At a glanceFriday, November 05, 2021

Collection Industry News At A Glance - November 5, 2021
Friday November 5, 2021
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Medical Debt and Reg F: Communication, Communication, Communication

As accounts receivable management (ARM) industry professionals make final preparations for Reg F compliance before Nov. 30, there are long-term takeaways to remember when it comes to health care collections and communication with clients and consumers.

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Mortgage rates rising amid uptick in US economic confidence: Freddie Mac

Mortgage interest rates rose once again, hitting 3.14% for the average 30-year fixed-rate loan as confidence in today’s economy and recovery from the COVID-19 pandemic increases, according to the latest Primary Mortgage Market Survey from Freddie Mac.

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5-year fixed personal loan rates plummet to lowest level since July

Borrowers with good credit seeking personal loans during the week of Oct. 25, 2021, prequalified for rates that rose for 3-year terms and fell for 5-year terms compared to the previous week's fixed-rate loans.

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How the student debt crisis ballooned to $1.7 trillion

The student debt crisis ballooned to over $1.7 trillion in recent years. This debt has varying effects on students, workers and the larger economy. Since taking office, President Biden has been largely silent about a plan to broadly cancel student debt, even though he campaigned on canceling up to $10,000 in student debt for all borrowers. However, his administration has absolved some student debt for certain groups, like borrowers with disabilities and active duty service members.

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CFPB Takes Action to Stop False Identification by Background Screeners

WASHINGTON, D.C. — The CFPB today issued an advisory opinion affirming that consumer reporting companies, including tenant and employment screening companies, are violating the law if they engage in shoddy name-matching procedures. Regulators are concerned about the significant harms caused by false identity matching, where an applicant is disqualified from rental housing or a job based on having the same name as another individual with negative information in their credit history.

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Student loan refinance rates hover near record lows and provide path to savings

Pulling yourself out of the quicksand of student debt has gotten easier, thanks to cheaper rates on a money-saving refinance. Five-year and 10-year refi loans remain in the neighborhood of their recent all-time lows, according to new numbers from a major loan marketplace.

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The CFPB Director Expresses Concern About Section 1071 Regulatory Burdens on Small Banks

After the Consumer Financial Protection Bureau (CFPB) issued their Notice of Proposed Rulemaking (NPRM) related to Dodd-Frank 1071, Rohit Chopra, the new CFPB director, expressed his concern regarding the regulatory burden that the proposed rule would have on small banks. Director Chopra stated that he hoped the CFPB could move towards bright-lined rules that are both easy to follow and enforce. He further expressed the importance of helping small banks remain successful, as opposed to forcing small banks into consolidation.

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DCM Services Announces Membership With Telecommunications Risk Management Association (TRMA)

Minneapolis, Minn. — (November 4, 2021) —DCM Services, LLC (“DCMS”), the industry leader in data and contact management solutions for the estate and specialty receivables recovery market, has become the newest business affiliate member of the Telecommunications Risk Management Association (“TRMA”). This new partnership will be mutually beneficial, allowing both organizations to share best practices, benchmarking data, and other relevant information to elevate the industry.

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FirstCash to Acquire American First Finance, a Leading Technology-Driven Virtual Lease-to-Own and Retail Finance Platform for Underserved Customers

FORT WORTH, Texas, Oct. 28, 2021 (GLOBE NEWSWIRE) -- FirstCash, Inc. (the “Company”) (Nasdaq: FCFS), the leading international operator of over 2,800 retail pawn stores in the U.S. and Latin America, today announced that it has entered into a definitive agreement to acquire American First Finance, Inc. (“American First Finance” or “AFF”), a rapidly growing, technology-driven virtual lease-to-own (“LTO”) and retail finance provider focused on underserved, non-prime customers. Under the terms of the agreement, the total consideration payable at closing is valued at approximately $1.17 billion, based on FirstCash’s closing stock price on October 26, 2021, consisting of approximately 8.05 million shares of common stock and $406 million in cash, subject to a net debt adjustment. Up to an additional $300 million of consideration is payable in the event AFF achieves certain performance targets through the first half of 2023.

