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Wednesday, May 29, 2013

CFPB Delays Effective Date on Credit Insurance Provision

The CFPB announced today that it is delaying the effective date of the credit insurance provision of the loan originator compensation rule until January 10, 2014. ABIA worked closely with members and partners to advocate for this outcome, which will enable the CFPB to consider carefully consider the inclusion of monthly premium structures in a ban on financed premiums which the industry has long interpreted to include only single-premium payments that were rolled into the loan principle.

ABIA, ABA, and six other trade groups in a comment letter last Thursday noted that monthly paid premiums are commonly sold by banks, and that it would be challenging if not impossible to unwind such programs by June 1. They added they did not believe the prohibition should apply to monthly premium structures, but that if the bureau decided to bar them anyway, banks would need an additional year to comply.

Read the letter