September 17, 2019
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Advocates seek 'unified voice' from regulators on small-dollar loans

U.S. consumers borrow nearly $90 billion every year in loans between $300 and $5,000, according to the OCC. But few banks are moving into that market.

Nearly 40 percent of American adults either would have to borrow or sell something to cover a $400 unexpected expense, or they wouldn't be able to cover it, according to the Federal Reserve Board's Report on the Economic Well-Being of U.S. Households, published in May.

That figure represents a modest improvement from the previous year's data, but it illustrates how a sizable portion of the U.S. population struggles in the short term.

Advocates have pushed for more banks to offer small-dollar loans as an alternative to the predatory lending to which this cash-strapped demographic is often susceptible.

Regulators have been slow to offer guidance to support banks that want to enter the space, said Kate Hao, the founder and CEO of Happy Mango, a fintech that helps banks and credit unions provide small-dollar loans to individuals with tarnished credit.
Read more at BANKING DIVE


Key Ruling on Native American Sovereign Immunity Stands-for Now. by Paul Mengel III. PilieroMazza PLLC

The Fourth Circuit case Williams v. Big Picture Loans[1] is being hailed as a major victory for Native American sovereign immunity rights. For entities owned by Native American tribes, the case stands as an important ruling for determining arm-of-the-tribe sovereign immunity. The case may be appealed to the Supreme Court.


The Lac Vieux Desert Band of the Lake Superior Chippewa Indians (the Tribe) formed two business entities under tribal law: Big Picture Loans, LLC, to serve as an independent lending entity and Ascension Technologies, LLC, to provide loan-related services (the Entities). Big Picture employed 15 members of the Tribe; Ascension employed 31 individuals, most of whom, including its president, were not tribal members. The Tribe also formed Tribal Economic Development Holdings, LLC (TED) to manage its lending operation, which became Big Picture and Ascension's parent company. The Tribe was the sole member of TED, which became Big Picture's and Ascension's sole member. Eventually the arrangement was that Big Picture would make a distribution to TED of its gross revenues, then TED would reinvest 2% of gross revenues into Big Picture's loan portfolio. TED also initially distributed 2%, which would later rise to 6%, to the Tribe.
Read more at JDSUPRA


House Financial Services Committee advances series of bills

The House Financial Services Committee advanced a series of bills this week, including one that is designed to enhance the coordination of state and federal banking agencies in regulating the activities of bank service companies.

The Bank Service Company Examination Act (H.R. 241) would amend the Bank Service Company Act (BSCA) to both enhance regulatory coordination and allow for the sharing of information related to examinations and regulations. It was introduced by Rep. Roger Williams (R-TX) with Rep. Greg Meeks (D-NY) as a cosponsor.

Additionally, the committee approved the Homebuyer Assistance Act of 2019 (H.R. 2852), a bill that would help alleviate the current shortage of certified appraisers. It was introduced by Rep. Brad Sherman (D-CA).

The committee also approved the Ensuring Diverse Leadership Act of 2019 (H.R. 281), which would require the Federal Reserve Bank to interview at least one individual reflective of gender diversity and one reflective of racial or ethnic diversity in making the appointment of a regional bank president. This bill was introduced by Rep. Joyce Beatty (D-OH).
Read more at Financial Regulation News


Launch Your Own Mobile Payment App. by Kristen Hoyman

Make it easy for customers to pay and stay with your very own mobile payment app.

People use their smartphones for so many things other than making actual calls. In a late 2017 Statista survey, almost one-third of smartphone owners reported that they use their phones to make calls either occasionally, seldom, or never.

Yet, almost two-thirds of smartphone users use their mobile browsers regularly and more than 70% use the messaging functionality regularly or very often. Aside from texting, there are many mobile apps in the Messages category, including Slack, WhatsApp, Asana, Basecamp, Telegram, Discord and more.

