August 27, 2019

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As An Economic Downturn Looms, Lenders Need To Start Now To Help Their Customers Weather The Storm

An economic downturn is coming soon. No one expects the next recession will be as "great" as the last one, but the outcome for consumers depends as much on how lenders treat them in the process as on the severity of the downturn. Have lenders learned anything from the last time?

While the exact timing of the next recession is anyone's guess, shrinking business investment, an inverted yield curve and stock market volatility point to the waning of the longest expansion in U.S. history. In the meantime, the situation on Main Street suggests there's plenty of shoring up to be done ahead of the storm.

In the current environment, managing through a downturn will require partnering with customers to help them work through financial challenges, as opposed to making the first and fastest claim on a consumer's assets.

Households are slightly less leveraged overall than they were a decade ago. This time, though, instead of mortgages, consumers have been taking out auto loans and personal loans to supplement stagnant wages, service their student loans, and afford rising housing and health care costs. According to TransUnion, outstanding personal loans totalled $138 billion and the end of 2018, a 200% increase from seven years ago. Read more at FORBES


US bankruptcy filings rose in July 2019 - what does that mean

Bankruptcy filings are on the rise as Americans pile up more debt. The latest ABI data pegs household debt near $14 trillion, which is $1 trillion more than the 2008 Great Recession peak.

According to the American Bankruptcy Institute, U.S. bankruptcy filings in July 2019 were up 3% from the same time a year ago. But bankruptcy filings have actually been declining over the past eight years year-over-year, so "2019 is the first year in that span to project an increase," Samuel Gerdano, executive director of the American Bankruptcy Institute, told Yahoo Finance's On the Move. "Historically, filings correlate with economic activity, particularly in the consumer sector because 98% of all bankruptcies are filed by individuals with household debt. So, we typically look to the household debt sector as consumers do their part to grow sustain the economy."

But Gerdano pointed out that it is just six months of data "so you have to be careful not to draw too many conclusions."

What the latest data reveals is that the economy is healthy because consumers are spending money, he said. According to Gerdano the economy has been driven by consumers over the past couple of years and this has an effect on household balance sheets.
Read more at YAHOO MONEY


Credit card rates keep going up, and Americans are getting trapped

The Federal Reserve may be lowering federal interest rates again these days, but credit card interest rates are rising.

Credit card interest rates increased 3.4 percentage points since 2015, according to data from the Federal Reserve of St. Louis, and have been rising since 2011.

And for Americans carrying credit card balances month over month, therein lies the trap: While consumer confidence hit an 18-year high in September 2018, credit card interest rates hit a 25-year high.

And those rates haven't gone down since (while consumer are starting to feel the pain from the ongoing trade war).

Credit cards amounted to a nationwide debt of $870 billion in the second quarter of 2019, according to the Federal Reserve data, which was a $20 billion increase from the first quarter of the year. On average, the American household carried a $6,028 credit card balance.
Read more at YAHOO MONEY

Dreher Tomkies LLP
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State Attorneys General and Carriers Announce Collaboration to Stem Illegal Robocalls

Today, the State Attorneys General of North Carolina, New Hampshire, and Arkansas announced a set of Anti-Robocall Principles that, to date, have been agreed upon by twelve carriers to combat illegal robocalls. All 50 State Attorneys General, plus the District of Columbia, have also signed on.

The agreement commits the signatories to combat illegal robocalls through prevention and enforcement reflected by the following eight principles:

Principle #1. Offer Free Call Blocking and Labeling. For smartphone mobile and VoIP residential customers, make available free, easy-to-use call blocking and labeling tools and regularly engage in easily understandable outreach efforts to notify them about these tools. For all types of customers, implement network-level call blocking at no charge. Use best efforts to ensure that all tools offered safeguard customers' personal, proprietary, and location information.

Principle #2. Implement STIR/SHAKEN. Implement STIR/SHAKEN call authentication.

