By A. Iomar. University of Maine at Farmington.

Some States that authorize vehicle title loans limit the rates lenders may charge to a percentage or dollar amount per one hundred dollars borrowed secure payday loan sites, similar to some State payday lending pricing structures com loan online payday. A common fee limit is 25 percent of the loan amount per month payday one loan default, but 163 roughly half of the authorizing States have no restrictions on rates or fees. Some, but not all, States limit the maximum amount that may be borrowed to a fixed dollar amount, a percentage of the borrower’s monthly income (50 percent of the borrower’s gross monthly income in 160 Id. Virginia’s fees are tiered at 22 percent per month for amounts up to $700 and then decrease on larger loans. Some States limit the initial loan term to one month, but several States authorize rollovers, including automatic rollovers arranged at the time 165 of the original loan. Unlike payday loan regulation, few States require cooling-off periods between loans or optional extended repayment plans for borrowers who cannot repay vehicle 166 title loans. State vehicle title regulations sometimes address default, repossession and related fees; any cure periods prior to and after repossession, whether the lender must refund any surplus after the repossession and sale or disposition of the vehicle, and whether the borrower is liable 167 for any deficiency remaining after sale or disposition. Some States have imposed limited requirements that lenders consider a borrower’s ability to repay. For example, both Utah and South Carolina require lenders to consider borrower ability to repay, but this may be 164 For example, some maximum vehicle title loan amounts are $2,500 in Mississippi, New Mexico, and Tennessee, and $5,000 in Missouri. Illinois’ limits the loan to $4,000 or 50 percent of monthly income, Virginia and Wisconsin limit the loan amount to 50 percent of the vehicle’s value and Wisconsin also has a $25,000 maximum loan amount. Examples of States with no limits on loan amounts, limits of the amount of the value of the vehicle, or statutes that are silent about loan amounts include Arizona, Idaho, South Dakota, and Utah. Idaho and Tennessee limit title loans to 30 days but allow automatic rollovers and require a principal reduction of 10 percent and 5 percent respectively, starting with the third rollover. Virginia prohibits rollovers and requires a minimum loan term of at least 120 days. Delaware requires title lenders to offer a workout agreement after default but prior to repossession that repays at least 10 percent of the outstanding balance each month. Delaware does not cap fees on title loans and interest continues to accrue on workout agreements. Arizona, Delaware, Idaho Missouri, South Dakota, Tennessee, Utah, Virginia, and Wisconsin specify that any surplus must be returned to the borrower. Nevada requires lenders to consider borrower ability to repay and 169 obtain borrower affirmation of their ability to repay. Missouri requires that lenders consider borrower financial ability to reasonably repay the loan under the loan’s contract, but does not 170 specify how lenders may satisfy this requirement. Information about the vehicle title market is more limited than with respect to the payday industry because there are currently no publicly traded vehicle title loan companies, most payday lending companies that offer vehicle title loans are not publicly traded, and less information is generally available from State regulators and other 171 sources. Another study extrapolating from State regulatory reports estimates that about two million Americans use 173 vehicle title loans annually. These estimates may not include the full extent of vehicle title loan expansion by payday lenders. Pew’s estimate includes borrowers of single- payment and installment vehicle title loans. Three privately held firms dominate the vehicle title 176 lending market and together account for about 3,200 stores in about 20 States. These lenders 177 are concentrated in the southeastern and southwestern regions of the country. In addition to the large title lenders, smaller vehicle title lenders are estimated to have about 800 storefront 178 179 locations, and as noted above several companies offer both title loans and payday loans. The Bureau understands that for some firms for which the core business had been payday loans, the volume of vehicle title loan originations now exceeds payday loan originations. The number of borrowers in Illinois taking vehicle title loans increased 78 percent from 2009 to 2013, the most 180 current year for which data are available. The number of title loans taken out in California 181 increased 178 percent between 2011 and 2014. In Virginia, between 2011 and 2014, the 175 Pew, Auto Title Loans: Market Practices and Borrowers’ Experience, at 1, 33 n. Community Loans of America has almost 900 stores and Select Management Resources has about 700 stores. Fred Schulte, Public Integrity, Lawmakers protect title loan firms while borrowers pay sky-high interest rates (Dec. In addition to the growth in loans made under Virginia’s vehicle title law, a series of reports notes that some Virginia title lenders are offering “consumer finance” installment loans without the corresponding consumer protections of the vehicle title lending law and, accounting for about “a quarter of the money loaned in 183 Virginia using automobile titles as collateral. The number of locations peaked in 2014 at 1,071, 52 percent higher than the 2006 levels. However, in each year since 2013, the State regulator has reported more licensed locations than existed prior to the State’s title lending regulation, the Tennessee 184 Title Pledge Act. Vehicle title loan storefront locations serve a relatively small number of customers. One study estimates that the average vehicle title loan store made 227 loans per year, not including 185 rollovers.

