April 4, 2019

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In defense of payday loans

Attorneys general from California and other liberal states - many of which already ban payday loans - sent a nasty letter to the Consumer Financial Protection Bureau Director Kathleen Kraninger last week opposing her proposal to relax the Obama-era rules that would severely restrict the availability of payday, vehicle title, and other small-dollar loans.

The liberal AGs promised to sue the CFPB over the issue, and they might even find a sympathetic judge who will find that Obama administration executive actions cannot be reversed by Trump appointees. But that would be an unfortunate outcome for millions of Americans who rely on small-dollar loans as a necessary last resort - and who would end up suffering serious consequences if the Obama rules came into effect.

Obama-appointed CFPB Director Richard Cordray, a protege of Elizabeth Warren, was still on the job in 2017 when the agency issued rules requiring mandatory underwriting for small dollar loans. Underwriting is the process of looking at a borrower's overall financial obligations and ability to repay a loan. Mandatory underwriting for typical payday and other short-term loans would present an enormous administrative burden, add lengthy delays to products that are often used in urgent, emergency circumstances, and create a significant barrier for many borrowers when they lack any other options. Read more at STAR BEACON

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CALIFORNIA: More payday lenders than McDonald's: Calls grow for regulations on California's loan industry

If you are short on cash and need some money before your next paycheck, there is a quick fix for that, but you could end up paying a high price for it.

There are nearly 1,300 McDonald's in California and more than 1,700 licensed payday lenders, according to a report by the California Department of Business Oversight.

A study by Pew Charitable Trusts showed 5 percent of Californians take out a payday loan each year, adding up to nearly $3 billion annually.

Acquiring a loan doesn't take much. No credit score is necessary, just bring identification, proof of income, and a bank statement, and you can walk out with cash.

"People are falling prey to these really, really high-interest rates," said Antoinette Siu, a journalist who wrote an in-depth piece for CALmatters, a nonpartisan, nonprofit journalism venture, on the payday lending industry and the legislature killing a number of bills in 2018.

Siu reported in 2016 that more than 80 percent of the 11.5 million payday loans in the state were taken out by a repeat borrower, a practice known as loan stacking.

"If you aren't able to repay that, you end up taking out another loan and stacking it on top of those previous ones," she said. "Last year, 1 in 4 took out 10 or more of these loans in a year. So it's a very common thing." Read more at KSBY

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New Law in Effect in N.Y. Regarding Collection of Debts From Deceased Individuals

A new law went into effect in New York today that clarifies how collectors and creditors can attempt to collect d e bts from deceased individuals.

The bill, S3491A, was passed by the New York legislature and signed into law by Gov. Andrew Cuomo last December.

Under the law, creditors or collection agencies seeking to collect on a d e bt owed by an individual who is deceased must affirmatively inform surviving family members or next-of-kin that they are not legally obligated to repay the deceased individual's d e bts. Neither creditors nor collection agencies can make any representations that a surviving family member is required to pay the d e bt of a deceased individual "in a way that contravenes with established fair d e bt collection practices."

Said Gov. Cuomo, in a statement: "Grieving New Yorkers should not have to suffer the indignity and insult of being hounded by unscrupulous d e bt collectors. This new law puts d e bt collectors in check and creates important consumer protections that make it clear that an individual's surviving family members are not obligated to pay their loved one's d e bts."

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U.S. Chamber of Commerce: Government Should 'Recalibrate' Financial Regulations

Though today's economy is positive for most business owners, existing regulations may be hampering further opportunities for growth, according to a survey conducted by the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness (CCMC).

Released today at the start of the 13th Annual Capital Markets Summit in Washington, D.C., the Financing Main Street: The State of Business Financing in America survey polled more than 300 corporate finance professionals about their businesses' financial needs and how regulations have impacted their access to capital.

The survey grouped businesses based on their size, with small businesses defined as having less than 250 employees, midsize companies having 250 to 999 employees and large companies having 1,000 employees or more. Most of the companies that participated had operations in the U.S., while others operated in areas like Canada, Mexico and Europe.

"The way we measure whether our financial regulations are working is whether entrepreneurs of every size and shape in the country ... have access to the financial products they need to grow, start and expand their business," said David Hirschmann, CCMC president and CEO.

