In an effort to help indebted students as they move into the workforce, the CFPB joined other federal regulators recently in issuing guidance on private student loans with graduated repayment terms at loan origination. “Financial institutions that originate private student loans may offer graduated repayment terms in addition to fixed amortizing terms to borrowers at the time of loan origination,” the guidance stated.Graduated repayment terms provide lower initial monthly payments early in the repayment period and phase in the amortization of the principal balance, it noted. “Graduated repayment terms may align a borrower’s income level with loan repayment requirements, provide flexibility to repay the debt sooner if a borrower’s income increases more quickly than projected, and may help long- ...

The CFPB recently sent letters to select private student loan lenders and servicers inquiring about their current and planned loan modification options. The letter is a follow-up to a meeting last year convened by CFPB Director Richard Cordray and Education Secretary Arne Duncan to discuss ways for industry participants to offer more options, such as modified repayment plans, to help borrowers avoid default and increase the likelihood of full repayment. Federal financial regulators have offered repeated guidance encouraging industry to pursue these workout arrangements, and they have noted that they will not criticize financial institutions even if these loan modifications lead to adverse credit classifications, CFPB Student Loan Ombudsman Rohit Chopra said in the correspondence. “While certain market participants have ...

Consumer complaints about their student loans turned in an uneven performance over the past year, with complaints down from the third quarter of 2014 to the fourth quarter, but up when compared against the fourth quarter of 2013, according to the latest analysis by Inside the CFPB. The uneven results can be attributed primarily to two factors: there were 80 companies in the complaint universe as of Dec. 31, 2014, compared with 61 the year before. Also, even though 4Q14 numbers were better than those of 3Q14, both of those quarters were still elevated compared to 4Q13 levels. It’s also important to keep in mind that consumer gripes filed with the CFPB are always a work in [with exclusive chart] ...

OIG Expects to Finish Nine Audits, Evaluations of the CFPB This Quarter. The CFPB’s Office of Inspector General has a batch of ongoing projects related to the bureau that it expects to complete sometime during the first quarter, according to the OIG’s latest work plan, released early this week.Among the projects are audits of the CFPB’s contract management process, its diversity and inclusion processes, and it headquarters renovation project. Other projects with a first quarter 2015 completion timeframe are audits of the CFPB’s public consumer complaint database, the bureau’s space-planning activities, and the CFPB’s Tableau system, an application used to develop, publish, and view business intelligence data. Also up for completion this quarter is an evaluation of the CFPB’s ...

As part of the growing attention the CFPB is paying these days to the marketing relationships between financial institutions and colleges and universities, the CFPB released for public comment a draft Safe Student Account Scorecard that offers information to institutions of higher learning when soliciting agreements from financial institutions to market safe and affordable financial accounts for their students.“The scorecard builds on prior work by the Federal Deposit Insurance Corp. and is designed to help colleges evaluate the costs and benefits to students of a financial product based on information about its features and how it is marketed,” said CFPB Director Richard Cordray. The bureau is seeking public input on the scorecard, which highlights four areas for schools to ...

Obama Vows Vetoes to Dodd-Frank Changes. President Barack Obama touted the Dodd-Frank Act during his recent State of the Union speech as well as the growth of the CFPB, and threatened a veto should the Republican-controlled Congress pass any additional fixes to Dodd-Frank. “Today, we have new tools to stop taxpayer-funded bailouts, and a new consumer watchdog to protect us from predatory lending and abusive credit card practices,” Obama said. “We can’t put the security of families at risk by taking away their health insurance, or unraveling the new rules on Wall Street, or refighting past battles on immigration when we’ve got a system to fix. And if a bill comes to my desk that tries to do any of ...

A total of $185.32 billion of non-mortgage ABS were issued in 2014, the highest annual production level for the market since 2007, according to a new Inside MBS & ABS analysis and ranking. ABS issuance was up 12.0 percent from the prior year, with solid gains in three of the market’s key sectors: auto finance, credit cards and business loans. The weakest link was the student loan ABS market, where annual production fell 25.4 percent from 2013 and slipped to its lowest level since 1999. Vehicle finance deals were...[Includes two data charts]

Issuers of auto ABS are loosening underwriting standards and delinquencies on subprime auto loans are increasing, but industry analysts suggest that there is little cause for concern. Performance remains much stronger than the delinquencies seen during the financial crisis and issuers are unlikely to loosen underwriting to the extent seen in the run-up to 2008. For independent finance companies, 60+ delinquencies increased by 13.7 percent in the past year, from 1.82 percent in the third quarter of 2013 to 2.07 percent in the third quarter of 2014, according to the latest data from Experian Automotive. Independent finance companies focus primarily on lending to subprime borrowers, and their delinquency trends outpaced any increase in delinquencies for other types of lenders that lend primarily to prime borrowers. Peter McNally, a vice president and senior analyst at Moody’s Investors Service, said...

The CFPB is likely to throw its weight around just as much this year as it did last year, only its focus and intensity will be more diverse in terms of the industries that will be affected. Back in 2014, much of the regulatory concern among lenders had to do with the bureau’s ability-to-repay rule with its qualified mortgage standard, and to lesser extents its rules on mortgage servicing and loan originator compensation. Make no mistake. The mortgage industry is still in the CFPB’s crosshairs. The biggest payload to be delivered in this regard in 2015 is the long-awaited and much discussed integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act. That rule ...

The residential mortgage space was the only sector in the large financial services universe to see a year-over-year decline in consumer complaints filed with the CFPB, according to a new analysis by Inside the CFPB. The positive performance, a drop of 14.5 percent, is most likely due to the continued recovery in the overall economy as well as the housing market, which is reducing the stresses that produce delinquencies, defaults and foreclosures, which are associated with high levels of borrower gripes.A lesser contributing factor to consumer criticisms in the “resi” space could be the steep drop-off in mortgage originations over the last year, which could be reducing the overall pool from which origination-related belly-aching originates. [With two exclusive charts] ...