Upcoming change in Lender requirements!
Sometime this year, many US Lenders will begin implementing systemic changes to comply with the requirements of the Payment Provisions portion of the Small Dollar Payment Rule. The Payment Provisions requirements stem from the CFPB’s 2017 “Final Rule onPayday, Vehicle Title and Certain High Cost Installment Loans.” Many of the underwriting provisions of the Final Rule have ultimately been rescinded through court action, however the Payment Provisions of that rule were ratified in July 2020.
Several lawsuits remain to be settled on the issue.
Many lender have begun to plan for its implementation, which calls for certain notifications to be sent to customers with loans that fall into one of three categories:
- Short term loans that require repayment within45 days of consummation or an advance, regardless of the cost of credit;
- Longer term loans that have certain types of balloon payment structures, regardless of the cost of credit;
- Longer term loans that have a cost of credit exceeding a 36% APR and have a payment mechanism which allows the lender to initiate transfers from the consumer’s account without further action by the consumer.
Communications must be provided to these consumers to notify them of the first attempted payment withdrawal, of payment amounts that differ from the originally scheduled payment, and of multiple failed ACH attempts.
While many of these messages can be provided electronically, it is important for lenders to note that consumers must provide a specific electronic disclosures consent to receive the communications under this rule. In the absence of that consent, orin the event that electronic communications fail due to invalid email address, written communication must be sent.
IM Group Marketing has developed a turnkey solution to allow lenders too easily comply with these payment provisions requirements. With letter templates for each situation and a standard file format, IM Group can easily integrate with your LMS platform. We provide same day mailing of all letter files, and create the return images of each letter sent for complete compliance with the regulation. For more information on the rule and its impact to your operations, contact Dennis Fish (dfish@imgroupmarketing.com)at 267-249-3992, or Seth Manley (smanley@imgroupmarketing.com)at 843-408-5777.
