NCUA Looking into Additional Options for Payday Alternative Loans
Federal credit union members could have more options for short-term, small-dollar borrowing under a rule proposed by the National Credit Union Administration Board.
The proposed rule would create one new product in addition to the current payday loan alternative that has been available to federally chartered credit unions since 2010. The Board also is requesting that credit union stakeholders provide comments on a possible third option.
The new payday alternative loan the NCUA is proposing has features to help federal credit unions meet specific needs of certain payday loan borrowers that are not met by the current program and provide those borrowers with a safer, less expensive alternative to traditional payday loans.
The proposed loan option includes most of the features of current payday alternative loan program, with four changes:
- Sets the maximum loan amount at $2,000 and eliminates the minimum loan amount
- Sets the maximum term of the loan at 12 months
- Does not require a minimum length of credit union membership
- Does not include time a restriction on the number of loans a federal credit union may make to the borrower in a six-month period, provided the borrower has only one outstanding loan at a time
The NCUA is requesting public comment on a third option including areas of interest rates, maximum loan amounts, loan terms, and application fees.
Question of the Week
Does federal law require a credit union to provide an overdraft notice whenever an NSF item is presented?
No. Truth in Savings does not require that a credit union give a member an overdraft notice when an NSF item occurs. However, credit unions are now required to include notice on the member’s statement advising of any overdraft fees or returned item fees. Credit unions do generally send a notice as a matter of industry practice and member courtesy. This notice is also helpful as a loss control measure since it raises a red flag for errors or unauthorized items.
While there is not a regulatory requirement to send the notice, the Joint Guidance on Overdraft Protection Programs suggests a best practice is to promptly notify the member each time the overdraft protection item is used.
National Credit Union Administration (NCUA)
The NCUA released the credit union performance data for Quarter 1 of 2018. The data shows that total assets and deposits have increased, delinquency rates have decreased, and the return on average assets has increased for federally insured credit unions.
Consumer Financial Protection Bureau (CFPB)
The CFPB announced that it will continue to convene the Consumer Advisory Board, Community Bank Advisory Council, and Credit Union Advisory Council. However, the CFPB will revamp the groups by making the membership smaller.
The CFPB announced the release of its quarterly consumer credit trends report. This report focuses on end-of-year credit borrowing and repayment of credit card balances.
The CFPB has published its spring regulatory agenda.
Federal Reserve Board (FRB)
The FRB announced that it will hold an open board meeting on June 14, 2018.
The FRB has released its annual performance plan for 2018.
The FRB has released its 104th Annual Report, which details the operations and activities during 2017.
The FRB announced that it will host a webinar. Keeping Fintech Fair: Thinking and Fair Lending and UDAP Risks, on June 25, 2018. Interested participants can register here.
Federal Communications Commission (FCC)
The FCC issued a notice requesting comment on several issues related to the interpretation and implementation of the Telephone Consumer Protection Act (TCPA). Comments are due on June 13, 2018 and reply comments are due on June 28, 2018.
Office of Foreign Assets Control (OFAC)
OFAC has updated the SDN list as of June 11, 2018. The last update prior to this was June 5, 2018.
Questions? Contact the Compliance Hotline: 1.800.546.4465, email@example.com.