August 9, 2018

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

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

Treasury recommends rescinding federal payday lending rules

The Trump Treasury Department recommended Tuesday that the Consumer Financial Protection Bureau rescind its major new rule regulating payday lending nationwide, officially stating the administration's desire to see the rule, currently in regulatory limbo, go away altogether.

The recommendation came as part of a 222-page Treasury report on reforming the nonbank financial system, touching on "fintech" firms, payday lenders, debt collectors, student lenders, and more. The Treasury called for greater latitude for nonbank financing and also new federal guidelines on a range of nonbank lending.

"America is a leader in innovation. We must keep pace with industry changes and encourage financial ingenuity to foster the nation's vibrant financial services and technology sectors," Treasury Secretary Steven Mnuchin said in a statement on the release of the report.

The Treasury's call to undo the Obama-era payday lending rule is likely to prove particularly controversial. Read more at WASHINGTON EXAMINER

Ted Cruz defends payday lending during San Antonio stop

Pressed by members of San Antonio's black community to help fight payday lenders who abuse their community with high-interest loans, U.S. Sen. Ted Cruz instead cautioned them about getting too aggressive against those businesses.

Cruz acknowledged that for some people, payday loan debt can spiral quickly out of control. But when he was asked to back legislation to cap payday loan interest rates, Cruz said he is reluctant to take action that could force some lenders to stop offering such loans to people who need them.

"You don't want to remove credit options for people in a tough circumstance where they have to then go to a loan shark," Cruz said at a meeting with about a dozen people at the Good Samaritan Veterans Outreach & Transition Center on Connelly Street.

Cruz said when the government stepped in to regulate subprime mortgage loans, suddenly it became hard for people to get home loans. Capping interest rates for payday lenders could have the same effect on that market, he said. Read more at CHRON.COM

As online lending companies gain popularity, the Trump administration is making it easier for them to bypass state regulations

Federal officials said Tuesday they would make it easier for financial technology firms to operate nationwide following a Trump administration report calling for sweeping regulatory changes to advance new fintech companies and services.

Just hours after the Treasury Department unveiled its long-awaited findings, the Office of the Comptroller of the Currency announced it was moving ahead with a plan to begin offering national banking charters to innovative companies offering loans or online payments.

Those firms would bypass state laws, which now govern most financial technology and nonbank services.

Companies such as San Francisco online lender SoFi have sprung up in recent years to leverage technology and offer consumers, particularly younger ones, new ways to manage their money and make payments beyond traditional bank accounts. Read more at LOS ANGELES TIMES

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

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.

NAFCU pushes CFPB for more exceptions to payday lending rule

Wants all "payday alternative loans exempted"

Back in October last year, the Consumer Financial Protection Bureau announced its new 1,690-page-long payday lending rule that included several exceptions for credit unions.

The rule, while setting limits on payday lending, does provide several exceptions. The final rule exempts loans issued by credit unions in conformance with the National Credit Union Administration for payday alternative loans.

These PAL I loans allow members of federal credit unions to borrow small amounts of money at a lower cost than traditional payday loans, and repay the loan over a longer period. The loans must be issued to members of credit unions who have been with the union at least one month. They are for amounts from $200 to $1,000 with a maximum annual percentage rate of 28% with an application fee of no more than $20. It must be fully repaid after one to six months, and no rollovers are allowed. Borrowers cannot have more than three PALs within a six month period.

Kirsten Gillibrand Has an Ambitious Plan to Take on Payday Lenders: The Post Office

While it might seem like a chore to go to the bank in an age of online payments and mobile apps that allow you to deposit a check with the snap of a picture, for some families, access to any bank could be life-changing. A 2015 survey by the Federal Deposit Insurance Corporation (FDIC) found that 26.9 percent of American households had either no bank at all or relied on nonbanking institutions for financial services. (These numbers are up to four times higher in black and Hispanic communities than for white Americans.) Unbanked families spend an average of $2,412 a year, or about 10 percent of their average annual income, on interest for financial services that most bank customers get for free.

Sen. Kirsten Gillibrand (D-N.Y.) has introduced legislation that would allow the United States Postal Service to branch out and offer basic financial services, including savings accounts and loans, to the underbanked. Rep. Yvette Clarke (D-N.Y.) introduced the bill in the House a month later in May. Although Gillibrand's legislation is unlikely to get much traction in a majority-Republican Congress, the potential 2020 presidential candidate has been rallying support for the legislation online and in her home state of New York. Read more at MOTHERJONES

The future of payday in the US may be flexible-pay services

For workers living paycheck to paycheck, one modest financial setback can lead to severe financial hardship. Flexible-pay services allow workers to take out money from their paychecks as they need it.

