On July 7, 2020, the Consumer Financial Protection Bureau (CFPB) issued a final rule to revoke the mandatory underwriting provisions of its Payday Loans, Vehicle Title, and Certain High-Cost Installment Loans rule.
Previously, in November 2017, the CFPB published a final rule establishing consumer protection regulations for these transactions. The rule established two discrete topics. First, the rule contained a set of provisions with respect to the underwriting of covered short-term and longer-term balloon-payment loans, including payday and vehicle title loans, and related recordkeeping and reporting requirements (the “Mandatory Underwriting Provisions”). Second, the rule contained a set of provisions, applicable to the same set of loans and also to certain high-cost installment loans, establishing certain requirements and limitations with respect to attempts to withdraw payments on the loans from consumers’ checking or other accounts (the “PaymentProvisions”).
The 2017 Final Rule became effective on January 16, 2018, although most provisions had a compliance date of August 19, 2019. On January 16, 2018, the Bureau issued a statement announcing its intention to engage in rulemaking to reconsider the 2017 Final Rule. A legal chal- lenge to the 2017 Final Rule was filed on April 9, 2018 and is pending in the United States District Court for the Western District of Texas. The revocation of the Payment Provisions has an effective date of November 19, 2020.
The rule is available at: https:// www.govinfo.gov/content/pkg/ FR-2020-07-22/pdf/2020- 14935.pdf
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