CFPB Finally Issues New PDL, Title… Rules

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SUMMARY: The Bureau of Consumer Financial Protection (Bureau or CFPB) is issuing this final rule to establish 12 CFR 1041, which creates consumer protections for certain consumer credit products, and the official interpretations to the rule.
First, the rule identifies it as an unfair and abusive practice for a lender to make covered short-term or longer-term balloon-payment loans, including payday and vehicle title loans, without reasonably determining that consumers have the ability to repay the loans according to their terms.
The rule exempts certain loans from the underwriting criteria prescribed in the rule if they have specific consumer protections.
Second, for the same set of loans along with certain other high-cost longer-term loans, the rule identifies it as an unfair and abusive practice to make attempts to withdraw payment from consumers’ accounts after two consecutive payment attempts have failed, unless the consumer provides a new and specific authorization to do so.
Finally, the rule prescribes notices to consumers before attempting to withdraw payments from their account, as well as processes and criteria for registration of information systems, for requirements to furnish and obtain information from them, and for compliance programs and record retention.
The rule prohibits 2 evasions and operates as a floor leaving State and local jurisdictions to adopt further regulatory measures (whether a usury limit or other protections) as appropriate to protect consumers.




Pray for Cordray: CFPB Director Richard Cordray Scratched

It’s official! CFPB Director Richard Cordray has bee scratched! He’s out of the race. Pray for Cordray? Not a chance!

It’s highly speculative at this juncture, but now that Richard Cordray has been scratched, he’ll likely run for governor of Ohio. Richard Cordray is expected to resign primarily because of his poor showing at Del Mar, Calif.

This is good news for BORROWERS! Richard Cordray’s resignation would guarantee consumers in all economic straits continued access to a wide spectrum of financial products rather than the few Cordray and “Big Brother” intend to shove down their throats!

Payday lenders, installment lenders, car title loan lenders and and line-of-credit lenders will likely be dancing in the streets as well. [Here’s a list of software, bond, call centers, credit reporting vendors and more…]

On the other hand, banks and credit unions will NOT be happy! Why? Because the majority of their profits today are derived from their 1400% APR non-sufficient funds fees literally siphoned out of their customer’s bank accounts.

So, CFPB Director Richard Cordray to resign? Running for governor of Ohio? Depending on the timing, this could have serious consequences on consumer credit issues.


Choice Act Defangs CFPB: “No Authority Over PDL, Vehicle Title Loans.”

Good news for payday loan, title loan and other alternative lenders! Proceed to page 403 of the Financial Choice Act  for some interesting language relevant to those of us who fund loans:

17 ‘‘(t) NO AUTHORITY TO REGULATE SMALL-DOLLAR 18 CREDIT.—The Agency may not exercise any rulemaking, 19 enforcement, or other authority with respect to payday 20 loans, vehicle title loans, or other similar loans.’’

Additionally, the American Bankers Assn. submitted a report to Treasury Secretary Steve Mnuchin requesting CFPB’s proposed payday-lending rules be denied and asking for regulatory changes allowing banks to issue their own payday loans.

Here’s a link to HR 10 The Financial Choice Act as propsed in The House: Choice Act

And, here’s a link to the Bank Report: ABA White Paper on Small Dollar Credit


Update: Payday Loan Business-Consumer Financial Protection Bureau

The CFPB Consumer Financial Protection Bureau & the Payday Loan Industry

Payday loans, auto title loans, and similar lending products: update from The CFPB

We’ve written often here about the issue of payday loan State’s rights versus the Fed’s and the CFPB.

The CFPB issued an update on their website regarding proposed rulemaking for car title loans, payday loans, installment loans, line-of-credit loans and related loan products made to consumers in the U.S.

Here’s the the CFPB release in full including 3 links to their “research” and “studies.” Take a deep breath and hold your nose…

The CFPB press release and website Post specifically state:

“The Bureau is in the process of developing a Notice of Proposed Rulemaking to address concerns in markets for payday, auto title, and similar lending products. The Bureau is particularly concerned that lenders are offering these products without assessing the consumer’s ability to repay, thereby forcing consumers to choose between reborrowing, defaulting, or falling behind on other obligations. We are also concerned about certain payment collection practices that can subject consumers to substantial fees and increase risk of account closure.”

The CFPB announcement went on to say:

Jer Trihouse Consulting

Jer Trihouse

“The Notice of Proposed Rulemaking will build on feedback we have received from small businesses and other stakeholders after releasing an outline of proposals under consideration last spring for purposes of the Small Business Regulatory Enforcement Fairness Act process. The Bureau will also publish results of further research it has been conducting into these markets in connection with the rulemaking proposal. The Bureau previously released a white paper and a report summarizing some of its research on some of these products. We expect to release the rulemaking proposal in first quarter 2016.”

Here’s a direct link to the CFPB’s “Small Business Regulatory Enforcement Act process (CFPB 1)

And a link to the previous CFPB Payday Loan White Paper, “Payday Loans and Deposit Advance Products: (CFPB 2)

And the CFPB Report, “CFPB Data Point”: (CFPB 3)

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