August 28, 2018

AFSPA Endorsed

Senate committee narrowly confirms Kathy Kraninger to head CFPB

Kathy Kraninger is a step closer to becoming the nation's top consumer financial watchdog: A Senate committee on Thursday narrowly approved the White House aide's nomination to lead the Consumer Financial Protection Bureau despite strenuous objections from Democrats that she's not qualified for the job.

Opponents of President Trump's nominee to head the Consumer Financial Protection Bureau said that she has no experience in consumer protection, financial regulation or the banking industry and questioned her involvement overseeing the budgets of agencies that developed and implemented the child-separation policy at the border and the response to Hurricane Maria in Puerto Rico. Democrats complained that Kraninger would not detail her role in those policies during her confirmation hearing or in written questions.

"She is refusing to describe her role in two very public management failures because she knows it would destroy her case for her nomination," Sen. Elizabeth Warren (D-Mass.) said.

But Republicans brushed off those concerns. All 13 of them voted to confirm Kraninger on Thursday, while all 12 Democrats opposed her nomination. Read more at LOS ANGELES TIMES


AFSPA Endorsed

As Payday Loan Market Changes, States Need to Respond

State lawmakers need to be on the alert: Big changes are underway in the payday loan market, many of which will be detrimental to borrowers and socially responsible lenders. Longer-term, high-cost payday and auto title installment loans have spread dramatically as companies diversify their business models in an attempt to reduce reliance on conventional payday loans. However, without state-level safeguards, these longer-term products often have excessive prices, unaffordable payments, and unreasonably short or long durations, and therefore can be as harmful to borrowers as conventional payday loans.

What should states do?
State lawmakers who want a well-functioning market for small loans will need to establish strong but flexible safeguards to protect consumers and ensure transparency. Legislators in states where payday loan stores operate should consider measures similar to Ohio's Fairness in Lending Act (H.B. 123), which was enacted in July. The law tackles the main problems in the market by lowering prices, requiring that payments be affordable, and giving borrowers reasonable time to repay. It also includes crucial provisions to balance the interests of consumers and lenders, thereby ensuring widespread access to credit. Read more at PEW TRUSTS

FactorTrust®, a TransUnion company, provides alternative credit data, analytics and risk scoring information to help lenders make more informed decisions.

Top CFPB official resigns, accuses administration of turning its back on students' financial futures

The student loan ombudsman at the Consumer Financial Protection Bureau (CFPB) has resigned, saying the agency's leaders have chosen to serve powerful financial companies instead of consumers, NPR News reported on Monday.

Seth Frotman reportedly said in an official resignation letter that leadership at the CFPB has "turned its back on young people and their financial futures."

"Unfortunately, under your leadership, the Bureau has abandoned the very consumers it is tasked by Congress with protecting," he letter read, according to NPR. "Instead, you have used the Bureau to serve the wishes of the most powerful financial companies in America."

The letter was reportedly addressed to Office of Management and Budget Director Mick Mulvaney, the CFPB's acting director.

Frotman had served as the student loan ombudsman for the last three years, NPR reported. The public radio station noted that in his role, Frotman led the agency's Office for Students and Young Consumers, where he evaluated thousands of complaints from student borrowers and reviewed questionable practices from private lenders, loan services and debt collectors.

The voice for the small-dollar, short-term lending industry.

TransUnion launches risk-scoring model for alternative lenders

TransUnion has introduced a new predictive risk-scoring model for alternative lenders which combines alternative credit data with traditional static and trended credit data.

With the launch of the CreditVision Link Short-Term Risk Score, TransUnion seeks to provide greater predictive power for enhanced underwriting decisions. The model allows lenders to better segment and evaluate consumer risk profiles and identify consumers with a good track record across the alternative and traditional credit markets.

"Nearly 75% of consumers active in the alternative credit market have one or more open traditional tradelines. Alternative credit data alone does not provide a comprehensive view of subprime consumers or tell their whole story, but when combined with traditional, particularly trended data, it can yield powerful results," said Liz Pagel, vice president of consumer lending market strategy at TransUnion. "Understanding whether a consumer is making payments on her traditional credit is valuable information for alternative lenders."

TransUnion's new offering builds upon its acquisition of alternative credit bureau FactorTrust late in 2017. The score harnesses FactorTrust's legacy risk scores as well as traditional and alternative credit data to help lenders better understand the consumer's full risk profile.

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

Mulvaney is urged not to weaken military consumer protections

Almost 30 military associations and veterans groups on Thursday sent a joint letter to Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, urging that he not weaken CFPB enforcement of the 2006 Military Lending Act to leave military consumers more vulnerable to predatory or deceitful lenders.

The letter also was addressed to Defense Secretary Jim Mattis because his department wrote the loan protection regulations to implement the lending law.

"We urge you to stand with the troops and against any attempt to weaken the Military Lending Act, including the Bureau's supervisory and enforcement authority and the Department's rules against predatory lending by all businesses, including by car dealerships," wrote the advocacy groups.

