This week was a busy one on the consumer protection front, as CUNA advocacy engaged Bureau staff on serving credit invisible consumers and regulating PACE loan programs; meanwhile the payday rule litigation continues and the Bureau announced a new office location in Atlanta, Georgia. 

Credit Visibility Symposium and Research Report
On Monday, September 17, CUNA attended a Bureau-hosted symposium titled “Building a Bridge to Credit Visibility.” The symposium focused on programs addressing the challenges credit invisible consumers face in accessing credit through traditional means. The topics discussed during the sessions included: lending deserts, entry-level financial services products, small business lending, alternative data and modeling techniques, and the bureau’s renewed mission to facilitate innovation. 

The symposium was a byproduct of the Bureau multi-year study “credit invisible” Americans, which has previously included two substantive reports from the BCFP Office of Research estimating the number of credit invisible consumers and exploring ways for those consumers to establish credit reports. Shortly after the symposium concluded, the Bureau released a third report on the geography of credit invisibility. 

The symposium and report could be signal that the Bureau intends focus on facilitating and encouraging innovation in consumer financial services entities to reach more credit invisible consumers. 

Future PACE Loan Regulation
CUNA joined other banking trades and consumer advocacy organizations to discuss Property Accessed Clean Energy (PACE) loans with the Bureau on Tuesday, September 18.  Acting Deputy Director Brian Johnson represented the Bureau in the meeting, which included several senior BCFP staff members from various offices.  CUNA was the only credit union trade association in attendance. 

PACE loans have been the subject of substantial scrutiny the past few years as they have few consumer protections, take first priority, and must be paid before borrowers can refinance or sell their property. PACE loans are generally structured as assessments on the property collected with local property taxes. This structure creates a risk that, like traditional property tax liens, the consumer could lose their home should they fail to make timely payments. While these programs have been approved in 32 states, the most troublesome programs are in the states of California, Florida, and Missouri. 

CUNA has actively opposed state efforts to expand programs that record these loans as tax assessments and supported federal legislation to require disclosures and adequate underwriting for PACE loans.  These efforts culminated in statutory language in S. 2155 requiring the Bureau to develop rules extending the Truth in Lending Act’s (TILA) ability-to-repay (ATR) consumer protections to PACE loans. This week’s meeting included a discussion of the Bureau’s current progress, timeline, and additional provisions that the coalition would like included in any rulemaking. 

Payday Rule Litigation
A trade association representing payday lenders has filed a motion for a preliminary injunction in a Texas federal court to prevent the BCFP’s payday lending rule from going into effect on August 19, 2019.  The motion alleges that payday lenders would be subject to “massive irreparable financial losses” should the payday rule going into effect unchanged. This is the second attempt by payday lenders to get the rule delayed and follows a request for the federal judge to stay the rule’s effective date – which was ultimately rejected. 

The Bureau has hinted at intentions to substantive revise the payday rule to encourage traditional lenders, such as banks and credit unions, to enter the short-term, small dollar loan space. CUNA has been supportive of those efforts, especially any changes that would increase accommodations for NCUA’s Payday Alternative Loan (PAL) program and any variation of that program finalized by NCUA. 

BCFP Office Coming to Atlanta, GA
The Bureau announced that their southeast regional office will be moving from its temporary location in Washington, DC to Atlanta, GA. This move increases the Bureau’s national presence and adds to its regional offices already located in New York, Chicago, and San Francisco. The move is expected to be complete by late 2019.  

The BCFP would join other federal banking regulators with a presence in Atlanta, including the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.  While the NCUA currently has an office in Atlanta, the office is slated to close in early 2019 as part of Chairman McWatters’ restructuring plan.