This release applies to state and federal credit unions.
What follows in this ii Release is a summary of the CFPB’s final Payday, Vehicle Title, and Certain High-Cost Installment Loans rule which will generally take effect for credit unions on August 19, 2019, 21 months after publication in the Federal Register. If it appears that the credit union has lending programs that must comply with the CFPB rule or that must be modified to avoid the rule, please consult the rule itself for full details. The rule will be codified at 12 CFR 1041. It governs the underwriting of certain personal loans with short term or balloon-payment structures, as well as lenders’ payment withdrawal practices for those loans and certain additional installment loan products. The rule also mandates processes and criteria for registration of information systems.
Credit unions may be pleased that in the final rule the CFPB addressed many of the concerns and objections that America’s Credit Unions, The League, and credit unions expressed regarding the rule as originally proposed. Careful review is needed but most credit unions are likely to find that most, if not all, of their loan products are exempt – or can be carefully tweaked to make them exempt. But the prospects look good for curtailing abusive payday lending with minimal impact on credit unions serving their members’ needs.
The CFPB expects to propose rules in early 2019 that will reconsider the rule regarding Payday, Vehicle Title, and Certain High-Cost Installment Loans and address the rule’s compliance date. The Bureau will make final decisions regarding the scope of the proposal closer to the issuance of the proposed rules. However, the Bureau is currently planning to propose revisiting only the ability-to-repay provisions and not the payments provisions, in significant part because the ability-to-repay provisions have much greater consequences for both consumers and industry than the payment provisions. The proposals will be published as quickly as practicable consistent with the Administrative Procedure Act and other applicable law.