The Payday, Vehicle Title, and Certain High-Cost Installment Loans (Payday) Rule has been unfolding for years. As currently scheduled, parts of the rule take effect on August 19, 2019; the rest, including the controversial underwriting rules, is delayed. The August 19 date is temporarily postponed by a court order. The Consumer Financial Protection Bureau (CFPB) has proposed to delay the underwriting rules until October 2020, and has further proposed eliminating those rules altogether.
With most new rules the options are comply or die – either fully implement the rule or risk violations. With the Payday Rule we have advocated for several years that the option is compliance or avoidance. Either build a comprehensive compliance management system to cope with the 1,700 page rule, take advantage of allowed exceptions, or make a few changes to your product line-up to eliminate a few low-volume products that are covered by the rule.
Most depository institutions do not make a large volume of “covered loans”. For those with limited covered loans, it is reasonable to take advantage of the exceptions or to tweak the product line-up to avoid the massive new rules.
This manual provides a review of the the current status of the massive new rule and explains, section by section, the various requirements and the actual or proposed effective dates.