At a glanceFriday, July 09, 2021

Collection Industry News At A Glance - July 9, 2021
Friday July 9, 2021
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Department of Education Approves Borrower Defense Claims Related to Three Additional Institutions

The U.S. Department of Education (Department) announced today the approval of over 1,800 borrower defense to repayment (borrower defense) claims for borrowers who attended three institutions: Westwood College, Marinello Schools of Beauty and the Court Reporting Institute. This is the first time the Department has announced approved borrower defense claims for students who attended institutions besides Corinthian Colleges, ITT Technical Institute, and American Career Institute since 2017.

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State Regulators Urge Department of Education to Rescind Preemption Policies

The Conference of State Bank Supervisors (CSBS) and North American Collection Agency Regulatory Association (NACARA) are seeking the return of states’ authority to regulate federal student loan servicers and debt collectors.

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Wells Fargo scraps personal lines of credit

In a statement to FOX Business, the bank confirmed the move, first reported by CNBC. "As we simplify our product offerings, we made the decision last year to no longer offer personal lines of credit as we feel we can better meet the borrowing needs of our customers through credit card and personal loan products. We realize change can be inconvenient, especially when customer credit may be impacted. We are providing a 60-day notice period with a series of reminders before closure, and are committed to helping each customer find a credit solution that fits their needs" according to a company spokesperson.

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9 million student loan borrowers will soon be getting a new servicer. Here’s why

Washington (CNN)About 9 million people with federal student loans will start getting their bills from a new agency after one of the government's biggest servicers said Thursday that it will end its contract with the Department of Education in December. The Pennsylvania Higher Education Assistance Agency (PHEAA), which is better known as FedLoan -- its arm that handles federal student debts -- has been contracted by the government to collect payments for the past 12 years. It's currently one of four main servicers that the Department of Education uses, processing more than $400 billion in student loans, or roughly a quarter of the total federal student debt portfolio.

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Rental assistance may help you and your tenants get through the pandemic

As a landlord, income from rental payments may be the only way you pay your own mortgage, taxes, insurance, and other costs. When the rent comes in short, or not at all, you might find yourself struggling to make ends meet.

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Biden has canceled $1.5 billion in student debt for victims of for-profit school fraud

Washington (CNN)The Department of Education has canceled a total of $1.5 billion in student loan debt for nearly 92,000 students, who were victims of for-profit college fraud, since President Joe Biden took office. The current administration has been taking steps to address the backlog of more than 100,000 forgiveness claims left over from the Trump administration. In its latest move, the Department of Education said Friday that it is canceling about $55.6 million, approving claims from 1,800 borrowers who attended either the now-defunct Westwood College, Marinello Schools of Beauty or the Court Reporting Institute.

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Rental assistance may help you and your tenants get through the pandemic

The financial strain brought on by the coronavirus pandemic has hit some groups harder than others. According to the Harvard Joint Center for Housing Studies (JCHS), over half of renters who work in hard-hit industries that saw closures and cut-backs live in single-family and small multifamily rentals . Three-quarters of these rental properties are owned by individual “mom and pop” investors – folks with their own bills to pay.

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U.S. Consumer Borrowing Jumped by Most on Record in May

(Bloomberg) -- U.S. consumer credit surged in May by the most on record, reflecting a jump in non-revolving loans that underscores solid household spending.

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CFPB and Georgia AG Settle With Debt-Relief Company

On June 29, the CFPB and the Georgia Attorney General’s Office settled with a debt-relief and credit-repair company and its owners for allegedly deceiving consumers into hiring the company to lower or eliminate credit-card debts and improve consumers’ credit scores.  The complaint alleges that the plaintiffs’ use of telemarketing and direct mail violated the Telemarketing and Consumer Fraud and Abuse Prevention Act, the Telemarketing Sales Rule, the Consumer Financial Protection Act, and Georgia’s Fair Business Practices Act by, among other things, falsely claiming that:

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Colorado Privacy Act Signed Into Law

On July 7, 2021, Colorado officially became the third state to pass broad consumer privacy legislation when Governor Jared Polis signed the Colorado Privacy Act (CPA) into law. The Colorado legislature previously passed the CPA on June 8. The CPA will go into effect on July 1, 2023.

