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

A week ago, the customer 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 when numerous may need it most. Both templates were released within the CFPB’s Policy on No-Action Letters (the “Policy”), that was revised in 2019. Depository organizations looking for CFPB approval for tiny buck installment loans and home loan servicers looking 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 small-dollar template ended up being given as a result to a credit card applicatoin through the Bank Policy Institute (“BPI”) and offers a path for BPI bank people along with other deposit using organizations trying to provide small-dollar credit items. An applicant may use this template to request a CFPB no-action page providing assurance that its small-dollar credit items will likely not trigger a CFPB supervisory or enforcement action.

The template requires a job candidate to offer different types of information, like the following: (1) those items placed in area a regarding the Policy, including a description of this applicant’s proposed credit product and a reason associated with the product’s consumer that is potential and risks; (2) certain certifications, including that the applicant is, or perhaps is associated with, an insured depository institution or insured credit union with total assets of more than ten dollars billion, that the small-dollar credit item is structured as either a hard and fast term, amortizing installment loan or an open-end credit line, and therefore the mortgage quantity will not go beyond $2,500; and (3) information regarding item features and lending practices, such as the anticipated APR range, extra charges, a description for the payment framework and a description regarding the lender’s underwriting requirements.