CFPB to Change Payday Ability-to-Pay Provisions First

The CFPB will make changes to its payday lending rule’s compliance date and ability-to-repay requirements in January, the agency announced Friday.

The bureau intends to address the rule’s payments provision later, bureau officials said.

When it issued its final payday lending rule last year, the agency said, “Under the new rule, lenders must conduct a ‘full-payment test’ to determine upfront that borrowers can afford to repay their loans without re-borrowing.”

However, the strict payday lending rule was issued during the regime of former Director Richard Cordray, who subsequently resigned to run for governor of Ohio.

When Acting Director Mick Mulvaney took over the agency as an appointee of President Trump’s, he said the agency would revisit the rule. In court documents filed as part of a lawsuit challenging the rule, Mulvaney’s attorneys were critical of the strict rule and said that the challenge might have merits.

The final payday lending rule exempted loans that strictly followed the NCUA’s Payday Lending Alternative program. Since the rule was issued, the NCUA has proposed a new payday lending program in an effort to encourage more credit unions to participate.

Consumer advocates immediately attacked the agency’s proposal to change the payday rule, saying it would remove a key consumer safeguard.

“Americans can’t catch a break with Mulvaney at the helm of the CFPB,” Rebecca Borné, senior policy counsel at the Center for Responsible Lending said. “This is nothing more than his keeping his promise to predatory lenders to sabotage the payday lending rule.”