By T. Phil. University of Virginia. 2018.

The Bureau anticipates that lenders would develop policies and procedures installment loan payday lenders, in accordance with proposed § 1041 instant online payday loan. The Bureau believes that many lenders and vendors would develop methods of automating projections instant online payday loan canada, so that for a typical consumer, relatively little labor would be required. The Bureau invites comments 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 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 comments 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 325 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 Bureau believes that projections based on both sources of information will be more reliable than either one standing alone. Proposed comment 5(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 proposed § 1041. Proposed comment 5(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 comments 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 326 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 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. 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 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 source or type of income, the length of the prospective covered longer-term loan, and the consistency of the income shown in the verification evidence the lender initially obtains, if applicable. Lenders would be required to develop and maintain 327 policies and procedures for establishing the sufficient history of net income payments in verification evidence, in accordance with proposed § 1041. Proposed comment 5(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 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. For example, a paper paystub would generally satisfy the requirement, as would a photograph of the paystub uploaded from a mobile phone to an online lender. In addition, the requirement would also be satisfied by use of a commercial service that collects payroll data from employers and provides it to creditors for purposes of verifying a consumer’s employment and income. Proposed comment 5(c)(3)(ii)(A)-1 would also allow verification evidence in the form of electronic or paper bank account statements or records showing deposits into the account, as well as electronic or paper records of deposits onto a prepaid card or of check- cashing transactions. Data derived from such sources, such as from account data aggregator services that obtain and categorize consumer deposit account and other account transaction data, 328 would also generally satisfy the requirement. During outreach, service providers informed the Bureau that they currently provide such services to lenders. Several other lender representatives expressed similar concerns during the Bureau’s outreach to industry. Many perceived that the Bureau would require outmoded or burdensome methods of obtaining verification evidence, such as always requiring a consumer to submit a paper paystub or transmit it by facsimile (fax) to a lender. Others expressed concern about the Bureau requiring income verification at all, stating that many consumers are paid in cash and therefore have no employer-generated records of income. The Bureau’s proposed approach is intended to respond to many of these concerns by providing for a wide range of methods for obtaining verification evidence for a consumer’s net income, including electronic methods that can be securely automated through third-party vendors with a consumer’s consent. In developing this proposal, Bureau staff met with more than 30 lenders, nearly all of which stated they already use some method—though not necessarily the precise methods the Bureau is proposing—to verify consumers’ income as a condition of making a covered loan.

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As reflected in comment 16(c)(2)-1 payday loan no fax online, however payday loan online tennessee, the Bureau anticipates that most updates furnished pursuant to proposed § 1041 loan bad credit payday. The Bureau believes that providing lenders a reasonable period after the event that causes this type of information 866 src="http://www. The Bureau solicits comment on whether the time period within which information would be required to be furnished under proposed § 1041. The Bureau has considered whether, in addition to requiring updates to information previously furnished, the Bureau should require under this proposal that lenders furnish information regarding payments made on a covered loan while it is outstanding. The Bureau is aware, for example, that lenders that furnish to consumer reporting agencies typically provide periodic updates in account status, including amount paid and current status. In particular, the Bureau has considered whether it should require under this proposal that lenders furnish information concerning any amounts past due on an outstanding covered loan. The Bureau believes that requiring the furnishing of information concerning payments made on a covered loan, and especially amounts past due on an outstanding loan, may permit a more precise assessment of a consumer’s ability to repay a contemplated loan for purposes of this proposal than the schedule of future payments that would be furnished pursuant to the proposal, and solicits comment on whether this is the case and whether a more precise assessment is 876 needed for purposes of the proposed rule. The Bureau is concerned that requiring lenders to furnish such additional payment information under this proposal could increase furnishing burdens on lenders imposed by the proposal. The Bureau also solicits comment on whether, if it were to require such additional furnishing, it should