Principle #3. Analyze and Monitor Network Traffic. Analyze high-volume voice network traffic to identify and monitor patterns consistent with robocalls.
Read more at INSIDEARM


Personal loan apps with payoff within 60 days to be barred from Google Play Store

Personal loan apps which require repayment in full within 60 days from the date of issuance will not be allowed on the Google Play Store, according to its new developer policy. Additionally, apps for personal loans must disclose the following information in the app metadata:

Minimum and maximum period for repayment.
Maximum Annual Percentage Rate (APR), which includes interest rate plus fees and other costs for a year, or similar other rate calculated consistently with local law.
A representative example of the total cost of the loan, including all applicable fees.

The policy also mandates that an individual can borrow money from one individual, organization, or entity to only on a nonrecurring basis; also, these loans cannot be used for financing the purchase of a fixed asset or for education.
Read more at MEDIANAMA


Here's how many Americans are struggling to pay their credit card balance in full

Many Americans are struggling to pay their credit card balances in full, according to a new report.

In fact, women are struggling the most, found in its monthly Credit Card Confidence Index.

Women are actually three times as likely as men to say they aren't confident at all in being able to pay their full credit card balance this month, the report found.

"We're starting to see signs that the nation's $1 trillion credit card debt is finally taking a toll on cardholders' confidence. This isn't a full-blown crisis, by any stretch, but it doesn't seem to be a one-month blip either," Matt Schulz, chief industry analyst at CompareCards, said in a statement.

"With fewer people paying their statement balances in full and cardholder confidence dipping to yearly lows, this is clearly something that bears watching," Schulz added.
Read more at FOX BUSINESS

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As U.S. watchdog retreats, mortgage firms reprise cozy marketing arrangements

WASHINGTON (Reuters) - U.S. mortgage firms are getting back into joint marketing and advertising arrangements, reviving a controversial practice that was effectively banned in the aftermath of the 2007-2008 subprime mortgage crisis.

Such arrangements involve mortgage originators and title insurers, hungry for sales leads, paying a real estate broker or homebuilder to promote their services and products, or to rent a desk in their offices.

They were effectively banned by the Obama administration under the Consumer Financial Protection Bureau's then director, Richard Cordray. He brought more than two dozen enforcement actions, including against big banks like JPMorgan Chase and Wells Fargo & Co, alleging the arrangements violated federal laws that bar kickbacks or referral fees that could increase the cost of buying a home.

In interviews, nearly two dozen lawyers, consultants and mortgage executives told Reuters that the CFPB's sharp pullback under the Trump administration has emboldened the industry to get back into these arrangements. Read more at REUTERS


This Is How Much Americans Are Earning at Every Age

It's human nature to be curious about how much money other people your age are earning. But while it's tempting to try to keep up with the Joneses, more money won't solve all your problems.

Roughly a quarter of U.S. households earning $150,000 or more per year are living paycheck to paycheck, according to a survey from Nielsen Global Consumer Insights, so a higher salary doesn't always equate to financial health.

That said, there's no harm in simply seeing what others are earning and how their retirement savings stack up to yours. But it's also important to understand whether your savings are on track for you to retire comfortably, regardless of how your salary and savings compare to that of others.

The average salary among American workers varies between men and women, and it also depends on age. Here's what the average man and woman are earning across various age groups, according to data from the U.S. Bureau of Labor Statistics:
Read more at THE MOTLEY FOOL


The CFPB's reckless plan for Debt Collection

WE LEARN IN email 101 that hyperlinks from unfamiliar senders are breeding grounds for scams. Microsoft has warned against clicking on foreign links for decades. The Federal Trade Commission has repeatedly cautioned Americans to be wary of malware and phishing expeditions. Last year, the Federal Communications Commission alerted consumers to a new cyber threat it dubbed "smishing"-targeting consumers with deceptive text or SMS messages-and urged consumers to "never click links, reply to text messages or call numbers you don't recognize."

The Consumer Financial Protection Bureau apparently skipped these lessons. Despite many warnings, the CFPB has proposed a rule that could require consumers to click on hyperlinks in unfamiliar emails. The proposal allows debt collectors to deliver important information about a debt and a consumer's rights via links in text messages and emails-without first obtaining consent to electronic communications, as is normally required under federal law.