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CFPB Compliance Aid: Debt Collection Rule – Disclosing the Model Validation Notice

The Debt Collection Rule (Rule) requires debt collectors to provide consumers with certain information to help them identify the debt being collected. This information is called the “validation information” and consists of information about the debt, information about the consumer’s protections and rights during collection of the debt, and information to facilitate the consumer’s ability to exercise those rights. The Rule details how a debt collector can provide the validation information in a validation notice.

This is a Compliance Aid issued by the Consumer Financial Protection Bureau. The Bureau published a Policy Statement on Compliance Aids, available at, that explains the Bureau’s approach to Compliance Aids.

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The New York Large Print Notice Is Fuzzy in Any Format

On Oct. 8, S.737A was signed into New York law, “requiring debt collectors to inform debtors that written communications are available in large print format.”  The legislation becomes effective Nov. 7, 2021.

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Eleventh Circuit Vacates Hunstein I, But Still Holds Mail Vendor Usage Violates FDCPA

In a surprise move last week, the Eleventh Circuit vacated its prior ruling in Hunstein but nevertheless doubled down on in a decision that will continue to allow the new wave of claims under the Fair Debt Collection Practices Act (“FDCPA”) to continue in federal courts.  Read on to learn more and what it means for the debt collection industry going forward assuming this 2-1 decision stands.

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Disputes on Consumer Credit Reports

Because of the importance of credit reporting to the consumer finance system, the accuracy of credit reports is a perennial policy concern. Studies have found that a substantial minority of consumers have errors on their credit reports with the three nationwide consumer reporting agencies (CRAs), including errors substantial enough to meaningfully affect consumers’ credit scores.

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High home prices could drop in November as mortgage rates increase, economist says

Home prices are rising, though not at the same record pace as earlier this year. As a result, economists say both homebuyers and homeowners should expect substantial home value increases annually, but decreases month-over-month toward the end of 2021.

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40% of organizations suffered a cloud-based data breach in the past 12 months

Despite increasing cyberattacks targeting data in the cloud, 83% of businesses are still failing to encrypt half of the sensitive data they store in the cloud, raising even greater concerns as to the impact cyber criminals can have. 40% of organizations have experienced a cloud-based data breach in the past 12 months, according to a study conducted by 451 Research.

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CFPB Finds Credit Report Disputes Far More Common in Majority Black and Hispanic Neighborhoods

WASHINGTON, D.C. — The Consumer Financial Protection Bureau (CFPB) today released research finding that consumers in majority Black and Hispanic neighborhoods, as well as younger consumers and those with low credit scores, are far more likely to have disputes appear on their credit reports. The new research is a part of a series of reports focusing on trends in the consumer financial marketplace, and uses data on auto loan, student loan, and credit card accounts opened between 2012 and 2019.

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Eleventh Circuit Keeps Troublesome FDCPA Ruling Despite Rehearing, Dissent

The Eleventh Circuit Court of Appeals has issued its ruling on the motion for rehearing in Hunstein v. Preferred Collection and Management Services, Inc., Case No. 19-14434 but most of the troublesome aspects of the Court’s panel opinion remain.  In Hunstein, the Eleventh Circuit reversed the dismissal of a Fair Debt Collection Practices Act (“FDCPA”) lawsuit alleging that the Defendant, a debt collector, had violated third party disclosure prohibitions in the FDCPA by using a mail vendor to mail its dunning letters. 

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FTC Finalizes Financial Institution Safeguards Rule

On October 27, 2021, the Federal Trade Commission (FTC) announced a newly updated rule under the Gramm-Leach-Bliley Act (GLBA) intended to require financial institutions to strengthen their data security safeguards to protect consumer financial information. The newly updated rule, the Standards for Safeguarding Customer Information (Safeguards Rule), amends the FTC’s 2002 Safeguards Rule, and comes in the wake of significant data security incidents and cyberattacks in the consumer financial services sector.