delay the effective date of such a requirement to permit lenders, many of whom would be furnishing information to a consumer reporting agency for the first time pursuant to the proposed rule, additional time to adjust to the requirement to furnish information as proposed. In addition to soliciting comment on the specific information required under proposed §1041. The Bureau also solicits comment on whether lender access to any additional information concerning a loan at the time it ceases to be an outstanding loan would further the consumer protections of this part. Such a requirement would ensure that lenders using consumer reports from a registered information system have timely information about most covered loans made by other lenders to a consumer. Although the Bureau would encourage lenders to furnish information concerning covered loans on a real-time or close to real-time basis, the proposal would permit lenders to furnish the required information on a daily basis or as close in time as feasible to the date the loan ceases to be outstanding. The Bureau solicits comment on whether the time period within which information would be required to be furnished under proposed § 1041. The Bureau further solicits comment on specific circumstances under which furnishing information no later than the date a loan ceases to be an outstanding loan may not be feasible. This information would enable a registered information system to generate a consumer report that allows a lender to determine whether a prior loan is outstanding, which would enable a lender to comply with, for example, proposed §§ 1041. This information would also enable a registered information system to generate a consumer report that allows a lender to determine whether a loan the lender is contemplating is part of a loan sequence and the chronology of prior loans within a sequence, which would enable a lender to comply with, for example, several provisions under proposed §§ 1041. A lender would need to have information concerning whether a loan is outstanding and the date as of which a prior loan was no longer outstanding to determine whether a contemplated new loan would be part of a loan sequence and, if so, the chronology of the outstanding or prior loan within the sequence (for example, whether the outstanding loan is or prior loan was the second or third loan in the sequence). This information would enable a registered information system to generate a consumer report that allows a lender to determine whether the exception to a presumption against a consumer’s ability to repay the second and any subsequent loans in a loan sequence, provided in proposed § 1041. Under the proposal, a lender contemplating making most covered loans would be required to obtain a consumer report from a registered information system and consider such a report in determining whether the loan could be made, in furtherance of the consumer protections of this part. The proposal would require that the Bureau identify the particular consumer reporting agencies to which lenders must furnish information pursuant to § 1041. Lenders providing information to provisionally registered and registered information systems as required under proposed § 1041. The Bureau believes that defining this term to include all such applicable laws would ensure that information systems have appropriate policies and procedures in place to prevent consumer harms that could result from these systems’ collection, maintenance, and disclosure of potentially sensitive consumer information concerning covered loans. These proposed conditions aim to ensure that information systems would enable lender compliance with obligations under with proposed §§ 1041. The Bureau solicits comment on the reasonableness and appropriateness of each of the eligibility criteria proposed and also solicits comment on whether the Bureau should require that additional criteria be satisfied before an entity may become a registered or provisionally registered information system pursuant to this section. During outreach, some consumer advocates have suggested that the Bureau should require, as an eligibility criterion, that an information system may not provide information furnished pursuant to this proposed rule to lenders for purposes of prescreening consumers for 883 eligibility to receive a firm offer of credit. In particular, advocates have raised concerns that this information would be provided to loan lead generators. At the same time, the Bureau believes that prescreening could prove useful to certain consumers to the extent they needed credit and received firm offers of affordable credit. The Bureau believes that development of these standards by market participants would likely be more efficient and offer greater flexibility and room for innovation than if the Bureau prescribed particular standards in this rule, but solicits comment on whether proposed § 1041. As discussed in more detail above, the Bureau believes that it appears to be an unfair and abusive practice for a lender to make a covered loan without reasonably determining that the consumer has the ability to repay the loan. The Bureau proposes to prevent the abusive and unfair practice by including in this proposal requirements for how a lender must reasonably determine that a consumer has the ability to repay a loan. The Bureau believes that, in order to achieve these consumer protections, a lender must have access to reasonably comprehensive information about a consumer’s current and recent borrowing history, including most covered loans made to the consumer by other lenders, on a real-time or close to real-time basis. Proposed comment 17(b)(3)-1 clarifies that the Bureau does not intend that the requirement in proposed § 1041.

