The CFPB recently announced a final rule delaying the August 19, 2019 compliance date for a regulation proposed in November 2017, governing Payday, Vehicle Title, and certain High-Cost Installment Loans. Compliance with the Rule is delayed to November 19, 2020. The Bureau’s rule generally has two parts:
First, the Bureau identifies as an unfair and abusive practice when lenders offer short- or long-term loans with balloon payments without reasonably determining whether the consumer has the ability to repay under the terms of the loan. Under the rule, lenders must make the repayment determination before making such loans. However, there are exemptions for certain short-term loans if other consumer protections are in place.
Second, the Bureau identifies as an unfair and abusive practice when payment withdrawals are attempted from a consumer’s account after two consecutive failed payment attempts, unless the lender obtains the consumer’s new and specific authorization to make further withdrawals from the account. These provisions of the rule apply to the same loan types noted above, and for longer-term loans with an annual percentage rate greater than 36 percent that are repaid directly from a consumer’s account.
On June 6, 2019, the Bureau’s final rule delayed the August 19, 2019 compliance date for mandatory underwriting provisions of the rule to November 19, 2020. The Bureau previously, on February 6, 2019, proposed rescission of those provisions. In the final rule, the Bureau stated that this timeline allows sufficient time for the Bureau to make a determination as to how to proceed and to prepare any further rulemaking if the Bureau elects to rescind the mandatory underwriting provisions.