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Page 2                                                               NDBA Legal Update • October 19, 2017

          Voicemail Is Covered By Fair                           The rule does not add the 2016 URLA to the Regulation
                                                                 B appendix. CFPB says the URLA form will be subject
          Debt Collection Practices Act                          to a separate Federal Register notice that will be issued
                                                                 2018. See the new provisions at http://files.consumerfinance.
          In the first appeals court decision on the point, the Federal   gov/f/documents/201709_cfpb_final-rule_regulation-b.
          Court of Appeals for the 11th Circuit has concluded the Fair   pdf?utm_campaign=ABA-Newsbytes-092117-HTML&utm_
          Debt Collection Practices Act definition of a communication   medium=email&utm_source=Eloqua.
          includes a voicemail and that a voicemail communication
          may constitute a “meaningful disclosure” even if it does not
          specify the name of an individual making the call. Hart v.   CFPB Issues Final Rule
          Credit Control LLC, 11th Cir, 16-cv-17126, September, 2017.    for Payday, Vehicle Title,
          The decision is a loss for debt collector, Credit Control LLC,
          which argued there was no meaningful disclosure.  Here’s the   and Certain High-Cost
          challenged voicemail: This is Credit Control calling with a   Installment Loan
          message.  This call is from a debt collector.  Please call us at
          866-784-1160. Thank you.”                              CFPB has issued a final rule to regulate payday, vehicle title,

          FDPCA kicks in to protect consumers when there is a    and certain high-cost installment loans.  It covers personal
          communication from a debt collector and that communication   loans with short term or balloon-payment structures, lenders’
          includes a meaningful disclosure.  The decision reverses a trial   payment withdrawal practices for those loans and some
          court dismissal and means the case will return to the district   additional installment loan products. The final rule also
          court for trial proceedings.                           prescribes processes and criteria for registration of information
                                                                 The final rule includes an important exemption for small-dollar
          CFPB Changes Reg B                                     “accommodation loans” to customers as sought by ABA in its
          to Reflect HMDA Data                                   comments to the proposed rule. Small-dollar loans are exempt
                                                                 entirely from the rule if made by a lender that has made fewer
          Collection Under  Reg C                                than 2,500 of these loans in each of the current and previous
                                                                 years and if these loans account for less than 10 percent of the
          The Consumer Financial Protection Bureau has modified   lender’s receipts. The accommodation loan exemption is not
          Reg B to give creditors some flexibility about the collection of   based on the size of the lender.  The final rule preserves the
          applicants’ demographic data under Reg C which implements   ability of banks that exceed the threshold to offer installment
          the Home Mortgage Disclosure Act. The changes allow    loans of 46 days or more. In a related action OCC has repealed
          creditors to self-identify information using disaggregated   its earlier guidance on bank Direct Deposit Advance small
          categories beginning on Jan. 1, 2017, so that they may use   dollar loan products. The rule also exempts completely certain
          Fannie Mae and Freddie Mac’s new Uniform Residential   types of credit, including non-recourse pawn loans, overdraft
          Loan Application prior to January 2018. The rule includes   services and lines of credit, wage advance programs, no-cost
          additional optional model forms to assure compliance with   advances, and loans similar to those made under the Payday
          Regulation B requirements. Effective in 2018 Institutions not   Alternative Loan program administered by NCUA. Banks that
          subject to HMDA reporting requirements are also allowed   are not exempt are required to evaluate the borrower’s ability
          to choose on an “application-by-application basis” between   to pay before making any loan with a term of 45 days or less or
          two approaches to collecting personal demographic data: the   a loan of 46 days or more with a “balloon” payment. The rule
          more limited, aggregate race and ethnicity category required   does not apply the ability to repay requirement to installment
          by Reg B or the disaggregated and more expansive categories   loans of 46 days or more (longer-term installment loans).  The
          required for HMDA reporting institutions under Reg C.
                                                                 rule also imposes limitations on re-borrowing by prohibiting
          Reg  B  previously  prohibited  creditors  from  collecting   a lender from making a short-term loan to a borrower who
          information on consumers’ race or ethnicity, except to the   has already received three short-term or longer-term balloon-
          extent required to monitor compliance with ECOA or comply   payment loans within 30 days of each other.  If it applies, the
          with HMDA. The permissible inquiries under Reg B included   prohibition period is 30 days after the third loan has been
          only aggregate racial and ethnic categories. However, under   paid off.
          the new HMDA rules, banks must permit applicants and   However, there is an exemption from the ATR requirements
          borrowers to self-identify using disaggregated ethnic and   for sequential loans in specified circumstances.  This is called
          racial categories.                                     the principal-payoff option. It allows up to three short-term
                                                                 loans to be made in close succession without an ability to pay
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