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The Bureau seeks comment on this proposed electronic short notice direct lender payday loan, including whether additional information should be excluded from the truncated notice ez payday loan. The Bureau seeks comment in particular on whether the readability and privacy concerns for email are outweighed by concerns 824 that requiring consumers to click through to the website to access the full notice information will make it less likely that consumers receive the full benefit of the information payday loan lenders usa. Proposed comment 15(c)(2)-1 explains that when a lender provides the electronic short notice by email, the identifying statement must be provided in both the subject line and the body of the email. The Bureau believes that the date and the amount of the transfer are the most important pieces of information for the consumer to understand the costs and risks of the forthcoming payment transfer and take appropriate action. Additionally, participants in the Bureau’s 825 consumer testing expressed comfort with the legitimacy of the notice due to its inclusion of the consumer’s account information. Accordingly, the Bureau believes that this should be required as well in the electronic short notice. Consumers would be able to obtain all of the information contained in the full disclosure by accessing the link contained in the electronic short notice. The Bureau seeks comment on the information included in the electronic short notice. The Bureau believes that consumers should have access to the full notice content, but also understands the format restrictions of mobile devices and text message may limit the utility of providing all of this information through electronic delivery. Through this proposed two-step electronic delivery process, the Bureau is attempting to balance information access with these format considerations. However, the Bureau realizes that this proposed solution may not perfectly accommodate all consumers. The Bureau is aware that some consumers may not have internet capability on their phones and may not be able to open up the website when they receive a text message. For those consumers with no means of internet access (and who nonetheless consent to receive electronic disclosures), the Bureau believes that the truncated payment notice information, which takes into account the formatting and character limits of text messages, still provides useful information. If the information in the electronic short notice is inconsistent with the consumer’s expectations, the consumer could reach out to the lender for additional information or assistance. The Bureau seeks comment on the burden on lenders of hosting, posting, and taking down notices on a webpage. It also seeks comment on alternative methods of electronic delivery that may be less burdensome. The Bureau invites comment on the proposed two-step disclosure process for electronic delivery, including whether the website link to the full payment notice introduces significant privacy concerns and whether more secure options for electronic delivery are available. The Bureau is aware that there may be additional methods of providing the disclosures required by § 1041. 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, pursuant to section 1032 of the Dodd-Frank Act. 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.

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The proposed definition is similar to what is commonly referred to as “take-home pay” but is phrased broadly to apply to income received from employment consolidation of payday loan debts, government benefits payday loan instant approval, or other sources top payday loan. It would exclude virtually all amounts deducted by the payer of the income, 523 whether deductions are required or voluntary, such as voluntary insurance premiums or union dues. The Bureau believes that the total dollar amount that a consumer actually receives after all such deductions is the amount that is most instructive in determining a consumer’s ability to repay. Other deductions may not be revocable, at least for a significant period of time, as a result of contractual obligations to which the consumer has entered. Even with respect to purely voluntary deductions, most consumers are unlikely to be able to reduce or eliminate such deductions, between consummation of a loan and the time when payments under the loan would begin to fall due. The Bureau also believes that the net amount a consumer actually receives after all such deductions is likely to be the amount most readily known to consumers applying for a covered longer-term loan (rather than, for example, periodic gross income) and is also the amount that is most readily verifiable by lenders through a variety of methods. The proposed definition would clarify, however, that net income is calculated before deductions of any amounts for payments under a prospective covered longer-term loan or for any major financial obligation. The Bureau proposes the clarification to prevent double counting any such amounts when making the ability- to-repay determination. The Bureau invites comment on the proposed definition of net income and whether further guidance would be helpful. Specifically, the definition of payment under the covered longer-term loan in proposed § 1041. It would define payment under the covered longer-term loan broadly to mean the combined dollar amount payable by the consumer in connection with the covered loan at a particular time following consummation. The proposed definition would further provide that in calculating the payment under the covered longer-term loan, the lender must assume that the consumer has made preceding required payments and that the consumer has not taken any affirmative act to extend or restructure the repayment schedule or to suspend, cancel, or delay payment for any product, service, or membership provided in connection with the covered longer-term loan. The Bureau believes that a broad definition, such as the one proposed, is necessary to capture the full dollar amount payable by the consumer in connection with the covered longer- term loan, including amounts for voluntary insurance or memberships and regardless of whether amounts are due to the lender or another