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The SEC’s Continued Focus on Cybersecurity Enforcement

On June 14, the Securities and Exchange Commission (SEC) announced a $490,000 settlement with the real estate services provider First American Financial Corporation (First American) for violations of disclosure controls and procedures related to cybersecurity vulnerabilities. Notably, the SEC’s case against First American did not specifically focus on a cyberattack or allege an underlying securities fraud charge, as many of its past cybersecurity enforcement actions have.

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ACA Outlines Benefits of Artificial Intelligence in Comments to Regulatory Agencies

Artificial intelligence-based technologies can help ACA International members and other financial services providers better understand their customers’ preferences and adapt their communications approaches, Vice President and Senior Counsel of Federal Advocacy Leah Dempsey said in recent comments on five federal agencies’ request for information (RFI) on artificial intelligence .

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Visa’s Crypto-Backed Cards Count $1 Billion In Spending

Visa said Wednesday that its cryptocurrency-backed credit card is growing in popularity. The company’s chief financial officer told CNBC today that users of the card had spent more than $1 billion worth of cryptocurrency globally on goods and services in the first six months of the year.

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Industry groups challenge Nevada’s new medical debt collection law

On June 25, a group of collection agencies, law firms, and industry associations filed a lawsuit against the Nevada State Commissioner requesting the Court declare invalid Nevada Senate Bill 248, which regulates medical debt collection. The new law took effect on July 1, 2021. Nevada enacted the new law last month.

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CFPB Issues Summer 2020 Supervisory Highlights

On June 29, the CFPB released its summer 2021 Supervisory Highlights. The findings of the report, which cover examinations that generally were completed between January 1, 2020 to December 31, 2020, are issued to “help institutions and the general public better understand how the Bureau examines institutions for compliance with Federal consumer financial law.”

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Current Mortgage Refinance Rates — July 8, 2021: Rates Fall for All Loans

The average 30-year mortgage refinance loan rate today is 3.248%, down 0.009% from yesterday's average of 3.257%. For each $100,000 refinanced at today's average rate, your monthly principal and interest payment would add up to $435. Total interest costs would be $56,635 per $100,000 in mortgage debt over the life of the refinance loan.

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DFS Settles with Indirect Auto Lenders to Resolve Fair Lending Violations

On June 29, NYDFS announced that two New York-charted banks engaging in indirect auto lending will pay civil money penalties for violating New York’s fair lending law for engaging in practices that resulted in members of protected classes paying higher interest rates that were not based on creditworthiness.  In particular, NYDFS asserts that the practice of allowing “dealer markup” in setting retail interest rates resulted in statistically significant differences in pricing, disadvantaging Hispanic and African-American consumers, with differences ranging from 20 to 59 basis points.

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July is Military Consumer Month

Federal agencies, including the Federal Trade Commission and Consumer Financial Protection Bureau’s Office of Servicemember Affairs, are holding several events for consumers during Military Consumer Month.

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Temporary Relief for Debt Collectors: 11th Circuit Withholds Hunstein Mandate

On June 14, 2021, the US Court of Appeals for the 11th Circuit issued an order withholding issuance of the mandate for its April 21, 2021, holding in Hunstein v. Preferred Collection and Management Services, Inc.

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California may move to regulate booming debt settlement industry

A bill aims to create new rules for California’s mostly unregulated debt settlement industry. AB 1405, expected to pass through Senate committees, comes at a time when the industry expects to see a 75% increase in account enrollment.

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Alert: Biden Signs Law Overturning True Lender Rule

On June 30, 2021, President Joe Biden signed a joint resolution to revoke the Office of the Comptroller of the Currency’s (OCC) “true lender” rule (the “Rule”). Passed in October 2020, the Rule clarified that a national bank was the true lender of a loan if it was the named lender on the loan agreement or funded the loan. Under the Trump administration, the OCC said the Rule would provide regulatory clarity for banks, borrowers and other stakeholders to identify the lender in a transaction.

