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Fintech in Brief: CFPB Issues No-Action Letter Templates for Affordable Dollar that is small Lending Mortgage Loss Mitigation

A week ago, the Consumer Financial Protection Bureau (the “CFPB”) released two “no action” letter templates that address the affordable dollar that is small and homeloan payment relief for customers whenever numerous might need it most. Both templates had been given included in the CFPB’s Policy on No-Action Letters (the “Policy”), which was revised in 2019. Depository institutions seeking CFPB approval for little buck installment loans and mortgage servicers searching for CFPB approval for usage of certain loss mitigation solutions may use these templates because the foundation for his or her no-action letter applications. The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency issued the “Interagency Lending Principles for Offering Responsible Small-Dollar Loans” that outline important risk management considerations for regulated financial institutions to consider when making small dollar loans to individuals and small businesses in a related May action.

Small Dollar Lending

The template that is small-dollar granted in reaction to a credit card applicatoin through the Bank Policy Institute (“BPI”) and provides a course for BPI bank people along with other deposit using organizations wanting to provide small-dollar credit items. A job candidate can utilize this template to request a CFPB no-action letter supplying assurance that its small-dollar credit services and products will likely not trigger a CFPB supervisory or enforcement action.

The template requires a job candidate to supply different types of information, like the following: (1) those items placed in part a regarding the Policy, including a description associated with the applicant’s proposed credit item and a reason regarding the product’s consumer that is potential and dangers; (2) specific certifications, including that the applicant is, or perhaps is connected to, an insured depository institution or insured credit union with total assets in excess of ten dollars billion, that the small-dollar credit item is structured as either a set term, amortizing installment loan or an open-end personal credit line, and therefore the loan quantity will not go beyond $2,500; and (3) details about item features and financing methods, such as the anticipated APR range, extra charges, a description associated with repayment framework and a description associated with the lender’s underwriting requirements. (more…)