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CFPB's Busy 2020 May Foretell Regulatory Uptick Ahead

  • Written by Steel Rose

Worst news for debt collectors? No more efforts to collect time-barred debts. The best news? The rules should greatly reduce class action litigation against debt collectors since the rules provide certainty on the types of conduct both permitted and prohibited by the rules.

Payday lending also received some compliance certainty. In July, the CFPB issued its long-awaited final rule amending the regulations that govern payday loans, vehicle title loans and certain high-cost installment loans. As expected, the CFPB revoked the mandatory underwriting provisions from its own final rule dated Nov. 17, 2017, and reaffirmed the payment provisions from that same rule.

Under the old rule, lenders were barred from making a covered short-term loan or a covered longer-term balloon-payment loan without reasonably determining that the applicant had an ability to repay the loan according to its terms. The 2020 final rule excises that restriction based on fears that it would entirely cut off a particularly vulnerable — and often unbanked — group from the credit market.

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