NCUA issued a regulatory alert (20-RA-07) detailing the Consumer Financial Protection Bureau’s final payday lending rule, including highlights of key provisions that affect credit unions.
The CFPB issued the final rule in July, which rescinds several ability-to-repay, underwriting, recordkeeping and recording requirements.
Provisions that affect credit unions include:
PAL I loans are included in a safe harbor under the final rule, and are not subject to it. Depending on the loan’s terms, a PAL II loan may be a conditionally exempt alternative loan or accommodation loan under the CFPB Payday Rule. A federal credit union should review the conditions in the final rule to determine if its PALs II loans qualify for the aforementioned conditional exemptions.
Non-PALs from federal credit unions must meet the following conditions: