CFPB Updates Payday Lending Rule FAQs Posted by AVCU on 1:01 PM

On August 11, 2020 the Consumer Financial Protection Bureau (CFPB) released updated FAQs concerning compliance with the “Payday, Vehicle Title, and Certain High-Cost Installment Loans” (Payday Lending Rule).  The FAQs, which are a CFPB Compliance Aid, were updated to provide additional guidance on several topics, including:

• Clarification that federal credit union loans originated in compliance with NCUA’s PAL I program meet the conditions for an alternative loan and are exempted from the Payday Lending Rule.
• Clarification that federal credit union loans originated in compliance with NCUA’s PAL II program may be exempt depending on the terms of the loan. There is no specific exemption for NCUA’s PAL II program under the Payday Lending Rule.
• Regarding Regulation Z’s coverage threshold, confirmation that the CFPB does not intend to take supervisory or enforcement action under the Payment Provisions of the Payday Lending Rule with regard to covered loans that exceed the Regulation Z coverage threshold (from January 1, 2020, through December 31, 2020, the Regulation Z threshold amount is $58,300).
• The conditions under which closed-end and open-end loans may become covered longer-term loans.
• Whether the exclusion for real estate secured credit applies to a refinance if the mortgage or other security instrument is not re-recorded during the term of the refinance.
• Whether the purchase money loan exclusion applies to an automobile loan that finances an extended warranty or service contract in addition to the price of the automobile.
• When the lender needs to begin complying with the Payday Lending Rule if an open-end loan becomes a covered longer-term loan due to an increase in the cost of credit during the loan’s term.
• Clarification on what is a “business day” for purposes of the Payday Lending Rule because the Payday Lending Rule does not define “business day”.
• Situations where the Payday Lending Rule requires a lender to provide an unusual payment withdrawal notice.

The FAQs can be found on the CFPB’s website here.