Guidance on CFPB’s payday rule outlined in NCUA letter to credit unions


The NCUA on Thursday issued guidance to credit unions regarding the CFPB’s July 22 changes to parts of its Payday, Vehicle Title, and Certain High-Cost Installment Loans Rule.

In a letter to federally insured credit unions, NCUA Chairman Rodney Hood said that, although the CFPB Payday Rule became effective on Jan. 16, 2018, the compliance dates are currently stayed due to a court order issued as a result of pending litigation. That means lenders are not obligated to comply with the rule until the court-ordered stay is lifted, he said, explaining that the July 2020 amendment to the rule rescinds the following:

  • requirement for a lender to determine a borrower’s ability to repay before making a covered loan;
  • underwriting requirements for making the ability-to-repay determination; and
  • some record-keeping and reporting requirements.

The letter also stated key CFPB payday rule provisions affecting credit unions include that:

  • lenders must calculate the finance charge under the CFPB payday rule the same way they calculate the finance charge under Regulation Z;
  • generally, for covered loans, a lender cannot attempt more than two withdrawals from a consumer’s account;
  • lenders must establish written policies and procedures designed to ensure compliance; and
  • lenders must retain evidence of compliance for 36 months after the date on which a covered loan is no longer an outstanding loan.

The full letter to credit unions can be accessed on the NCUA website.

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