AFSPA
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
June 25, 2019

The US Treasury is calling for mandatory financial literacy courses for college students

The U.S. Department of the Treasury released a new report on behalf of the Financial Literacy and Education Commission that recommends mandatory financial literacy courses for college students.

With the cost of college rising faster than incomes and a staggering 44 million Americans owing more than $1.5 trillion in student loans, there has been growing concern that students and their families are taking on debt without truly understanding the long-term impact.

Indeed, there is a lot of research exploring this national problem: Nine out of 10 parents and students failed a 2018 quiz about student loan debt. Meanwhile, MarketWatch reported that half of college students taking an AIG survey on personal finance basics got two or fewer questions correct. And in a recent survey from the Brookings Institution, less than 30% of student respondents could correctly answer three questions on inflation, interest and risk diversification.

"Helping students and their families avoid the pitfalls associated with financing higher education, and empowering them to make optimal financial choices, should be a priority of all institutions of higher education," the report reads.  Read more at CNBC

CFSA

FACTS ABOUT SMALL-DOLLAR LOANS
  • Only 1.5% of all consumer complaints submitted to the CFPB concern small-dollar loans - far below other financial products like mortgages, credit cards, and student loans
  • CFPB and Better Business Bureau (BBB) data indicates that a majority of complaints about small-dollar loans are likely related to scams, not regulated lenders
  • Nearly half of Americans cannot afford a $400 unanticipated expense

Bank of America CEO: 'We Want a Cashless Society'

Bank of America CEO Brian Moynihan kicked off Fortune's inaugural Brainstorm Finance conference in Montauk, N.Y., on Wednesday by discussing the tech-driven strides made by one of the country's largest financial institutions.

Speaking with Fortune editor-at-large Shawn Tully, Moynihan touched on BoA's embrace of artificial intelligence-driven technology via applications like Erica, a voice-activated virtual assistant used by 7 million customers. By his estimation, the financial institution has "probably spent $30 billion on code" over the past eight years to develop and improve its technological infrastructure.

With 27 million mobile customers, 37 million digital customers, and more than half of its transactions already "digitized" via methods like payments application Zelle, Moynihan said the banking industry "will continue to move" toward a digital, tech-enabled models-which, as he noted, are cheaper and more efficient than traditional methods.

"If you think about the major types of technology that people talk about-voice recognition, artificial intelligence, machine learning, robotics-all of those apply to our industry," he said. "That's how we reduce the size of our company, [by] applying technology across all procedures."
Read more at FORTUNE

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Dreher Tomkies LLP
Dreher Tomkies LLP is a law firm concentrating in the areas of Banking and Financial Services law.

Fintech algorithms discriminate 40% less than traditional lenders

Algorithmic fintech lending is less discriminatory against minorities than traditional loan officers, according to a recent study of US mortgages. The findings signal hope that technology could provide financing that's more fair, but the research also underscores how widespread discrimination remains.

The US housing market has long been prejudiced against minorities. When Latino and Africa-American borrowers are looking to buy a home, they usually end up paying 7.9 basis points (0.079 percentage points) more than whites to take out the mortgage, and 3.6 basis points more when they refinance the debt, according to a National Bureau of Economic Research working paper published this month.

That comes to $765 million in additional interest costs each year. The researchers also estimated that discrimination may have resulted in as many as 1.3 million mortgage applications being rejected between 2009 and 2015.

Algorithms tend to have a better record. Online financial technology companies discriminate, too, but 40% less than loan officers who make decisions face-to-face, the NBER researchers found. They also found no discrimination from the robots when it comes to loan approvals.
Read more at QZ.COM

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US Dept of Treasury
Agencies Release List of Distressed or Underserved Nonmetropolitan Middle-Income Geographies

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency today announced the availability of the 2019 list of distressed or underserved nonmetropolitan middle-income geographies, where revitalization or stabilization activities are eligible to receive Community Reinvestment Act (CRA) consideration under the community development definition.

