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NAFCU seeks feedback on proposed PALs changes
NAFCU is seeking credit unions' feedback on the NCUA's proposed changes to expand its payday alternative loans (PALs) program. NAFCU has long advocated for additional mechanisms to allow credit unions to provide more small-dollar loans to members in need, and also hosted a small-dollar lending working group to explore additional small dollar lending options for credit unions.
The NCUA issued its proposed rulemaking during its May open board meeting. The proposal would provide federal credit unions with an additional option under PALs. PALs II would not replace the current PALs rule, but would be an alternative option that features higher loan amounts, longer loan terms and less strict membership requirements.
Currently, PALs loans qualify for a safe harbor under the CFPB's payday loan rule. However, changes proposed under PALs II would not qualify for the same treatment potentially creating additional compliance requirements for credit unions offering PALs II loans.
In a Regulatory Alert send to credit unions Friday, NAFCU would like feedback on possible implications on safe harbor treatment under the CFPB's rule, application fees, interest rates, underwriting guidelines, among other concerns.
Credit unions can submit comments to NAFCU on the PALs proposal until July 13; comments are due to the NCUA Aug. 3.