February 22, 2019

How will CFPB's payday rule changes affect CUs?

The CFPB has issued two proposals related to its 2017 payday lending rule: One to remove mandatory underwriting requirements – including ability-to-repay (ATR) provisions – and one to delay the rule's implementation date by 15 months, to Nov. 19, 2020. NAFCU is seeking credit unions' feedback on how these changes would impact the industry and what other revisions the bureau should consider.

NAFCU sent two Regulatory Alerts to members Thursday covering each of the proposals.

In the Regulatory Alert for the proposal to rescind mandatory underwriting requirements, NAFCU notes that the current safe harbor for NCUA's payday alternative loans would be retained. The proposed rule retains the payments provisions, as well as the requirement of lenders to have a compliance program in place. The association would like to know if:

  • ATR provisions should be rescinded;
  • credit unions would be more likely to offer small-dollar loans that are considered "covered loans" under the payday rule;
  • all future iterations of PALs should be exempt from the payday rule; and
  • there are other aspects of the payday rule that should be rescinded in order to improve access to credit and increase competition in the marketplace.

Credit unions can submit feedback on the mandatory underwriting requirements proposal through NAFCU's Regulatory Alert until April 30; comments are due to the bureau May 15.

Credit unions can also submit feedback on the delay through NAFCU's Regulatory Alert until March 1; comments are due to the bureau March 18.