The bottom line: people are on mobile apps. A LOT. This includes your customers. In fact, eMarketer conducted a fascinating study in late 2017. The study concluded that people are on their mobile phones for longer periods each day (no surprise there). The surprise, however, was that the time spent in mobile browsers is declining and time spent using mobile apps is increasing. At the same time, the number of apps people are using is dropping. People all over the country, including your customers, are on their phones more, browsing less, and using fewer apps more frequently.
Read more at REPAY

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California Just Made It Harder for Americans to Access Credit, Short-term Loans

California passed new legislation to limit the amount of interest that can be charged on short-term, small loans. In effect, it will drive those lenders out of business and leave low-income Americans with less access to capital.

You might think that capping interest rates sounds reasonable. After all, no one wants poor people borrowing money at interest rates they can't afford.

However, these small, high-interest loans are what many (poor) people rely on and prefer. While waiting for their next paycheck, they may not have emergency savings to cover a bill that's due.

Short-term loans (also called payday loans) may be the best offer for those who don't have good credit and can't get the cash they need quickly. A high-interest rate is an incentive to repay the loan quickly and most people do.

When lawmakers limit interest rates on these loans, the lenders can't afford the risk and costs and will stop offering these financing options. As a result, they shut down and Americans end up with fewer ways to access credit quickly when they need it.
Read more at Independent Women's Forum


NEVADA: State, major payday lender again face off in court over "refinancing" high-interest loans

One of Nevada's largest payday lenders is again facing off in court against a state regulatory agency in a case testing the limits of legal restrictions on refinancing high-interest, short-term loans.

The state's Financial Institutions Division, represented by Attorney General Aaron Ford's office, recently appealed a lower court's ruling to the Nevada Supreme Court that found state laws prohibiting the refinancing of high-interest loans don't necessarily apply to a certain kind of loan offered by TitleMax, a prominent title lender with more than 40 locations in the state.

The case is similar but not exactly analogous to another pending case before the state Supreme Court between TitleMax and state regulators, which challenged the company's expansive use of grace periods to extend the length of a loan beyond the 210-day limit required by state law.

Instead of grace periods, the most recent appeal surrounds TitleMax's use of "refinancing" for individuals who aren't able to immediately pay back a title loan (typically extended in exchange for a person's car title as collateral) and another state law that restricted title loans to only be worth the "fair market value" of the automobile used in the loan process.
Read more at The Nevada Independent


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Read more at MICROBILT


Don't be surprised if that credit score you see is not what a lender actually uses

Earlier this year, pharmacy technician Curtis Webb thought his credit score was high enough to help him snag good terms on a mortgage.

"It was close to 730. I thought it would help me get a good interest rate," said Webb, 28, a Utah resident.

"Then the lender came back with my actual score," he said. "I was shocked."

The underwriter had checked Webb's "classic" FICO score, which was more than 40 points lower than the score he'd been monitoring online. The lower score meant a higher interest rate, making the loan a more expensive prospect.

That scenario is common, experts say. Consumers can retrieve a credit score online that may not be the one that's used when they actually apply for a loan. And while the discrepancy might not always be significant - or could be in your favor - some industry watchers say the differences are confusing at best and misleading at worst.
Read more at CNBC


Why Companies Are Forming Cybersecurity Alliances

In the physical world, governments are responsible for keeping citizens and corporations safe from enemies. The digital world, so far, has been a little different. When it comes to cybersecurity and cyber attacks, most governments have spent much more time increasing their offensive capabilities than protecting companies and individuals.

The reason for this is, until recently, national security officials viewed digital networks as fairly benign and cyber attackers as unlikely threats to safety - or to a country's sovereignty. However, the advent of cyber-physical systems and the internet of things, along with the increasing sophistication of bad actors, has made cyber attacks issues of human safety. But companies have largely been left to fend for themselves.

That's why, over the last few years, tech-focused companies have begun entering into cybersecurity alliances and pacts with one another. These alliances are a symptom of the breakdown of trust between policy makers and those they're making polices for. Hundreds of companies - some of them, such as Airbus, Cisco, HP, Microsoft, Siemens, and Telefonica, among the largest in the world - have tried to step into this trust gap by forming groups around goals related to the future of the internet and digital networks. Read more at Harvard Business Review


Why Regulation And Innovation Are Not Mutually Exclusive

The constraints that government imposes on business often conjure images of bureaucratic red tape that stifles technology development. However, as companies -- especially those in financial services -- continue to wrestle with new data security challenges and user privacy requirements like the General Data Protection Regulation (GDPR), the increase in regulation is driving innovation.