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It includes examples of when a major financial obligation in a consumer report is greater than the amount stated by the consumer and of when a major financial obligation stated by the consumer does not appear in the consumer report at all easy to get payday loan. The examples do not address compliance or noncompliance with the proposed requirement in § 1041 payday loan payday uk. The Bureau believes that many lenders and vendors would develop methods of automating projections bad credit loans my payday loan, so that for a typical consumer, relatively little labor would be required. The Bureau invites comment on the proposed approach to verification and to making projections based upon verified evidence, including whether the Bureau should permit projections that vary from the most recent verification evidence and, if so, whether the Bureau should be more prescriptive with respect to the permissible range of such variances. As discussed below, the required verification evidence will normally consist of third-party documentation or other reliable records of recent transactions or of payment amounts. The exception would accommodate situations in 558 which a consumer’s net income or payment for a major financial obligation will differ from the amount supportable by the verification evidence. For example, a consumer who has been unemployed for an extended period of time but who just accepted a new job may not be able to provide the type of verification evidence of net income generally required under proposed § 1041. The lender would be required to retain the statement in accordance with proposed § 1041. The Bureau invites comment as to whether lenders should be permitted to rely on such evidence in projecting residual income. The lender would then use the statements as an input in projecting the consumer’s net income and payments for major financial obligations during the term of the loan. The lender would also be required to retain the statements in accordance with proposed § 1041. As discussed above, the Bureau believes it is important to require lenders to obtain this information directly from consumers in addition to obtaining reasonably available verification evidence under proposed § 1041. Accordingly, the 559 Bureau believes that projections based on both sources of information will be more reliable than either one standing alone. Proposed comment 9(c)(3)(i)-1 clarifies that a consumer’s written statement includes a statement the consumer writes on a paper application or enters into an electronic record, or an oral consumer statement that the lender records and retains or memorializes in writing and retains. It further clarifies that a lender complies with a requirement to obtain the consumer’s statement by obtaining information sufficient for the lender to project the dates on which a payment will be received or paid through the period required under § 1041. Proposed comment 9(c)(3)(i)-1 includes the example that a lender’s receipt of a consumer’s statement that the consumer is required to pay rent every month on the first day of the month is sufficient for the lender to project when the consumer’s rent payments are due. The Bureau invites comment on whether to require a lender to obtain a written statement from the consumer with respect to the consumer’s income and major financial obligations, including whether the Bureau should establish any procedural requirements with respect to securing such a statement and the weight that should be given to such a statement. The Bureau also invites comments on whether a written memorialization by the lender of a consumer’s oral statement should not be considered sufficient. It would specify the type of verification evidence 560 required for net income and each component of major financial obligations. The proposed requirements are intended to provide reasonable assurance that the lender’s projections of a consumer’s net income and payments for major financial obligations are based on accurate and objective information, while also allowing lenders to adopt innovative, automated, and less burdensome methods of compliance. A lender making a covered longer-term loan within 30 days of the borrower having an outstanding covered short-term loan or covered longer-term balloon-payment loan would also be, in certain circumstances, required under proposed § 1041. It would not specify a minimum look-back period or number of net income payments for which the lender must obtain verification evidence. The Bureau believes that, generally, the term of a loan will affect the period of time for which a lender will need verification evidence in order reasonably to project the consumer’s net income. However, the Bureau does not believe it is necessary or appropriate to require verification evidence covering a lookback period of a prescribed length. Rather, sufficiency of the history for which a lender obtains verification evidence may depend upon the term of the prospective covered longer-term loan and the consistency of the income shown in the verification evidence the lender initially obtains. For example, a lender’s normal practice in making loans for six-month terms may be to obtain 561 verification evidence showing the consumer’s three most recent receipts of net income. But if there is significant variation in a particular consumer’s three most recent receipts of net income, simply projecting income based on the highest of the three would generally not comply with proposed § 1041. In that case, the lender may be able to reasonably project income based on that highest of the three most recent amounts, for the reason that the combination of the initial and additional receipts of consumer net income the lender examines is sufficient to support the lender’s projection of net income. On the other hand, for a consumer who recently started a new job and has received only one salary payment, verification evidence showing the amount and timing of the payment may be sufficient to support the lender’s projection. Lenders would be required to develop and maintain policies and procedures for establishing the sufficient history of net income payments in verification evidence tailored to the covered longer-term loans they make, in accordance with proposed § 1041. Proposed comment 9(c)(3)(ii)(A)-1 would clarify that a reliable transaction record includes a facially genuine original, photocopy, or image of a document produced by or on behalf of the payer of income, or an electronic or paper compilation of data included in such a document, stating the amount and date of the income paid to the consumer. It would further clarify that a reliable transaction record also includes a facially genuine original, photocopy, or image of an electronic or paper record of depository account transactions, prepaid account transactions (including transactions on a general purpose reloadable prepaid card account, a 562 payroll card account, or a government benefits card account), or money services business check- cashing transactions showing the amount and date of a consumer’s receipt of income. The Bureau believes that the proposed requirement would be sufficiently flexible to provide lenders with multiple options for obtaining verification evidence for a consumer’s net income.