Luis Vazquez and his girlfriend were down to their last $50 after she got sick and had to miss work for a month.

He already paid his rent and bills for the month, but without her income the couple couldn't cover groceries and other essentials. His next paycheck was more than a week away.

Faced with a similar cash crunch years ago, Mr. Vazquez had resorted to a payday loan, a high-interest, short term loan meant to tide a borrower over until the next paycheck. But the couple and their toddler son were eventually evicted from their apartment because they couldn't make both their rent and the loan payments.

Vazquez vowed never to take out such a loan again. This time, he had another option. An overnight support manager at Walmart, Vazquez was able get a $150 advance on his pay using an app that allows the company's employees to access up to half their earned wages during a pay period.

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Consumer agency hated by Trump and GOP lawmakers has the backing of most Americans

The Trump administration and Republican lawmakers have long viewed the Consumer Financial Protection Bureau as a rogue agency, dedicated solely to preventing decent, hard-working businesses from creating jobs and growing the economy.

It turns out, though, that the CFPB enjoys strong support from at least one group. Consumers. Millions of them. Republican and Democrat.

Americans for Financial Reform and the Center for Responsible Lending will release survey results Tuesday showing that an overwhelming majority of Americans - at least 80% - are concerned about the Trump administration's recent efforts to curb oversight of banks and payday lenders, and the possible shutdown of a database of consumer complaints.

Similarly high percentages of Americans worry about a reduction in regulatory monitoring of racial discrimination among lenders, increasingly cozy ties between government officials and industry lobbyists, and any moves aimed at easing rules for businesses rather than protecting consumers. Read more at LOS ANGELES TIMES

Unaffordable houses have more Americans renting. by Walt Wojciechowski

With home prices at historic highs and inventory at record lows, it's not exactly the best of periods for deal-hunting prospective homebuyers to be in the market. The inauspicious time for purchasing properties has led to an uptick in demand for fully furnished rental apartments. This could be a boon for penny-pinching tenants, opportunity-seeking landlords and business owners using alternative credit data to potentially grow their customer base.

Revenues for the serviced apartments market reached $3.62 billion in 2017, according to data compiled by the Highland Group and reported by The Wall Street Journal. Corporate housing is an umbrella term used to refer to apartments leased for 30 days or more. It's the fifth straight year in which the sector has experienced growth.

4 months worth of single-family home supply
The inordinately limited number of single-family houses up for sale, in comparison to apartments, has fueled that volume. Indeed, based on the most recent statistics from the National Association of Realtors, the supply of existing homes in May was 4.1 months at the current sales pace. This means that if no other properties entered listings, inventory for condominiums, co-ops, single-family homes and townhouses would dry up completely in approximately 17 weeks. Existing-home listings have fallen on a year-over-year basis for 36 months straight. Read more at MICROBILT

How Can Regulators Promote Financial Innovation While Also Protecting Consumers?

Innovation changes the way consumers access, borrow, and transfer money. Checks, ATMs, and debit cards are examples of technologies and products that changed people's use of funds. Today, innovations such as mobile banking and payment apps (sometimes referred to as financial technologies, or fintech) are attracting attention from consumers, investors, service providers, and regulators.1 However, these technologies-whether new ways to deposit old instruments, such as checks, or novel tools like mobile banking apps-can expose regulatory gaps, ambiguities, and duplication.2 Recent research demonstrates the difficulties regulators around the globe face in addressing innovations in the financial system, especially emerging mobile payments and banking platforms.3

One key challenge policymakers contend with is the need to manage sometimes conflicting priorities such as market growth, competition, and safety in the financial system. Striking that balance may involve altering mature regulatory structures, defining how nontraditional financial service providers-such as technology companies and retailers-fit within these structures; creating agencies, licenses, or rules to oversee innovation; or fostering desirable financial services. And which approaches regulators choose can have substantial effects on people's financial well-being. Although innovation is fundamentally a neutral force, its consequences can be clearly positive, facilitating consumer transactions, as the ATM did starting in the 1960s,4 or markedly negative, such as when novel forms of mortgage-backed securities helped cause the Great Recession. Effective regulation can promote positive outcomes and maintain a healthy, safe financial market. Read more at PEW

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