At a glanceWednesday, November 18, 2020

Collection Industry News At A Glance - November 18, 2020
Wednesday November 18, 2020
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Americans’ mortgage debt soars to a record $10 trillion

New York (CNN Business) Low interest rates have helped fuel a boom in the US housing market: Last quarter Americans' mortgage debt climbed to a record high of nearly $10 trillion, the Federal Reserve Bank of New York reported Tuesday.

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The DOJ has approved Mastercard’s acquisition of Finicity

Federal regulators have approved Mastercard’s  acquisition of Salt Lake City-based startup Finicity, which provides open-banking APIs. The deal is expected to go for $825 million.

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300 companies that received virus relief funds have filed for bankruptcy

The government distributed $525B in PPP loans since April.   Billions of dollars shelled out to companies through the Paycheck Protection Program (PPP) wasn’t enough to sustain hundreds of businesses during the pandemic.

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Kinecta Federal Credit Union Recognized as Great Place to Work

MANHATTAN BEACH, Calif.Nov. 9, 2020 /PRNewswire/ -- Kinecta Federal Credit Union today announced it is Great Place to Work-Certified™ (GPW). To reach GPW certification, anonymous employee feedback was gathered, and a rigorous, data-driven methodology proved 89% of employees consistently have a positive experience at Kinecta, compared to 59% for a typical U.S.-based company.

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Agencies announce dollar thresholds in Regulations Z and M for exempt consumer credit and lease transactions

WASHINGTON, D.C. — The Federal Reserve Board and Consumer Financial Protection Bureau today announced the dollar thresholds in Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) that will apply for determining exempt consumer credit and lease transactions in 2021.

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These major retailers are spending millions of dollars to show employees appreciation

With their profit coffers fully stocked after months of consumers hoarding food and cleaning products during the COVID-19 pandemic, some major retailers are opening up their checkbooks to reward tired workers ahead of the busy holiday shopping season.

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CFPB Shelves Enforcement Changes After Staff Pushback (1)

The Consumer Financial Protection Bureau has put the brakes on a planned restructuring of its supervision and enforcement unit after bureau staff raised objections to the changes. The reorganization, announced in mid-October, would have essentially forced the CFPB’s enforcement division to get approval for new investigations and research matters from a new office in its Supervision, Enforcement and Fair Lending division. But the plan was met with pushback within the bureau, according to a Monday email from Bryan Schneider, the associate director of the CFPB’s SEFL unit, obtained by Bloomberg Law.

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CFPB Announces Settlement with Debt Collector for Credit Reporting Violations

We have been covering developments concerning litigation brought under the Fair Credit Reporting Act (“FCRA”).  Well, entities regulated under the FCRA can also be subject to enforcement actions for failing to meet their statutory obligations.  The Consumer Financial Protection Bureau (“CFPB”) last week announced a settlement with Afni, Inc. (“Afni”) to address violations the CFPB identified in Afni providing information to consumer reporting agencies (“CRAs”).  

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Banks Reinforce Protections As Cybercriminals’ Tactics Evolve

Banks have long worked to anticipate and protect against emerging tactics of cybercriminals. Now, with the pandemic accelerating a move toward digital product acquisition, communication, purchases and money movement, financial institutions (FIs) and their clients need to be even more vigilant. Leslie Ragan manages transaction fraud prevention for Elan Financial Services, a unit of U.S. Bancorp, which is the parent company of U.S. Bank, one of the largest commercial banks in the United States. In an interview with PYMNTS, Ragan said technology developments have enhanced the industry’s fraud-fighting strategies, but customer awareness is still a critical component of preventing bad actors from succeeding.

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BBVA sells U.S. subsidiary to PNC for $11.6 billion

MADRIDNov. 16, 2020 /PRNewswire/ -- BBVA has agreed to sell to PNC its subsidiary in the U.S. for $11.6 billion (€9.7 billion1) in cash, an amount that represents 19.7 times the unit's 2019 earnings2, and that is almost 50% of BBVA's current market capitalization, creating significant value for shareholders. The transaction will have a positive impact on BBVA's fully loaded CET1 ratio of c.300 basis points, or €8.5 billion of CET1 generation.

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FTC Warns Frank Financial Aid to Stop Potentially Misleading Marketing Directed to Students Seeking Coronavirus Financial Relief

The Federal Trade Commission has sent a warning letter to a company that markets financial aid prep assistance to post-secondary students, notifying the company that it could potentially be misleading consumers about access to a coronavirus relief program.

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Banks’ Margins Suffer As US Consumers Pay Down Credit Card Debt

U.S. consumers have been paying down payments on credit cards with the pandemic continuing to hamper spending opportunities, which has led to dramatically falling bank card loans, The Financial Times (FT) reports. According to the report, the total amount of card loans in U.S. banks was $755 billion, down $100 billion from before the pandemic, while balances have drifted lower in three of the last four weeks. In addition, the amount of Americans opening new accounts was down to 8.6 million in the third quarter, almost 50 percent lower year over year, according to stats from TransUnion. That has also had a negative impact on banks, with card revenue for Citigroup falling 18 percent this year compared to 2019; a Wells Fargo bank analyst said credit card spending would likely stay down until COVID-19 was on the way out, the report says.

