ABA has issued a staff analysis of the CFPB’s recently proposed rule on small dollar lending. The proposed rule would sharply curtail short-term, small-dollar consumer loans by defining loans as “abusive and unfair” if lenders fail to reasonably determine borrowers’ ability to repay the loan or satisfy an exception.
To demonstrate ability to repay, lenders would be required to verify income, customer debt obligations and housing costs; forecast basic living expenses; and project customers’ income, obligations and expenses over the term of the loan. The proposed rule would also impose limits on re-borrowing.
ABA intends to comment on the proposed rule and is seeking bankers to join its Small Dollar Lending Working Group to provide feedback. Comments are due by Sept. 14.
Read the staff analysis.
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