A week earlier Senate Democrats sent their own joint letter to Mulvaney pleading that he not direct the bureau to trim its audit responsibilities and "make it easier for unscrupulous lenders" to target military members and their families

Sparking these concerns is a two-page internal document at CRPB, reported on this month by The New York Times, that shows Mulvaney, who also is director of the Office of Management and Budget, is considering a policy change to have bureau auditors ignore the Military Lending Act when conducting routine supervisory exams of banks, savings and loans, payday lenders and other loan originators and brokers. Read more at STARS and STRIPES

Better predictive scoring for you.
Better credit control for your customers.

The Case for a State-Owned Bank. by Meagan Day

Regulating finance won't cut it. To combat predatory lending, we need a fully public, state-owned bank.

I'm a college student. I don't really have assets," Austin Wilson, a twenty-one-year-old senior at the University of Kansas who was short on rent by a few hundred bucks this month, recently told CNBC. "I own my car, I have a bunch of Dungeons & Dragons books. I could try to sell those."

Wilson filled out forty job applications, looking for a last-minute gig to supplement his work at a senior care center, but nothing came through in time. His bank wouldn't loan him anything less than $3,000 with corresponding interest, which he was hesitant to add to his already substantial student loan debt.

Thus Wilson joined the nearly 40 percent of college-age Americans who, according to a poll conducted by CNBC, seriously consider taking out a payday loan - a small-sum, quick-turnaround, high-interest loan that can help in a pinch but can also easily lead the borrower down a spiral of debt.

There are nearly twice as many payday lenders as there are McDonald's locations in the United States. Payday lenders rake in $46 billion a year. The business model is predicated on hidden fees, punitive fines and exorbitant interest rates - up to 700 percent in some cases. These high-risk loans often precipitate financial disaster, but people who are cash-strapped take them anyway, because they have no other option. Without them, they won't be able to pay rent and may risk eviction, or they won't be able to afford transportation or childcare and may lose their job. Read more at JACOBIN

National Debt Holdings
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.

MaxDecisions delivers 4% direct mail response rate

MaxDecisions, inc. delivers $40 cost per funded loan to sub-prime lenders in the United States

MaxDecisions, Inc. announces that it has achieved unparalleled success with its latest generation of Direct Mail modeling techniques. In July 2017, MaxDecisions, Inc. engaged with a mid-size sub-prime lender to expand the lender's direct marketing channel. MaxDecisions took over the campaign and worked with the lender's management team and credit bureau to quickly deployed a direct mail campaign with over 250,000 pieces across 10 states. The result of the campaign produced close to 10,000 responders and over 2,500 loans.

When MaxDecisions, Inc. took over this portfolio. There had already been four campaigns deployed from Sept 2016 to April 2017. These previous campaigns varied from 0.2% to 0.9% response rate (netted anywhere from 200 to 500 loans). The wide range of swings cause the lenders to under and over staff constantly and created many cash drag issues with their investors. The unpredictability of response rates and the quality of the responders caused further issues with lender's underwriting staff and default rates. Read more at MaxDecisions
Decision Cloud is a black box platform, which allows users to build decision waterfalls, utilizing Insight's services, as well as a plethora of third party vendor services.

8-Year Financial Wellness Study Finds ...

Employees experiencing financial problems lose a full week of productivity compared with employees who aren't

The burden of saving for our own retirements, paying a larger share of healthcare costs, and coping with higher-education and other debt is taking a toll on our overall health, research shows.

The same is true at Prudential, where the company's partnership with Truven Health Analytics and its IBM Watson technology allowed Prudential for the first time to analyze employee financial stress over the last decade.

The results, outlined in Prudential's new thought leadership paper, were startling.

In 2008, the first year of the Great Recession, 31 percent of employees experienced financial problems, higher than WebMD's national benchmark, which stood at 28 percent.

It was even higher the following year at 34 percent, compared with the benchmark 29 percent.

That stress carries into the workplace.

Prudential's research found that employees experiencing financial problems lose a full week of productivity compared with employees who aren't. Also, diagnosed mental health conditions are more prevalent among those who experience financial problems. Read more at 401K Specialist

We are transforming lending with innovative payment instrument data and technology, increasing credit access to the financially underserved, and reducing fees for borrowers and creditors.

1 in 3 Americans have less than $5,000 saved for retirement-here's why so many people can't save

The vast majority of Americans, 78 percent, say they're "extremely" or "somewhat" concerned about not having enough money for retirement, according to Northwestern Mutual's 2018 Planning & Progress Study.

And for good reason: A shocking 21 percent of Americans have nothing at all saved for the future, and another 10 percent have less than $5,000 tucked away, the study finds.

That means about a third of Americans have only a few thousand dollars, or less, put away for their golden years.

Of course, some people are more prepared: A quarter report having $200,000 or more stashed away, while 16 percent have between $75,000 and $199,999. But overall, Northwestern Mutual found that Americans with retirement savings have an average of $84,821 saved, which is far from enough. Experts typically recommend trying to accumulate at least $1 million.

Meanwhile, a new survey from Bankrate finds that 13 percent of Americans are saving less for retirement than they were last year and offers insight into why much of the population is lagging behind. The most popular response survey participants gave for why they didn't put more away in the past year was a drop, or no change, in income. Read more at CNBC

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