Distressed nonmetropolitan middle-income geographies and underserved nonmetropolitan middle-income geographies are designated by the agencies in accordance with their CRA regulations. The criteria for designating these areas are available on the Federal Financial Institutions Examination Council (FFIEC) website (http://www.ffiec.gov/cra). The designations continue to reflect local economic conditions, including unemployment, poverty, and population changes.

As with past releases, the agencies apply a one-year lag period for geographies that were listed in 2018 but are no longer designated as distressed or underserved in the current release. Revitalization or stabilization activities in these geographies are eligible to receive CRA consideration under the community development definition for 12 months after publication of the current list.
Read more at U.S. DEPARTMENT OF THE TREASURY

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AFSPA
Dreher Tomkies LLP

Dreher Tomkies LLP is a law firm providing services to financial institutions nationwide. We concentrate in the areas of banking and financial services law. The Firm's practice encompasses all aspects of financial services provided by creditors to consumers and business entities. The Firm's clients range from Fortune 500 companies and foreign-owned enterprises to small businesses, including diversified companies, banks and bank holding companies, investment bankers, investment funds, finance companies, credit and charge card issuers, mortgage bankers, retailers, debt purchasers, manufacturers, industry and trade associations, and coalition and issue groups.

Our attorneys routinely advise clients on consumer lending, home equity lending, first and second mortgage lending, private label and general purpose credit card lending, student lending, retail sales financing, payday lending, title lending, RAL lending, agricultural lending, wholesale financing, inventory financing, business revolving credit and charge programs, factoring, health care and medical financing, deposit taking, home banking, annuity and insurance sales, GAP programs, reinsurance, debt cancellation and suspension, debt collection compliance, money transmitting, state and federal regulatory compliance, and the licensing and chartering of institutions.


TransUnion
Alt Data is the key to compete effectively

Housing Financial Literacy Act advances Financial Services Committee

The House Committee on Financial Services has voted to advance the Housing Financial Literacy Act of 2019, which is designed to aid first-time homebuyers.

The measure, introduced by Rep. Joyce Beatty (D-OH), provides first-time homebuyers with a discount on their Federal Housing Administration (FHA) mortgage insurance premium of 25 basis points.

"Motivating first-time homebuyers to seek vital pre-purchase counseling and equipping them with the much-needed financial skills and tools to make informed financial decisions benefits their families, the surrounding neighborhood, and our entire economy," Beatty said. "I am pleased to see my bill move one step closer to becoming law and many thanks to my Democratic and Republican colleagues for their support."

The effort involves first-time homebuyers completing a Department of Housing and Urban Development (HUD)-certified housing counseling course to be eligible for the discount. Studies confirm homebuyers receiving pre-purchase housing counseling are nearly one-third less likely to fall behind on their mortgage and face a reduced risk of foreclosure.
Read more at Financial Regulation News

ValidiFI
Redefining how financial service businesses measure risk and process payments.

Measure seeks to expand credit access

A bipartisan group of senators recently introduced a bill designed to expand credit access opportunities for Americans.

Sens. Angus King (I-Maine), Joe Manchin (D-WV), Tim Scott (R-SC), Doug Jones (D-AL), Mike Rounds (R-SD), Jon Tester (D-MT) and Tom Cotton (R-AR) said the Credit Access and Inclusion Act of 2019 addresses circumstances in which Americans
do not have a history of traditional loan payments, such as student loans, mortgages, and car loans.

"Oftentimes, Americans who struggle with access to credit are able to pay their bills - but the recurring bills they pay are not included in the credit rating process," King said. "Maine people who pay their phone and utility bills on time every month should be able to point to these bills as an example of credit because these are the major expenses they incur every month. This bill is about giving people the chance to establish themselves and open up new avenues to success - it doesn't get more common sense than that." Read more at Financial Regulation News

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Alternative Credit Reporting
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Alchemy
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CALIFORNIA: Bill That Limits Payday Lenders' Profits Might Actually Hurt The Poor

A California bill that was already passed by the Assembly and is now in the Senate would put a cap on how much payday lenders may charge Californians for loans between $2,500 and $10,000. It would also bar California Financing Law (CFL) licensees from imposing penalties for prepayments.

