The Consumer Financial Protection Bureau (CFPB) is reportedly expected to eliminate underwriting requirements in a revamp of its payday lending rule. In 2017, t he CFPB in signaled its interest in “revisiting” the ability-to-repay provisions in the 2017 small-dollar lending rule issued under former Director Cordray.
However, under new Director Kathy Kraninger, the bureau has concluded the best approach is to remove the provisions altogether. The current rule, which has not yet gone fully into effect, requires lenders to verify a borrower’s income, as well as debts and other spending, to assess one’s ability to repay credit while meeting living expenses. The latest proposal also is expected to rescind limits the rule placed on repeat reborrowings by a single consumer. However, the CFPB is expected to leave intact payment provisions to limit the number of times a lender can try to extract loan payments directly from consumers’ bank accounts. Regulators have also opened the door for banks to get into installment lending as an alternative to payday lenders. In May, the Office of the Comptroller of the Currency endorsed banks’ offering affordable installment loans.