- Source: aba.com
The 1071 Final Rule (1071 Rule or The Rule) was a long time coming, making demands on small business lenders for additional data collection and reporting. Treliant’s Regulatory Compliance, Mortgage, and Operations Solutions practice specializes in practical, customized solutions for complex requirements. Our team of lending professionals stands ready to help you build and implement the right solutions at the right time.
On July 31, 2023, U.S. District Court Judge Randy Crane, of Texas, granted the Texas Bankers Association (TBA) and co-plaintiffs, Rio Bank of McAllen, Texas, and the American Bankers Association (ABA) a Preliminary Injunction, “sparing TBA and ABA members from having to devote time and resources complying with the rulemaking until the Supreme Court resolves a separate case involving the constitutionality of the CFPB’s funding.”
The ABA, in its press release stated, “we believe the injunction is a recognition of the complexity of the 1071 Final Rule and the significant costs and burdens it places on our members, particularly community banks which provide much of the country’s small business lending.”
The U.S. Supreme Court is scheduled to address the constitutionality of the CFPB’s funding structure in its next term with a decision by June 2024. Those entities that are not part of the TBA or ABA continue to be required to implement the 1071 Rule.
As small business lenders digested The Rule, it became apparent that applications processes across the impacted business lines were largely inconsistent and, in some cases, especially for community banks, wholly manual. An industry leader said, “this gives us a sigh of relief to do this very well and thoughtfully, but shouldn’t stop our focus. It may buy us an extra 6-9 months, but it is highly unlikely the rule will be scrapped.” She added, “use the time to be purposeful, but keep moving forward.”
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