According to AB 539's co-author, Assemblywoman Monique Limón (D-Santa Barbara), the bill fixes a loophole that allows payday lenders to charge higher interest rates on loans that are higher than $2,500. This, she wrote in an op-ed, prompted lenders to "push consumers toward much larger loans."

The bill extends a 36 percent cap on loans between $2,500 and $10,000. However, it doesn't apply to all payday lenders operating in California, since OneMain, Opportun, and Lendmark, which had already established limited interest rates, are exempted. These companies are also supporters of the bill, according to the California Globe. Read more at THE EPOCH TIMES

Payliance
Payliance: Powerful Payment Processing Technology

Financial regulation for tech companies like Facebook just got more urgent

Financial regulators have spent centuries working on ways to contain banks, making sure their services are fair and they won't crash the economy. As big technologies companies like Facebook and Tencent tread deeper into finance, these watchdogs are going to have to expand the way they oversee the financial system.

Silicon Valley's biggest companies have been making inroads into finance in Europe and North America, but the process has moved much more quickly in China. This makes sense: Technology upstarts have had more success in developing economies where the financial infrastructure, from regulation to bank branches, is less entrenched. WeChat Pay and Alipay, run by technology titans Tencent and Ant Financial, respectively, have gobbled up market share in China, while US-based Google and Facebook have lagged behind in their domestic markets when it comes to financial services.

Now, with the Libra cryptocurrency, Facebook and its 27 partners are looking to radically overhaul how things are paid for online and across borders, particularly in places where financial systems are underdeveloped. Wall Street executives have long worried about data-centric tech business models disrupting traditional banking. Read more at QUARTZ

MaxDecisions
Lending as a Service
AFSPA
TransUnion

As More Off-Lease Vehicles Go to Market, Used Car Demand for Prime and Above Consumers Rises

While used vehicle financing has traditionally been associated with non-prime borrowers, a new TransUnion (NYSE:TRU) study has found that consumers across the credit spectrum are increasingly evaluating used vehicles as a more practical option. This trend is especially noteworthy among consumers with prime and higher credit scores, and is believed to be driven in part by the influx of off-lease vehicles to the marketplace.

The study found that, contrary to popular belief, prime and above consumers are making up the majority of used vehicle finance transactions. From 2016 to 2018, these lower-risk consumers generated 56% of used vehicle loans. Over the past five years, used vehicle sales have accelerated from 1.3% year-over-year growth in 2014 to 3.1% in 2018. Meanwhile, new vehicle sales have slowed across all risk tiers, falling to 0.6% year-over-year growth in 2018, down from 5.9% in 2014


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Financial regulation for tech companies like Facebook just got more urgent

Financial regulators have spent centuries working on ways to contain banks, making sure their services are fair and they won't crash the economy. As big technologies companies like Facebook and Tencent tread deeper into finance, these watchdogs are going to have to expand the way they oversee the financial system.

Silicon Valley's biggest companies have been making inroads into finance in Europe and North America, but the process has moved much more quickly in China. This makes sense: Technology upstarts have had more success in developing economies where the financial infrastructure, from regulation to bank branches, is less entrenched. WeChat Pay and Alipay, run by technology titans Tencent and Ant Financial, respectively, have gobbled up market share in China, while US-based Google and Facebook have lagged behind in their domestic markets when it comes to financial services.

Now, with the Libra cryptocurrency, Facebook and its 27 partners are looking to radically overhaul how things are paid for online and across borders, particularly in places where financial systems are underdeveloped. Wall Street executives have long worried about data-centric tech business models disrupting traditional banking. Read more at QUARTZ

  NDH
National Debt Holdings is a professional Receivables Management Company that partners with creditors to purchase and/or manage receivables at all stages of the account life cycle.
AFSPA
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

Alternative Financial Service Providers Association
757.737.4088

315 Tuscarora St., Lewiston, NY 14092
dan@afspassociation.com
www.afspassociation.com