There is an opportunity born of necessity, as noncompliance comes with extensive penalties, including high legal costs, bad press and tarnished reputations. For example, some companies are facing fines of more than $1.5 billion in the European Union and up to $5 billion in the United States for privacy transgression.

The trouble is, not only do many companies lack the resources to pay fines but they also can't deal with ever-expanding compliance obligations such as vendor management, updated noticing requirements and consent management. On top of that, few of these compliance activities generate revenue or contribute to a company's bottom line.
Read more at FORBES


How Alternative Data Increases Accuracy in Credit Assessment

An estimated 45 million Americans are either "credit invisible", or "unscorable". These individuals have a credit score that would generally be perceived as subprime and thus, considered by traditional lenders to be less desirable candidates for a new credit. And while lenders need to pay careful attention to mitigating the risk of delinquency, the fact remains that there are many factors leading to a subprime credit score, several of which have nothing to do with the creditworthiness of the candidate.

The Faults of FICO
FICO scores are ubiquitous as a first line of evaluation of the creditworthiness of a borrower. However, FICO scores only take into account a handful of criteria to formulate a score. These include:
  • Credit payment history
  • Amount owing
  • Length of account
  • Credit mix
  • New credit
Read more at TRUST SCIENCE


10 Innovative Women Building Mega-Successful Businesses That Are Shaking Up Their Industries

These founders are breaking new ground in some very traditional--and male-dominated--industries.

Tech, food, and finance are rarely welcoming, and often hostile, to female founders. But each of the following entrepreneurs--a small subset of Inc.'s list of 100 women founders building America's most innovative businesses--is breaking through in a male-dominated profession: overhauling our food systems, programming cutting-edge robots or world-changing apps, and bringing financial services to people who have never had access to them.

Lisa Q. Fetterman | Nomiku Meals
After knockoffs hurt sales of her home sous vide machines, Fetterman began offering frozen meals based on recipes devised by herself and Michelin-starred chefs. RFID readers let the machines recognize each meal and cook it perfectly. The company sells the devices at cost and makes money on its food. And revenue is doubling. --Leigh Buchanan
Read more at Inc.

Dreher Tomkies LLP

Dreher Tomkies LLP
Our clients range from Fortune 500 companies and foreign-owned enterprises to small businesses, including:
  • Services and payment processors
  • Diversified companies
  • Banks and bank holding companies
  • Investment bankers
  • Investment funds
  • Finance companies
  • Credit and charge card issuers
  • Mortgage bankers
  • Retailers
  • Insurers and Reinsurers
  • Debt purchasers

Dreher Tomkies LLP


How To Protect Your Financial Wellness From Market Volatility

Volatility is in the air. After a long period of very stable and seemingly predictable markets, the swings have returned. As a planner at Financial Finesse, I have the privilege of getting real-time feedback on how market news affects the investing public's decisions since our service offers financial coaching to employee populations across the country.

We know that when there is any market shift, our phones will light up with questions about what to do. The answer for a lot of these questions is simple. Market news and market change does not necessarily imply change in your investment strategy.

In times like these, it is tempting to try and guess where the market will be in the next 6 months, 1 year and even 5 years. One problem with that is it that you can find plenty of market pundits and economists on either side. But what if you have a really good idea of what you will think will happen in the market? You still have an even more difficult hurdle to cross, and that is the question of timing. Read more at FORBES


California passes new rules that cap payday loan interest at 36%

More than 23 million people relied on at least one payday loan last year. On Friday, Sep. 13, California passed legislation that would make these loans less expensive for residents.

The California State Legislature passed the Fair Access to Credit Act, which blocks lenders from charging more than 36% on loans of $2,500 to $10,000. Previously, there was no interest rate cap on loans over $2,500, and the state's Department of Business Oversight found over half of these loans carried annual percentage rates of 100% or more.

Payday loans are typically small, personal loans consisting of a few hundred dollars, and for some they can be the only way to get cash quickly. You can get these in most states by walking into a lender's store with a valid ID, proof of income and a bank account. No physical collateral is needed. In recent years, lenders have even made them available online.
Read more at CNBC


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