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Most student loan borrowers aren’t ready to resume payments, survey finds – here’s what you can do

Federal student loans are in forbearance until Sept. 30, 2021, and unless President Joe Biden's administration takes further action, millions of borrowers will need to resume making payments on Oct. 1. But the vast majority of college graduates aren't prepared for federal student loan payments to resume, according to a survey of more than 23,000 student loan borrowers conducted by Student Debt Crisis, an advocacy group.

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LexisNexis Risk Solutions Wins Seven Categories at the 2021 Cyber Defense Global InfoSec Awards

ATLANTA, July 7, 2021 /PRNewswire/ -- LexisNexis® Risk Solutions won seven awards at the ninth annual Cyber Defense Global Infosec Awards, an independent awards competition administered by the Cyber Defense Media Group as part of its Cyber Defense Awards Platform. The judging panel consisted of CISSP, FMDHS, CEH, certified security professionals who vote based on their independent reviews of the products and services submitted for contention.

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Home loan amounts for purchases rising as mortgage applications fall

The average loan amount for buying a home in the U.S. continued to climb this week while loan applications across the board continued to drop, as low inventory in the market pushes the cost of purchasing to greater heights. "Swift home-price growth across much of the country, driven by insufficient housing supply, is weighing on the purchase market and is pushing average loan amounts higher," Joel Kan, the Mortgage Brokers Association Associate vice president of Economic and Industry Forecasting, said in the MBS' latest report on its weekly mortgage survey.

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Fireworks On The Horizon For Post-PPP Alt-Lending

With the Paycheck Protection Program (PPP) and other government aid initiatives ending, small businesses need to turn to new sources of capital. According to some industry players, the moment could be ripe for an alternative lending comeback. “PPP has come to an end and is starting to wear off in terms of its impact,” explained Sam Graziano, CEO of Linear Financial Technologies, in a conversation with PYMNTS last month. “As confidence in the small business base comes back, you’re going to see a lot more investment, and therefore a need for capital in the space.”

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Fixed-rate student loan refinancing rates tick up, still hover near yearly lows

Rates for well-qualified borrowers using the Credible marketplace to refinance student loans into 10-year fixed-rate loans crept up slightly during the week of June 28, 2021. Still, 10-year rates remain a bargain compared to earlier this year, when rates averaged 3.83%

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Fla. Supreme Court Holds Note Prevails Over Mortgage in Event of Conflict

The Supreme Court of Florida recently held that a mortgage and note must be read together, and in the event of a conflict, the note prevails, quashing the decision of the Third District Court of Appeal because it conflicted with the Court’s established precedent.

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Should you buy now and pay later?

If you’ve shopped online recently, you may have noticed new payment options at checkout, including buy-now-pay-later (BNPL) credit, for purchases like clothing, electronics, furniture, and exercise equipment. BNPL is a type of deferred payment option that generally allows you to purchase items with little to no money paid up front, followed by installment payments. Its use has spiked during the COVID-19 pandemic. According to a recent survey, 42% of American consumers have used BNPL at least once.

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Texas Legislature Passes Remote Work Law for Office of Consumer Credit Licensees

Texas Gov. Greg Abbott signed a new law (H.B. 3510) that will allow remote work for employees of entities licensed by the Texas Finance Commission.

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Meet Connecticut’s New Cybersecurity Law

Like many state data security laws, the Cybersecurity Standards Act requires a cybersecurity program with “reasonable” controls.  But, rather than define what is reasonable by reference to certain enumerated requirements (like the laws in neighboring states Massachusetts and New York), the Cybersecurity Standards Act includes more general requirements and what is reasonable cybersecurity is established by way of a safe harbor. Specifically, the Cybersecurity Standards Act makes available an affirmative defense to a tort claim that a business’ failure to “implement reasonable cybersecurity controls” results in a data breach.

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Carr Stops Company from Exploiting Georgians

ATLANTA, GA – Attorney General Chris Carr today announced that Burlington Financial Group, LLC, Katherine Burnham, Sang Yi, and Richard Burnham (Burlington) have entered into a consent judgment with the State of Georgia and the Consumer Financial Protection Bureau (CFPB) to resolve allegations that they violated the Telemarketing Sales Rule, the Fair Business Practices Act (FBPA), and the Debt Adjustment Act in connection with the marketing, sale, and provision of debt relief and credit repair services.

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Industry Events

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