The Board appreciates the commenters issues in regards to the burden extortionate charges put on borrowers.
Section 701.21(c)(7)(iii)(A)(7) allows an FCU to charge a fair application cost, not to ever meet or exceed $20, to all or any people trying to get a PALs I loan. The Board interprets the definition of вЂњapplication fee,вЂќ as used into the PALs we rule, regularly with that associated with the CFPB’s legislation Z. consequently, so that you can qualify being an вЂњapplication feeвЂќ beneath the PALs we rule, an FCU must make use of the fee to recuperate real expenses associated with processing an application that is individual credit such as for instance credit history, credit investigations, and appraisals.  An application cost that surpasses the specific price of processing a debtor’s application try just a finance fee under Regulation Z that must definitely be within the APR and calculated contrary to the usury roof in the NCUA’s guidelines. 
As a result to your PALs II NPRM, a few commenters argued that the present application cost restriction of $20 is simply too lower to permit an FCU to recuperate the specific prices of processing applications. Nearly all these commenters suggested that the Board ready the application form cost restriction between $40 and $50 to produce a reason to get additional FCUs to supply PALs loans with their customers. The Board does not believe that an Start Printed Page 51946 application fee limit between $40 and $50 is appropriate because of the limited underwriting involved with a PALs loan. A majority of the commenters have not provided sufficient data to support their conclusion that the $20 application fee limit is too low to allow any FCU to recover the actual costs of processing applications while one commenter provided a revenue model to help illustrate the potential cost of making a PALs loan. Read More