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The Bureau is aware that there may be additional methods of providing the disclosures required by § 1041 not accepted for payday loan. The Bureau believes that the explanation of how the transfer may differ from the consumers’ expectation is important information that needs to be included in the electronic short 827 notice in order for the notice to be effective bad credit loans not a payday loan, pursuant to section 1032 of the Dodd-Frank Act get an instant payday loan. As discussed above, when a payment differs from the consumer’s expectations, the payment may pose greater risk of triggering overdraft or non-sufficient funds fees. The Bureau believes that consumers should be informed when a lender has triggered proposed § 1041. The Bureau is also concerned that some lenders would pressure consumers to provide affirmative consent and could 828 present the reasons behind the re-initiation limit in an incomplete manner. Requiring disclosure of prior failed payments and consumer rights under proposed § 1041. Due to these policy considerations, the Bureau believes that a lender should be required to provide a standardized consumer rights notice after it has initiated two consecutive failed withdrawals. The Bureau seeks comment on the proposed content and timing requirements of the consumer rights notice. Proposed comment 15(d)(2) clarifies that this timing requirement is triggered whenever the lender or its agent, such as a payment processor, receives information that the payment transfer has failed. When a lender has initiated two consecutive failed payment transfers and triggers the protections provided by proposed § 1041. In the meantime, some loans may accrue interest or fees while the balance remains unpaid. For these reasons, the Bureau believes that the consumer rights notice should be provided shortly after the second attempt fails. However, the Bureau is aware that, depending on the payment method, there may be a delay between the lender’s initiation of the payment transfer and information that the payment transfer has failed. Accordingly, the Bureau is proposing that the lender be required to 829 send the consumer rights notice within three business days after the lender receives information that the payment transfer has failed. The Bureau seeks comment on this timing requirement, including whether it is appropriate in length and whether it accommodates all payment channels. The Bureau invites comment on whether this timing requirement should be included, or whether the requirement for lenders to provide the consumer rights notice before obtaining a consumer’s reauthorization under proposed § 1041. The Bureau believes that a consumer should know that a lender has triggered the provisions in proposed § 1041. The Bureau believes that it may be important to inform consumers that Federal law prohibits the lender from initiating payments. Consistent with the Bureau’s authority under section 1032(a) of the Dodd-Frank Act, this content would inform consumers of the payment status on their covered loans and may help prevent consumer confusion or misinformation about why the lender cannot initiate another payment, helping to ensure that this information is effectively, accurately, and fully disclosed to the consumer. The 830 Bureau believes that a heading explaining that a lender is no longer permitted to withdraw payments would inform a consumer both that there is an issue with their payment and that the lender has an external requirement to stop any further attempts. The Bureau believes that this information should be provided to the consumer early on in the notice because it provides context for why the consumer is receiving the notice. A truncated account number similar to the one used in Model Form A-5 in appendix A to this part would be permissible. This information may also be useful for checking that the correct account was debited. However, the Bureau is also aware that the consumer’s full account number is sensitive information. The Bureau believes that providing the last four digits of the account number, as provided in the Model Forms, would provide sufficient information for the consumer to identify the account while protecting the sensitive nature of the account number. Information that identifies the loan number may help consumers evaluate the legitimacy of the notice and also may be useful if the consumer contacts the lender about the information in the notice. The Bureau believes that explaining how this re-initiation limit is a requirement under Federal law will help clarify the reason behind the notice, including how this limit is being imposed as a consumer protection. This information would help ensure that certain risks of the loan and associated payments are consistently and accurately disclosed to consumers, according to the Bureau’s authority under section 1032 of the Dodd-Frank Act. The Bureau seeks comment on this proposed statement of Federal law prohibition, including the breadth and benefit of the statement and its location within the consumer rights notice. The Bureau believes that a statement that 832 the lender may contact the consumer about payment choices would prepare the consumer for future contact from the lender. The Bureau believes that showing the information about the prior unsuccessful attempts would provide context for why consumers are receiving the notice and help consumers identify errors. For example, the consumer could compare this table to the payment notices to see whether the prior attempts were initiated for the correct amount. The Bureau seeks comment on the inclusion of this information, including whether more or less information about the prior unsuccessful attempts should be included in the notice. Consistent with the Bureau’s authority under section 1032 of the Dodd-Frank Act, these proposed requirements would help ensure that consumer rights under proposed § 1041. The Bureau seeks comment on the information in the electronic short notice, including whether information about the consumer’s account would be helpful and whether less information should be included. The Bureau also seeks comment on whether lenders should be 834 required to provide the full consumer rights notice, rather the two-step electronic short notice, when email is the method of electronic delivery. Proposed comment 15(e)(2)-1 clarifies that when a lender provides the electronic short notice by email, the email must contain this identifying statement in both the subject line and the body of the email.

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