 with respect to this proposal.”
Under the current payday lender regulations, the CFPB restricts lenders from making multiple attempts to debit payments from consumer bank accounts. A pending lawsuit in Texas also seeks to eliminate the current regulation, to which the judge has postponed the rule’s compliance date to November 2020.
An additional part of the bureau’s agenda is to issue a proposal revising the remittance rule. It would confront the “temporary exception that allows institutions to estimate fees and exchange rates in some circumstances,” the CFPB said.
Two new rulemaking initiatives were also added to the agency’s long-term agenda regarding loan originator reimbursement and using electronic communication in credit card servicing. Both initiatives emerged from a review of the CFPB’s operations in 2018.
More information on the proposed rule is available at https://www.consumerfinance.gov/policy-compliance/rulemaking/rules-under-development/payday-vehicle-title-and-certain-high-cost-installment-loans/.