Lending as a Service

Income-Specific Defect Risk Stabilizes, According to First American's Loan Application Defect Index

SANTA ANA, Calif.--(BUSINESS WIRE)--Mar 29, 2019--First American Financial Corporation(NYSE: FAF), a leading global provider of title insurance, settlement services and risk solutions for real estate transactions, today released the First American Loan Application Defect Index for February 2019, which estimates the frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications. The Defect Index reflects estimated mortgage loan defect rates over time, by geography and loan type. It is available as an interactive tool that can be tailored to showcase trends by category, including amortization type, lien position, loan purpose, property and transaction types, and can provide state- and market-specific comparisons of mortgage loan defect levels.

February 2019 Loan Application Defect Index

The frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications increased by 4.4 percent compared with the previous month.
Compared to February 2018, the Defect Index increased by 14.5 percent.
The Defect Index is down 6.8 percent from the high point of risk in October 2013.
The Defect Index for refinance transactions increased by 3.6 percent compared with the previous month, and is up 24.6 percent compared with a year ago.


* Nearly half of Americans cannot afford a $400 unanticipated expense

America's community banks in danger of extinction due to credit union tax loophole

Congress must decide soon if it supports-and wants to maintain-the role that community banks play in our nation's economy. Many on Capitol Hill are on record about how much they like and support community banks. Yet, no action is being taken to close one of the most outdated and abusive tax loopholes: the exemption enjoyed by credit unions which has far outlived its usefulness and intended purpose.

In 1994, there were only 14 credit unions in the nation that were $1 billion or larger. Today, there are 300 and growing. Meanwhile, according to FDIC official records, the number of banks in our nation is at the lowest point in recent history. From a high of 18,033 in 1985, there were 5,477 as of the third quarter of 2018.

While the credit union industry argues that FDIC banks hold more in deposits than they do, the true and real comparison should be made between community bank and credit union deposits. For instance, in one of our largest urban areas in Florida, the Tampa Bay region with more than 4 million residents, Suncoast Credit Union, $9 billion in size, is larger than all community banks in the region combined. Yet Suncoast pays $0 in state and federal corporate taxes. This is an abuse of the nation's tax code. Read more at FOX BUSINESS

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Top 5 Markets for Payday Loans Companies

Payday loans have exploded over the last two decades, with lenders across the world offering cash-strapped consumers the opportunity to have money in their bank accounts in a matter of hours.

Designed to fill a gap in the market for those wanting to borrow smaller amounts of money over a shorter period of time, these high-cost short-term loans mainly advertise themselves as the solution for emergency expenses, such as cars repairs or a new boiler. In reality, as one leading payday loans broker in the UK discovered, it's not just unexpected expenses that make people take out payday loans, with 'pay bills' and 'home improvement' repeatedly given as the motivation behind applying for this type of finance.

Despite the often bad press than payday lenders receive, they still remain a popular choice for those who need cash, quickly. But where are the top 5 markets for payday loan companies?

1. USA
Despite the fact that loans are not legal in all US states, the USA is still the world's biggest payday lending market. Indeed, the "father of payday lending", Allan Jones, who founded Check Into Cash, came from the US. Read more at THE COSTA RICA NEWS

Compete in the data-driven lending era

What Are Push Payments & Why Do Lenders Need Them? by Kristen Hoyman

Thanks to the fintech industry, more firms are making more consumer loans at lower interest rates than ever before. Markets for consumer lenders are competitive both among the fintech newcomers and incumbent lenders. Fintech lenders, in particular, are looking for an advantage in the marketplace. Just providing a service the traditional banks don't offer isn't enough to make lenders stand out anymore. Now big banks are jumping into fintech style lending services as evidenced by Wells Fargo's FastFlex and Goldman Sachs' Marcus.

How does a fintech lender compete with the billions of capital the large traditional banks have at their disposal?

Fintech lenders rely on technology and use it as a competitive advantage. One way they can maintain an edge is integrating better technology into their payments systems. Push payment technology represents a huge opportunity in today's lending climate.

Push Payments v Pull Payments
Both pull and push payments are opportunities to make payments faster, easier, and cheaper for lender and borrower alike. A pull payment is standard for payments processing. In this case, the payment starts with the lender. The lender pulls the money from the borrower's account after the borrower provides all necessary information and payment authorization. This is also known as a debit transfer. Read more at REPAY

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BAV Advantage issues a highly-predictive score based on the same 350-800 scale used in traditional credit scoring. Unlike a traditional credit report, BAV Advantage uses the consumer's submitted bank routing and account number to deliver a cross-institutional view of banking behavior and past loan performance.