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How Alternative Lending Technology Stays Flexible For SMBs

In the wake of the 2008 global financial crisis, and banks’ subsequent pullback from the small- to medium-sized business (SMB) lending arena, a slew of alternative lenders emerged onto the scene to fill the credit gap. Over the years, that surge in competition gave way to a more collaborative spirit between traditional financial institutions (FIs) and FinTechs as both sides worked to digitize and modernize SMB financing. While this partnership model remains popular, market volatility has once again created a need to connect more SMBs to capital as quickly and efficiently as possible.

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CFPB, Colorado’s Attorney General Announce Joint, Virtual Office Hours

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) and the Office of the Colorado Attorney General announced joint, virtual office hours to be held as part of the American Consumer Financial Innovation Network (ACFIN). Joint office hours provide innovators with the opportunity to discuss issues such as financial technology, innovative products or services, and other matters related to financial innovation with officials from the CFPB and state partners.

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CFPB Grants No-Action Letter for Proposed Small-Dollar Credit Product

On November 5, in accordance with its updated NAL Policy, the CFPB granted a no-action letter (NAL) to Bank of America, N.A. regarding its proposed small-dollar credit product, “Balance Assist”, which will provide the Bank’s checking account customers access to credit in increments of $100, up to $500, to be repaid in fixed minimum payments over three months, with an APR of 36% or less plus a $5 “Product Fee” but no late payment or prepayment penalties.

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Consumer Financial Protection Bureau Announces Settlement with Debt Collector for Credit Reporting Violation

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (Bureau) today announced a settlement with Afni, Inc. (Afni) to address its violations in providing information to consumer reporting agencies (CRAs). Afni is a non-bank Illinois-based debt collector that specializes in collecting debt on behalf of telecommunications companies and furnishes information to consumer reporting agencies (CRAs) about consumers’ credit. The consent order requires Afni to take certain steps to prevent future violations and imposes a $500,000 civil money penalty.

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The average Gen Xer has $32,878 in non-mortgage debt—here’s how they compare to other generations

Considering that Gen Xers sit squarely in middle age — this generation was born between the mid-1960s and 1980 — it’s not all that surprising they have the highest household debt according to data from Experian. After all, they’re likely busy juggling kids, aging parents, mortgages, car loans and all the various costs associated with adulthood. According to the Experian 2020 State of Credit report, the average Gen X consumer has about $32,878 in non-mortgage debt, such as credit cards, student loans, car loans and/or personal loans. Gen X homeowners have an average mortgage balance of $245,127.

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Biden transition team brings back key CFPB players

President-elect Joe Biden is creating transition teams as he prepares for Inauguration Day in January, and there is a very familiar name at the top of the transition team for the Consumer Financial Protection Bureau: Leandra English, the hand-picked successor of former CFPB Director Richard Cordray. Thanks to a Supreme Court decision passed (and fought for) by President Donald Trump’s administration, a new CFPB director is widely expected to be one of the early actions Biden will make once in office. 

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Voters Approve California Privacy Rights Act

On November 3, 2020, a majority of Californians voted to approve a new ballot initiative – Proposition 24, or the “California Privacy Rights Act of 2020” (“CPRA”).  We previously issued alerts on the road to certification of this ballot initiative here. Below, we highlight the main points that businesses facing compliance with this new privacy law should bear in mind.

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Fintech Vs. Traditional Lending Risks

Fintech reportedly is allowing lenders to close on mortgage loans faster than in the past, and, especially as the market shifts increasingly digital, all signs point to its growth in mortgage lending. Researchers have found fintech lenders tend to take on certain risks that traditional lenders do not—though, for a few reasons, this is counterintuitive—leaving fintech loans more likely to default.

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Opinion: Many retirees are buried in debt — how can they get out?

It’s easy to assume retirees have built a nest egg and paid off their home. So the last thing they need to worry about is debt. If only. Their labor income has dried up. They primarily live off their savings and Social Security benefits. And despite the best laid plans, maintaining their standard of living in retirement can cost far more than they expected. The total debt burden for Americans over age 70 increased 543% from 1999 through 2019, to $1.1 trillion, according to the Federal Reserve Bank of New York. For those in their 60s, debt grew 471% to $2.14 trillion.

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Homebuying slump worsens as applications for mortgage loans drop

As the vote counting in last week’s presidential election slowed down, so did mortgage applications. An index tracking the number of mortgage applications to buy homes dropped 3 percent, seasonally adjusted, compared to the prior week. The Mortgage Bankers Association’s weekly metric, known as the purchase index, has not increased in seven weeks. Joel Kan, head of industry forecasting for MBA, said the purchase index last week was at the lowest level since May.

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Nebraskans vote to cap interest rates on payday loans

Consumer advocates in Nebraska have been pushing state legislators to cap interest rates on payday loans for years, according to Aubrey Mancuso of Voices for Children in Nebraska, to no avail. So this year, they got the issue on the ballot and won, with almost 83% of the vote

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Their Service Entitles Them To Low-Cost Loans. But Veterans Often Pay More

At the start of the year, John Forr saw interest rates falling and figured it was a good time to refinance the mortgage on his house in Punta Gorda, Fla. Forr is a retired Marine Corps colonel. He served for 27 years. He wanted to get a VA loan — backed by the U.S. Department of Veterans Affairs — because he knew he was supposed to be able to get a better deal on the interest rate and other terms. Those are perks offered to vets and service members for their service.

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Portfolios For Sale

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