person. It is the total dollar amount due at each particular time that is relevant to determining whether or not a consumer has the ability to repay 525 the loan based on the consumer’s projected net income and payments for major financial obligations. The amount of the payment is what is important, not whether the components of the payment include principal, interest, fees, insurance premiums, or other charges. The Bureau recognizes, however, that there is great variety in the repayment terms of covered longer-term loans, and that under the terms of some covered longer-term loans, a consumer may have options regarding how much the consumer must pay at any given time and that the consumer may in some cases be able to select a different payment option. The proposed definition would include any amount payable by a consumer in the absence of any affirmative act by the consumer to extend or restructure the repayment schedule, or to suspend, cancel, or delay payment for any product, service, or membership provided in connection with the covered longer-term loan. Proposed comment 9(a)(5)(i) and 9(a)(5)(ii)-1 includes three examples applying the proposed definition to scenarios in which the payment under the covered longer-term loan includes several components, including voluntary fees owed to a person other than the lender, as well as scenarios in which the consumer has the option of making different payment amounts. As explained in proposed comment 9(a)(5)(iii)-1, such rules are necessary because the amount and timing of the consumer’s actual payments on a line of credit after consummation may depend on the consumer’s utilization of the credit (i. As a result, if the definition of payment under the covered longer-term loan did not specify assumptions about consumer utilization and repayment under a line of credit, there would be uncertainty as to the amounts and timing of payments to which the ability-to-repay 526 requirement applies. It would require the lender to assume that the consumer will utilize the full amount of credit under the covered longer-term loan as soon as the credit is available to the consumer, that the consumer will make only minimum required payments under the covered longer-term loan, and, if the terms of the covered longer-term loan would not provide for termination of access to the line of credit by a date certain and for full repayment of all amounts due by a subsequent date certain, that the consumer must repay any remaining balance in one payment on the date that is 180 days following the consummation date. The lender would then apply the ability-to-repay determination to that assumed repayment schedule. The Bureau believes these assumptions about a consumer’s utilization and repayment are important to ensure that the lender makes its ability-to-repay determination based on the most challenging loan payment that a consumer may face under the covered longer-term loan. They also reflect the likely borrowing and repayment behavior of many consumers who obtain covered loans with a line of credit. Such consumers are typically facing an immediate liquidity need and, in light of the relatively high cost of credit, would normally seek a line of credit approximating the amount of the need. Assuming the lender does not provide a line of credit well in excess of the consumer’s need, the consumer is then likely to draw down the full amount of the line of credit shortly after consummation. Liquidity-constrained consumers may make only minimum required payments under a line of credit and, if the terms of the covered longer-term loan provide for an end date, may then face having to repay the outstanding balance in one payment at a time specified under the terms of the covered loan. It is such a payment that is likely to be the highest payment possible under the terms of the covered longer-term loan and therefore the payment for 527 which a consumer is least likely to have the ability to repay. Indeed, as discussed above in Market Concerns—Longer-Term Loans, consumers very often refinance or reborrow when such a high payment falls due, even after successfully making a series of lower, often interest-only minimum payments. The lender would then apply the ability-to-repay determination to that assumed repayment schedule. For any covered longer-term loan with a line of credit that does not provide for a date certain by which the outstanding balance must be repaid, the definition would require the lender to assume full repayment of the outstanding balance 180 days after consummation. It would ensure that lenders make the required ability-to-repay determination for an assumed repayment schedule that would result in full repayment of the loan and provide lenders with greater certainty as to how to comply with the requirements of § 1041. The Bureau invites comment on the proposed definition of payment under the covered longer-term loan.

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Proposed comment 9(b)-1 provides an overview of the baseline methodology that would be required as part of a reasonable determination of a consumer’s ability to repay in §§ 1041 i need payday loan today. Proposed comment 9(b)-2 would identify standards for evaluating whether a lender’s ability-to-repay determinations under proposed § 1041 advance cash loan online payday. It would clarify minimum requirements of a reasonable ability-to-repay determination; identify assumptions that payday loan canada, if relied upon by the lender, render a determination not reasonable; and establish that the overall 532 performance of a lender’s covered longer-term loans is evidence of whether the lender’s determinations for those covered longer-term loans are reasonable. The proposed standards would not impose bright line rules prohibiting covered longer- term loans based on fixed mathematical ratios or similar distinctions, and they are designed to apply to the wide variety among covered longer-term loans and lender business models. For many lenders and many loans, several aspects of the proposed standards will not be applicable at all. For example, a lender that does not make covered longer-term balloon-payment loans would not have to make the determination under proposed § 1041. Moreover, the Bureau does not anticipate that a lender would need to