Debt collectors are required to send a "validation notice" that tells a consumer when a debt has been placed in collection and that the consumer has the right to get information to be able to verify or dispute it. When Congress enacted the Fair Debt Collection Practices Act in 1977, it considered the validation notice critical to minimizing mistaken identity and errors on the amount or existence of a debt. Read more at WIRED

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Earned Wage Access Should Be Available to All Employees

The new niche industry of earned wage access has the potential to benefit millions of employees so long as it can play well with regulators

Like many areas of fintech, earned wage access (sometimes called earned income access or payroll advances) wasn't really a thing until recently. Now, it is a thriving niche industry with companies such as PayActiv, Earnin, Even, DailyPay, HoneyBee and others providing offerings in this space.

In a sign that earned wage access is gaining mainstream approval Walmart signed a deal with PayActiv and Even back in 2017 to allow its workers early access to their pay. Currently over 300,000 Walmart associates take advantage of this service.

Before we go any further, I should define earned wage access. It is a mechanism for employees to get access to wages they have already earned. It breaks up the weekly, biweekly, or monthly pay cycles so workers can receive money that is rightfully theirs before payday. Typically, workers will pay a small fee for this service. Earned wage access is not credit and thus it has very little in common with traditional loan products.

Dan Quan, former head of innovation at the CFPB penned an excellent article on this topic in American Banker a couple of months ago. Here is a quote from that article (he calls it Earned Income Access - or EIA): Read more at LEND ACADEMY


These are the best cities for middle-class families, by state: Report

It can be difficult to choose a place to live if you have a family. There is any number of factors you have to consider, from housing costs to education systems.

A recent report by Simple Thrifty Living looked at cities across all 50 states to find which ones were the best for middle-class families

The site looked at data for more than 9,500 cities in the U.S. across seven factors including income, real estate taxes, home value, unemployment, college education, school and job availability.

Cities were only ranked against other cities in their state, according to the report.

For each state, the website listed the 100 best cities where possible (states like Hawaii had fewer than 100 cities listed). Read more at FOX BUSINESS


This is America's No. 1 college major for salary and job availability

One college major offers smooth sailing above all others for students seeking a secure, well-paying job.

Naval Architecture and Marine Engineering is the most valuable major, according to ranking a ranking of 162 college majors released Monday by personal-finance site

Students majoring in the field learn how to design ships and their inner workings, but the study said they'll also learn not to worry about finding a good job.

People with naval architecture and marine engineering major earned an $90,000 median annual income and had a 1.6% unemployment rate. Twenty-nine percent had higher degrees, Bankrate said after reviewing 2017 U.S. Census Bureau data.

On average, the median annual income for all majors was $55,000 and a 2.8% unemployment rate, with 37% holding higher degrees. Read more at MarketWatch


Why Your Financial Wellness Program Might Make You Sick

When I joined Financial Finesse (the company that basically created the financial wellness industry 20 years ago) as a Personal Financial CoachTM in 2015, no one really knew what I meant when I said I worked for a financial wellness company. I had to come up with all sorts of creative ways to describe what I do so that people would understand that a) I don't manage investments and can't tell you how to time this market or what stock to buy (although I will say just stay in unless you need the money in the coming few years) and b) I don't accept clients, but I work with real people all day every day. It was a strange concept. Most people only understood what a financial advisor does and unless they were looking for a product or had just come into some money they weren't planning to spend right away, they shied away from me, thinking I might try to sell them anyway.

The wild west of 'financial wellness'
It's amazing how quickly things can change in just 4 short years. Thanks to some large financial services companies throwing major ad dollars behind their own scrambles to get in on this "hot, new way to get employers to pay you and then give you access to their untapped employees," pretty much everyone has at least heard of financial wellness, and they generally understand that it's usually tied to your work and is supposed to help you with your money. Now I'm often the person who gets cornered at parties and family gatherings, helping someone work through a financial question they have. Read more at FORBES


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