NAFCU Compliance Blog.Written by Jennifer Aguilar, Regulatory Compliance Counsel

NAFCU Compliance Blog.Written by Jennifer Aguilar, Regulatory Compliance Counsel


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October 23, 2017

The CFPB’s Last Payday Rule: The PAL Exemption

On 5, the CFPB announced it had finalized its rule on payday loans october. The final guideline seeks to offer « common-sense defenses » for pay day loans, car name loans, deposit advance items and certain other long term loans with balloon payments. a protection that is key this new guideline is loan providers is supposed to be expected to conduct an ability-to-repay analysis to ascertain if the borrower can repay the total quantity of the mortgage without re-borrowing. The rule that is final imposes demands concerning withdrawal methods, disclosures and recordkeeping. The last guideline covers several different types of loans, nevertheless the rule additionally offers a wide range of exclusions and exemptions, certainly one of which can be of specific value for credit unions – the PAL exemption.

New part 1041.3(e) exempts « alternative loans » through the payday rule. The CFPB explains that this exemption applies to any loan that meets the conditions outlined in the final rule so that any lender, not just federal credit unions, may qualify for this exemption in the preamble. The CFPB discovered that it was the approach that is best to guarantee the guidelines are used consistently to any or all lenders. So that you can qualify as a loan that is »alternative » the loan must fulfill every one of the following conditions:

  • Loan terms: the mortgage should not be organized as open-end credit; have a phrase between one and 6 months; have principal between $200 – $1,000; be repayable in 2 or higher equal re re payments due in equal periods; totally amortize through the term; with no costs can be imposed except that the rate and application charges permissible under 12 C.F.R. 701.21(c)(7)(iii). Continuer la lecture de « NAFCU Compliance Blog.Written by Jennifer Aguilar, Regulatory Compliance Counsel »