The NCUA Thursday released a Regulatory Alert for credit unions to provide guidance on the CFPB’s Small Dollar Lending Rule. The rule, finalized last month, includes the rescission of mandatory underwriting requirements – including ability-to-repay (ATR) provisions – from the 2017 payday lending rule.
NAFCU supported the removal of mandatory underwriting requirements but had called for an expansion of the safe harbor for credit unions’ payday alternative loans (PALs), as the rule only covers the first iteration of the NCUA’s PALs program.
PAL II and non-PAL loans may be structured in a way to fall within one of the conditional exemptions.
In the Regulatory Alert, the NCUA notes which loans are covered, excluded, or conditionally exempted from coverage under the CFPB’s Small Dollar Lending Rule and outlined key provisions of the rule that will affect credit union lenders, including:
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