Posted October 3, 2017
CFPB Issues Final Rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans
On Oct. 5, 2017, the Bureau of Consumer Financial Protection issued this final rule to create consumer protections for certain consumer credit products. The rule has two primary parts. First, for short-term and longer-term loans with balloon payments, the Bureau is identifying it as an unfair and abusive practice for a lender to make such loans without reasonably determining that consumers have the ability to repay the loans according to their terms. The rule generally requires that, before making such a loan, a lender must reasonably determine that the consumer has the ability to repay the loan. The Bureau has exempted certain short-term loans from the ability-to-repay determination prescribed in the rule if they are made with certain consumer protections. Second, for the same set of loans and for longer-term loans with an annual percentage rate greater than 36 percent that are repaid directly from the consumer’s account, the rule identifies it as an unfair and abusive practice to attempt to withdraw payment from a consumer’s account after two consecutive payment attempts have failed, unless the lender obtains the consumer’s new and specific authorization to make further withdrawals from the account. The rule also requires lenders to provide certain notices to the consumer before attempting to withdraw payment for a covered loan from the consumer’s account.
The rules won’t go into effect until mid-2019 and are strongly opposed by most Republicans. The five-year term of Cordray, who was appointed by President Obama, expires in July 2018, and he could leave sooner to run for governor in his home state of Ohio. President Trump would nominate a replacement who could move to rescind the rules before they ever go into effect.
White House Releases Tax Reform Framework
On Sept. 27, 2017, the White House released a tax reform blueprint entitled “Unified Framework for Fixing Our Broken Tax Code”, to be used as a template for developing tax legislation. The Trump Administration’s goal is to get a tax bill through the House in October and to the Senate in November.
Click here to read the full framework and here to read a one-page overview.
Beginning Sept. 11, 2017, Treasury Will Participate in the Exchange of the Unauthorized Entry Fee
With the publication of a final 31 CFR Part 210 rule on Sept. 11, 2017, the U.S. Treasury became an active participant in NACHA’s efforts to improve ACH network quality through the unauthorized entry fee rule that was implemented in October 2016. As has been the case for commercial ACH network participants since the rule was implemented, the Treasury will now participate in the exchange of the Unauthorized Entry Fee for return reason codes R05, R07, R10, R29 and R51.
Beginning Sept. 11, 2017, for any unauthorized return with a government routing transit number (RTN) on either side of the transaction, the commercial RTN for the transaction will see a $4.50 entry representing either the fee (billing code 57996) or the credit (57997) on its billing statement at the end of each month. Please contact your account executive or FedACH® and Check Customer Support with any questions pertaining to these entries on your institution’s billing statement.
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