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#2251064 - 03/23/21 08:11 PM Time Note ATR
burkemi Offline
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Joined: Nov 2013
Posts: 549
Looking for guidance and/or opinions, please.

We offer short-term time notes (generally 6 months or less) with a single payment due at maturity. These notes are usually driven by special circumstances to cash flow, such as a settlement check, life insurance proceeds, seasonal income, etc. These loans can range from $1,000 to $25,000 or even more. In many cases, the customer's monthly income is insufficient to repay the debt. As a best practice, I would like to collect the "Expected Source of Repayment," kind of like I stated at the beginning. The closest guidance I can find is from the CFPB's Payday Lending Rule, Ability to Repay (which if I understand was revoked anyway). Are there any other regulations or guidance I can use to strengthen my position?

These loans are available for commercial and personal reasons. They are intended to provide a quicker access to cash flow when expected income is near. The Bank doesn't gain any specific advantage - these loans follow the same underwriting guidelines as our term loans, same rate tree, etc. My concern is that a normal debt to income ratio doesn't provide any real evidence of a customer's ability to repay the debt.

Thoughts, please???
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#2251094 - 03/24/21 01:31 PM Re: Time Note ATR burkemi
burkemi Offline
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Joined: Nov 2013
Posts: 549
Any ideas?
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#2251095 - 03/24/21 01:34 PM Re: Time Note ATR burkemi
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,361
Galveston, TX
Not sure you are going to find any guidance. Purely a product/pricing/credit decision issue.
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#2251099 - 03/24/21 02:24 PM Re: Time Note ATR burkemi
burkemi Offline
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Joined: Nov 2013
Posts: 549
Thanks, Randy. That's what I thought, but was hoping someone might know something I had missed.
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