Many financially struggling consumers echoed the American Bankers Association in arguing that the CFPB’s proposed rules on prepaid products could hurt the so-called underbanked and those who sometimes have more month than they do money. “The CFPB’s proposed rules for prepaid products include some onerous provisions that could create insurmountable compliance barriers for banks offering the cards,” the ABA said in a comment letter. “This would be particularly harmful for ‘underbanked’ individuals, many of whom rely on prepaid accounts as an alternative to traditional deposit products.” One barrier is the CFPB’s proposed treatment of overdrafts, which “effectively prohibits linking prepaid cards to overdraft services ... and prohibits imposing any fee when an account is in overdraft status,” the trade group ...
In response to the CFPB’s draft “scorecard” for safe financial products to be offered on college campuses, two lender trade groups said that colleges should be able to work with banks to offer a flexible array of deposit products to their students and not be pigeon-holed into just one approach. In a joint comment letter to the CFPB, the American Bankers Association and the Consumer Bankers Association said they strongly support transparency and strong protections for consumers when using any financial service and will continue to work with the bureau to achieve that goal. “However, the proposed scorecard appears singularly focused on driving colleges and universities into limiting insured depository institutions to offering a particular type of deposit program with ...
Consumer complaints to the CFPB fell in most financial service product segments during the first quarter, not only from the previous quarter but also from one year ago, according to the latest analysis of bureau data by Inside the CFPB. Total gripes in the first quarter of 2015 declined 8.2 percent from the fourth quarter of 2014, and slid 17.0 percent compared to the first quarter of 2014. Once again, consumer criticisms about residential mortgages led the decline in both timeframes, dropping 20.3 percent quarter over quarter and plunging 33.5 percent year over year. The fall-off is likely due to the shrinkage in overall mortgage originations as well as the continued recovery in the overall housing and mortgage markets.The [with exclusive data chart] ...
CFPB Deputy Director Steven Antonakes revealed recently that the bureau is increasingly concerned about the subprime auto finance sector and will crack down on any practices that prove to be too risky for consumers. Speaking at an event of the Consumer Bankers Association, Antonakes identified a loosening of credit in the subprime auto loan market as one of the emerging risks the bureau is paying close attention to. “From our standpoint, it is not inherently troubling that more consumers are getting auto loans; under the right conditions, increased access to credit is good for the economy and individual upward mobility,” the deputy director said. “However, we have noticed some trends in connection with this credit expansion that give us cause ...
The CFPB brought an enforcement action against National Corrective Group, a nationwide debt collection operation based in San Clemente, CA, and CEO Mats Jonsson, accusing them of using deceptive threats of criminal prosecution and jail time in order to intimidate consumers into paying debts for bounced checks. The bureau also accused the company of misleading consumers into believing they have to sign up for a costly financial education program to avoid criminal charges. The CFPB complaint also alleges that National Corrective Group created a false impression for consumers that its communications were from a state or district attorney’s office. “The company sent letters on prosecutors’ letterheads that appeared to be signed by the state or district attorney,” the bureau said...
Concerns about how borrowers will be impacted by a change in servicers go beyond mortgages in non-agency MBS. Analysts at Moody’s Investors Service warn that the decentralized servicing models used for consumer loan ABS issued by Springleaf Holdings and OneMain Financial face significant risks in the event that servicing needs to be transferred. Both Springleaf and OneMain originate consumer loans at local branches, where they conduct certain servicing operations and collections. The decentralized model can help boost originations and loan performance, though there are risks for investors in consumer ABS with decentralized servicing. “As long as the originator maintains the customer relationship and local presence, this ‘high-touch’ model can help...
Creditworthy buyers are being constrained by dated scoring systems, according to a study released this week by VantageScore Solutions, which says there are benefits to Fannie Mae and Freddie Mac, as well as consumers, if a new model is adopted. The enterprises could increase their revenue while expanding access to mortgages to a more diverse group of consumers. The credit reporting company has been working to get Fannie and Freddie to embrace a new credit reporting system for years now. Its new report comes on the heels of the Federal Housing Finance Agency comments in its 2015 scorecard directing the GSEs to look into potential alternative forms of credit scoring.
The CFPB issued a formal notice and request for information on how the credit card market is functioning and the effect credit card protections are having on both issuers and consumers. As per the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, the CFPB is required to conduct a review of the consumer credit market every two years. Among its focal points, the bureau wants to know how the terms and conditions of credit card agreements have changed since it conducted its review of the credit card market two years ago. “The bureau is looking to see how card issuers may have changed their pricing, marketing, underwriting, or other practices and whether those changes have benefited or harmed consumers,” the ...
CFPB Updates TRID Documentation. Last week, the CFPB put out some updates to the implementation materials for its integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act. The updated material lines up with the rule that was published Feb. 19, 2015, that modifies the 2013 TILA/RESPA integrated disclosure rule (TRID). This rule extends the timing requirement for revised disclosures when consumers lock a rate or extend a rate lock after the Loan Estimate is provided and permits certain language related to construction loans for transactions involving new construction on the LE. Additionally, the bureau is making non-substantive corrections, including citation and cross-reference updates and wording changes for clarification purposes, to various provisions of ...
Credit unions support a CFPB proposal that would let them off the hook for one year when it comes to submitting their credit card agreements to the bureau while the agency works to develop a more streamlined and automated electronic submission system. Other requirements, including card issuers’ obligations to post currently-offered agreements on their own Web sites, would remain unaffected by the proposed rule, which was issued in February. Currently, card issuers are required to send agreements to the bureau manually through e-mail. The CFPB intends to come up with a new system through which card issuers would be able to upload agreements directly to the bureau’s database and eliminate the process of e-mail submissions. Among the supporters was the ...