Deadline for Bureau Info Request

The Consumer Financial Protection Bureau announced today its anticipated proposed rule [PDF, 1334 pages] that would require lenders who offer covered loan products to determine whether borrowers can afford the full amount of each payment when it is due without having to reborrow within the next month and limit lenders' ability to roll such debt over. Covered loans would include payday loans, single-payment auto title loans and certain high-cost installment loans (those with an "all-in" APR over 36 percent to be repaid by creditor access to the consumer's deposit account or paycheck or secured by a vehicle title).

Under the proposal, loans of $500 or less could be offered with a "principal reduction feature" designed to keep consumers from being trapped in debt. Lenders could also offer two longer-term loan options with more flexible underwriting by adhering to certain limits, such as loans generally meeting the parameters of the NCUA's "payday alternative loans" program or loans payable in equal installments with terms not over two years with an all-in cost of 36 percent or less, plus a reasonable origination fee.

Another provision of the proposal would require a notice in advance of a lender's attempt to collect a payment on a covered loan from the consumer's deposit account, and cut off a lender's authorization for such account access after two unsuccessful attempts, unless the lender obtains a new authorization. Comments on the proposed rule will be accepted through September 14, 2016.

• Fact sheet on proposed rule
• Proposed model disclosure forms

The Bureau also announced an inquiry into other potentially high-risk loan products and practices that are not specifically covered by the proposed rule. A Request for Information was issued with a comment deadline of October 14, 2016.

Also released was the text of CFPB Director Cordray's prepared remarks introducing the proposal and inquiry at the Field Hearing on Small-Dollar Lending, to be held today by the Bureau in Kansas City, Missouri.