Compliance Update with Amy K
by Amy Kleinschmit
Chief Compliance Officer
3/7/2019

Prepaid Accounts – Effective April 1. Last week, the Consumer Financial Protection Bureau (CFPB) issued technical specifications rule regarding the agreement submission requirements of the prepaid account rule. As has been discussed in the prior Memo articles, this rule is effective April 1 – which is now less than a month away.

The CFPB’s final rule created “comprehensive consumer protections for prepaid accounts” which translates to detailed disclosures and extending error resolution and periodic statement, or alternative periodic statement as discussed last week, in addition to other consumer protections.

Beginning on April 1, 2019, prepaid account issuers are required to submit their currently offered prepaid account agreements to the CFPB. The CFPB is issuing technical specifications for those submissions, including the URL for the website at which issuers (or their designees) can register and submit their prepaid account agreements.

Section 1005.19(f) states that an issuer must submit to the CFPB no later than May 1, 2019 all prepaid account agreements it offers as of April 1, 2019. Following that, § 1005.19(b) requires an issuer to make rolling submissions to the CFPB no later than 30 days after an issuer offers, amends, or ceases to offer any prepaid account agreement. Prepaid product agreement submission instructions can be found here and the rule can be found here.

Reminder – there are a number of resources to help with implementation of this rule which can be found consumerfinance.gov. This includes the small entity compliance guide; preparing the short form disclosure for prepaid accounts; coverage charts; model and sample forms; and native design files.

PACE Loans. The CFPB recently issued Advance Notice of Proposed Rulemaking (ANPR) regarding residential property assessed clean energy financial or PACE loans. This proposed rulemaking is to implement section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) and can be found here. PACE financing is defined as “financing to cover the costs of home improvements that results in a tax assessment on the real property of the consumer.”

S. 2155 directs the CFPB to implements regulations that will require TILA’s Ability to Repay (ATR) requirements and apply TILA’s general civil liability provision for violations of the ATR rules that will apply to PACE financing.

As detailed in the ANPR, the CFPB is seeking five categories of information: “(1) written materials associated with PACE financing transactions; (2) descriptions of current standards and practices in the PACE financing origination process; (3) information relating to civil liability under TILA for violations of the ATR requirements in connection with PACE financing, as well as rescission and borrower delinquency and default; (4) information about what features of PACE financing make it unique and how the Bureau should address those unique features; and (5) views concerning the potential implications of regulating PACE financing under TILA.”

 

As always, CUAD members may contact Amy Kleinschmit with any compliance related questions.

 

 

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