Ensuring Compliance with SDLR

As a lender, preparing for the SDLR may feel daunting—but with the right approach, you can turn this challenge into an opportunity to modernize your operations. Let’s break down the steps you can take to ensure compliance while minimizing disruptions.

Step 1: Audit Your Loan Portfolio

The first step in preparing for the SDLR is understanding which loans fall under its scope. Take a close look at:

• Short-term loans repayable within 45 days.
• Longer-term loans with balloon payments or an APR exceeding 36%.
• Loans tied to automatic payment mechanisms (ACH, cards).

This audit will give you a clear picture of where to focus your compliance efforts. Don’t overlook loans that may fall into gray areas—better safe than sorry when it comes to CFPB regulations.

Step 2: Upgrade Your Payment Systems

Next, assess whether your systems are equipped to handle SDLR requirements. Can your Loan Management System (LMS) or payment processor:

• Track failed payment attempts in real-time?
• Send accurate borrower notifications automatically?
• Retain records securely for 36 months?

If your current systems aren’t up to the task, it’s time to explore upgrades or integrations. A compliance-ready system will save time and reduce the risk of costly errors.

Step 3: Streamline Borrower Notifications

Under the SDLR, communication with borrowers must be timely, accurate, and compliant:

• Initial Notifications: Include repayment terms in the signed loan agreement.
• Subsequent Notices: Notify borrowers 3-10 business days before payment attempts that deviate from previous terms.
• Consumer Rights Notices: If two consecutive payment attempts fail, borrowers must be informed of their rights and next steps.

This might seem complex, but with the right tools, these communications can be automated and streamlined.

Step 4: Train Your Team

Your team is critical to your compliance strategy. Equip them with:

• Knowledge of SDLR provisions.
• Clear guidelines for managing notifications and tracking failed attempts.
• Confidence in leveraging your compliance tools effectively.

How Payliance Simplifies Compliance

Payliance offers a range of solutions tailored to SDLR compliance:

• Pre-Built Notification Templates: Eliminate manual errors in borrower communications.
• Real-Time Monitoring: Stay ahead of prohibited actions with proactive alerts.
• Seamless LMS Integration: Avoid the need for costly system overhauls.

Take Action Today: Contact Payliance to explore how our tools can simplify compliance and keep your operations running smoothly.