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Consumers First Act, Aimed to Bring CFPB Back to Statutory Purpose, Passes in House Financial Services Committee

Last week, the House Financial Services Committee passed H.R. 1500, the Consumers First Act, by a 34-26 vote. The legislation was initially introduced by Rep. Maxine Waters (D-CA) back in September 2018 as H.R. 6972, and then re-introduced in the new congress as H.R. 1500.

According to the Committee's press release, the Consumers First Act aims "to block the Trump Administration's anti-consumer agenda and reverse their efforts, led by Mick Mulvaney, director of the Office of Management and Budget, to dismantle the Consumer Financial Protection Bureau."

In March 2019, the Consumers First Act was front-and-center at the Consumer Financial Protection Bureau's (CFPB) annual report to congress, where Director Kathy Kraninger testified before both the House Financial Services Committee and the Senate Banking Committee. This set of hearings was the first for Director Kraninger since she took over leadership of the CFPB in December 2018. Many questions at these two hearings revolved around the actions taken by Director Kraninger's predecessor, Former Acting Director Mick Mulvaney, which the Consumers First Act attempts to undo.

The bill seeks to put a cap on the number of political appointees at the Bureau, to bring back enforcement of areas like payday lending, and to return the name of the Bureau to the Consumer Financial Protection Bureau or CFPB -- the latter already being done by Kraninger as one of her first acts as Director. Read more at insideARM

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

Tax deadline looms: Top tips for late filers

The tax deadline for 2019 is approaching, and if you haven't filed yet, now's the time to think about getting your paperwork in order.

Filing past the April 15 deadline, without an extension, could lead to penalties.

The failure-to-file penalty is typically 5 percent of the amount of taxes owed for each month, up to a maximum of 25 percent. When a return is filed more than 60 days after the deadline, it is subject to a minimum late filing penalty that is the lesser of either 100 percent of the tax required to be shown on the return that was not paid on time, or a specific dollar amount that has been adjusted for inflation ($210 for returns due between Jan. 1, 2018, and Dec. 31, 2019).

If you fail to pay your taxes by April 15, the penalty is 0.5 percent of the taxes not paid. The penalty is weighed each month after the due date until the bill is paid or the levy reaches 25 percent of unpaid taxes.

In order to avoid paying a penalty to the IRS this year, here's what you need to know as the deadline draws near: Read more at FOX BUSINESS

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Consumer Financial Protection Bureau Announces Policy Guidance on Disclosure of Home Mortgage Data

WASHINGTON, D.C. - The Consumer Financial Protection Bureau (Bureau) today announced final policy guidance describing the Home Mortgage Disclosure Act (HMDA) data the Bureau intends to make available to the public beginning in 2019, including modifications to protect consumers' privacy.

HMDA requires lenders to collect, report, and publicly disclose loan-level data about their mortgage applications, originations, and purchases. The purposes of HMDA are to provide the public and public officials with sufficient information to enable them to determine whether financial institutions are serving the housing needs of their communities; assist public officials in distributing public-sector investment so as to attract private investment to areas where it is needed; and assist in identifying possible discriminatory lending patterns and enforcing antidiscrimination statutes.

In 2015 the Bureau finalized changes to Regulation C, the CFPB's rule implementing HMDA, updating the quality and type of data that lenders must collect and report. These changes also shifted the responsibility for disclosing loan-level HMDA data from lenders to the HMDA supervisory agencies. The Bureau has stated that it intends to engage in rulemaking to reconsider aspects of the 2015 HMDA rule. Read more at The Consumer Financial Protection Bureau

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13 States Without Pension or Social Security Taxes

Reduce your retirement tax bills.

Retirees can help their savings last longer by moving to a place with lower taxes. These 13 states don't tax Social Security or pension income. However, they have very different property and sales tax rates, which should also be taken into consideration, according to data from Wolters Kluwer Tax & Accounting, the Tax Foundation and the U.S. Census Bureau. Check out these low tax places to retire.

The state of Alabama doesn't tax Social Security benefits or traditional pension payments. Property owners in Alabama paid a median of just $558 in real estate taxes in 2017. The state sales tax rate is also a relatively low 4 percent, but there may be additional local sales taxes in some areas of the state.

Alaska is the only state with no state income tax and no state sales tax. However, property taxes can be high. Homeowners paid a median of $3,117 for real estate taxes in 2017.
Read more at YAHOO FINANCE

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