perform a manual analysis of each prospective loan to determine whether it meets all of the proposed standards. A lender would then apply its own policies and procedures to its underwriting decisions, which the Bureau anticipates could be largely automated for the majority of consumers and covered longer-term loans. It also provides additional interpretation of what makes a determination reasonable. For example, it would note that the determination must include the applicable determinations provided in § 1041. It would also have to be consistent with the lender’s written policies and procedures required under § 1041. The policies and procedures would specify the conclusions that the lender makes based on information it obtains, and lenders would then be able to largely automate application of those policies and procedures for most consumers. The provision would not require a lender to obtain information other than information specified in proposed § 1041. However, a lender might become aware of information that casts doubt on whether a particular consumer would have the ability to repay a 534 particular prospective covered longer-term loan. But if the lender learned that a particular consumer had a transportation or recurring medical expense dramatically in excess of an amount the lender used in estimating basic living expenses for consumers generally, proposed comment 9(b)-2. Instead, it would have to consider the transportation or medical expense and then reach a reasonable determination that the expense does not negate the lender’s otherwise reasonable ability-to-repay determination. The Bureau invites comment on the minimum requirements for making a reasonable determination of ability to repay, including whether additional specificity should be provided in the regulation text or in the commentary with respect to circumstances in which a lender is required to take into account information known by the lender. The first example is a determination that relies on an assumption that the consumer will obtain additional consumer credit to be able to make payments under the covered longer-term loan, to make payments under major financial obligations, or to meet basic living expenses. The Bureau believes that a consumer whose net income would be sufficient to make payments under a prospective covered longer-term loan, to make payments under major financial obligations, and to meet basic living expenses during the applicable period only if the consumer supplements that net income by borrowing additional consumer credit is a consumer who, by definition, lacks the ability to repay 535 the prospective covered longer-term loan. Although the Bureau believes this reasoning is clear, it is proposing the commentary example because some lenders have argued that the mere fact that a lender successfully secures repayment of the full amount due from a consumer’s deposit account shows that the consumer had the ability to repay the loan, even if the consumer then immediately has to reborrow to meet the consumer’s other obligations and expenses. Inclusion of the example in commentary would confirm that an ability-to-repay determination is not reasonable if it relies on an implicit assumption that a consumer will have the ability to repay a covered longer-term loan for the reason that the consumer will obtain further consumer credit to make payments under major financial obligations or to meet basic living expenses. Like the prior comment, the Bureau is including this comment in an abundance of caution lest some lenders seek to justify a decision to make, for example, a multi-payment, interest-only loan with a balloon payment on the ground that during the interest-only period the consumer will be able to accumulate savings to cover the balloon payment when due. A consumer who finds it necessary to seek a covered longer-term loan typically does so because she has not been able to accumulate sufficient savings while meeting her existing obligations and expenses. As discussed in Market Concerns—Longer-Term Loans, above, the high incidence of reborrowing and refinancing coinciding with balloon payments under longer-term loans strongly suggests that consumers are not, in fact, able to accumulate sufficient savings while making lower payments to then be able to make a balloon payment. A projection that a consumer will 536 accumulate savings in the future is purely speculative, and basing an ability-to-repay determination on such speculation presents an unacceptable risk of an erroneous determination. The Bureau therefore believes that basing a determination of a consumer’s ability to repay on such speculative projections would not be reasonable. The Bureau, invites comment on whether there are any circumstances under which basing an ability-to-repay determination for a covered longer-term loan on assumed future borrowing or assumed future accumulation of savings would be reasonable. In determining whether a lender has complied with the requirements of proposed § 1041. In some cases, a lender might have carried out these steps but still have violated § 1041. In other cases the reasonableness or unreasonableness of a lender’s determinations might be less clear. As discussed above, the Bureau recognizes that the affordability of loan payments is not the only 537 factor that affects whether a consumer repays a covered longer-term loan according to its terms without reborrowing. A particular consumer may obtain a covered longer-term loan with payments that are within the consumer’s ability to repay at the time of consummation, but factors such as the consumer’s continual opportunity to work, willingness to repay, and financial management may affect the performance of that consumer’s loan. Similarly, a particular consumer may obtain a covered longer-term loan with payments that exceed the consumer’s ability to repay at the time of consummation, but factors such as a lender’s use of a leveraged payment mechanism, taking of vehicle security, and collection tactics, as well as the consumer’s ability to access informal credit from friends or relatives, might result in repayment of the loan without reborrowing or other indicia of harm that are visible through observations of loan performance and reborrowing.

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