The Consumer Financial Protection Bureau has released a flurry of rulemaking in the past few weeks. The Bureau adopted the much-anticipated short-term, small-dollar loan regulation this month. The focus of the rule is loans that require full or nearly full repayment at one time, such as payday loans, vehicle title loans, and deposit advance products, although some longer-term loans that have balloon payment features also are covered under the rule. Most of the rule, which is based on last year’s proposal, will take effect 21 months after it is published in the Federal Register.
According to the Bureau, the rule:
- establishes a full-payment test for installment loans to ensure that consumers can afford their payments and still meet their basic living expenses and major financial obligations;
- limits to three the number of loans that can be made in close succession (while a prior loan is outstanding or within 30 days after a prior loan is repaid);
- creates an exception to the full-payment test for very small loans if the lender offers a way the consumer can get out of debt more gradually;
- creates a separate exemption for loans that pose less risk for consumers; and
- prevents lenders that make short-term loans, balloon-payment loans, and longer-term loans with an annual percentage rate of more than 36 percent from continuing to attempt to debit consumer accounts for payments after two consecutive failures.
The Bureau provided a factsheet that summarizes the rule.
Mortgage servicers. The CFPB has issued an interim final rule intended to provide mortgage servicers with clearer and more flexible standards for providing modified written early intervention notices to borrowers who have invoked their cease communication rights under the Fair Debt Collection Practices Act, with rule amendments that become effective on Oct. 19, 2017.
The Bureau also has proposed amendments to clarify timing requirements for servicers to transition to providing modified or unmodified periodic statements and coupon books to consumers in connection with their bankruptcy case.
ECOA rulemaking. Late last month, the CFPB modified Equal Credit Opportunity Act regulations in order to provide greater clarity for mortgage lenders regarding their obligations in collecting consumer ethnicity and race information, while promoting compliance with rules intended to ensure consumers are treated fairly.
The Bureau’s amendments would allow mortgage lenders to adopt application forms that include expanded requests for information regarding a consumer’s ethnicity and race as they will no longer be required to maintain different practices depending on their loan volume or other characteristics.
The Bureau also finalized additional amendments to facilitate compliance with Reg. B’s requirements for the collection and retention of information about the ethnicity, race, and sex of applicants seeking certain types of mortgage loans.
The rule amendments are effective on Jan. 1, 2018, except that the amendment to Appendix B removing the existing “Uniform Residential Loan Application” form in amendatory instruction 6 is effective Jan. 1, 2022.
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