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New York Adds ADA-Type Requirement and Teeth to Debt Collection Procedure Act

On October 8, the governor of New York signed Bill No. AO-2260A to assist borrowers who need accommodation for visual impairments. Bill No. AO-2260A is “an act to amend the general business law, in relation to requiring debt collectors to inform debtors that written communications are available in large print format” (or other different formats). In short, this law will require “principal creditors” and “debt collectors” to inform a consumer in their “initial communication” that the consumer may request future communications in a “reasonably accommodatable format” such as large print, braille, audio compact disc, or other alternatives. This law becomes effective November 7, 2021.

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CFPB Issues Debt Collection Guidance and Creates More Uncertainty for Mortgage Servicers

On October 29, 2021 — just 32 days prior to the November 30, 2021 effective date — the Consumer Financial Protection Bureau (CFPB) released new guidance regarding the debt validation notice requirements that are part of the upcoming debt collection rules. Specifically, the CFPB provided (1) new Frequently Asked Questions related to the special rule for certain residential mortgage debts when a mortgage servicer might otherwise be required to fully display the itemization information; and (2) a 27-page guidance document explaining how debt collectors comply with the itemization information requirements when populating a debt validation notice. Earlier in October, the CFPB published on its website a Spanish translation of the debt validation notice model form.

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CFPB Director Chopra Appears at First House Hearing Since Approval as Director

On October 28, newly approved CFPB director, Rohit Chopra, made his first appearance before the House Financial Services Committee since his narrow approval by the Senate.  Director Chopra focused on topics with bipartisan appeal:  the Bureau’s enforcement efforts aimed at large companies, ways it may try to help small businesses (including small financial companies) and the importance of strong relationships between banks and customers.

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Crucial Conversations All Debt Collectors Should Have with their Creditors

With the CFPB having decided to leave the effective date of the Debt Collection Rule as November 30th, the push is on for debt collectors to ensure their compliance with the Rule by that date. As debt collectors make the final push towards implementation, there are crucial conversations debt collectors should be having with creditors to ensure a smooth transition.

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Statement of CFPB Director Chopra on Stablecoin Report

WASHINGTON, D.C. CFPB Director Rohit Chopra released a statement today regarding the Report on Stablecoins issued by the President’s Working Group on Financial Markets, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation.

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Fintech lender Enova says CFPB probing loan processing

(Reuters) - The U.S. Consumer Financial Protection Bureau is investigating loan processing issues at fintech lender Enova International Inc, the company said on Thursday.

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FHFA to permanently allow desktop appraisals: How can it make the mortgage process easier?

The Federal Housing Finance Agency (FHFA) Acting Director Sandra Thompson announced at the Mortgage Bankers Association (MBA) conference in San Diego that it will allow lenders to use desktop appraisals for conventional loans. These alternative valuation products will improve the homebuying process for many borrowers.

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Americans have $1.42 trillion in auto loan debt and industry is off the rails, report says

It's no secret that the price of new and used cars climbed exponentially in the past decade, especially in the last year and a half. As vehicles get more expensive, there's a perfect storm: Buyers need to borrow money and lenders are ready to charge for that money. According to a report from Consumer Reports last Wednesday, the auto loan industry resembles the Wild West more than we thought.

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U.S. consumer watchdog to review Big Tech data, promote lending competition

WASHINGTON, Oct 27 (Reuters) - Chief consumer finance watchdog Rohit Chopra told U.S. lawmakers on Wednesday his agency will review Big Tech's impact on the flow of money in the economy as leading technology firms use real-time consumer payments systems that collect huge amounts of personal data.

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U.S Mortgage Rates Rise for a 3rd Consecutive Week

Mortgage rates were on the rise again, holding onto 3% levels for the 5th time since 21st April. In the week ending 28th October, 30-year fixed rates increased by 5 basis points to 3.14%. Compared to this time last year, 30-year fixed rates were up by 33 basis points.

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TransUnion Marks Five-Year Anniversary of its Innovation Lab as More Financial Institutions Seek New Models to Offer Access to Affordable Credit

TransUnion (NYSE: TRU) marked the five-year anniversary of its popular Innovation Lab this week during the Money 20/20 USA conference. Since its inception the Innovation Lab has helped dozens of banks, insurers, lenders and other financial institutions with customized data and analytics capabilities.

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