Compliance Blog tackles payday rule during delay
Yesterday would have been the compliance deadline for the CFPB's payday lending rule, but litigation surrounding the rule and the bureau's decision to delay the ability-to-repay provisions until Nov. 19, 2020, has it in some limbo. In light of this, NAFCU's Reginald Watson details the implications of the rule on certain covered loans in a new Compliance Blog post.
"The rule covers both short term and longer term balloon payment loans," Watson explained. "Covered short-term loans include both open-end and closed-end credit products that have terms of 45 days or less, or where the consumer is required to repay substantially the entire amount of the loan or advance in less than 45 days.
"Longer-term balloon payment loans are those close-end or open-end loans that have a longer than 45 day term, but require the consumer to repay substantially the entire amount of the loan or advance more than 45 days after consummation in either a single payment or at least one payment that is more than twice as large as any other payment."
In addition to the types of loans covered by the rule, Watson provided information related to:
- payment transfer provisions, which will require credit unions to provide an advance notice of six days before an attempt to withdraw the first payment or to withdraw an unusual payment; and
- recording requirements under which credit unions will need to furnish specific loan information at consummation to certain CFPB-designated registered information systems.
For more information on the CFPB's payday rule delay and how those rules will effect credit unions as a whole, read the full Compliance Blog post here.