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Rosy Outlook for Auto Loans
Automotive News (12/19/12) Henry, Jim

Low interest rates, low delinquencies, more and bigger auto loans, sharper competition among auto lenders, and high replacement demand indicates there will be continued growth in auto finance in 2013, according to TransUnion. An improved housing market, improving consumer confidence, and fuel-efficient new models will also contribute to growth in 2013, concluded Morgan Stanley Research.
TransUnion anticipates a slight increase in auto loan delinquencies of 60-plus days from the fourth quarter of 2012 to the fourth quarter of 2013. Making the statistic more impressive said Peter Turek, automotive vice president for TransUnion’s financial services business unit, is the fact that subprime lending is up. "There are more loans being made to nonprime, yet we're not seeing that delinquency factor like we did in the past," he said. Turek also noted that unlike in previous downturns, a TransUnion study found that people are putting their car payments, rather than their mortgage payments, first. Consumer borrowing is also up – the average debt per borrower for new and used vehicles is expected to grow from $13,689 in the fourth quarter of 2012 to $14,133 in the fourth quarter of 2013.

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Inside the Beltway
CFPB Wants to Allow Banks to Test Their Own Mortgage Disclosures
Reverse Mortgage Daily (12/19/12) Oliva, Jason

The Consumer Financial Protection Bureau (CFPB) has proposed a plan that would allow banks to test new mortgage disclosures for borrowers. Companies that receive CFPB approval will be exempt from certain federal disclosure requirements for a set period. The purpose of the plan is to encourage innovation from financial services institutions.
The CFPB’s proposed policy describes which programs will be considered eligible for a temporary safe harbor, determining factors for approval, procedures for issuing waivers, and how the Bureau will share information about the trial programs. The proposal is open to public comments for 60 days.

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CFPB Seeking Comment on Future Credit Card Policy
American Banker (12/19/12) Witkowski, Rachel

The Consumer Financial Protection Bureau (CFPB) is seeking comments on how the Credit Card Accountability Responsibility and Disclosure of 2009 (CARD Act) has impacted consumers and the credit card industry. The specific areas the Bureau would like information about include: changes to terms and conditions; cost and availability of credit; account repricing; and the extent to which unfair or deceptive practices still exist. "With today's inquiry, the bureau is seeking to understand how the credit card market is working in practice and how the CARD Act changes have affected consumers and credit card issuers," said CFPB Director Richard Cordray. The comment period will be open for 60 days after publication in the Federal Register. Information gathered will culminate in a report to Congress on the state of the consumer credit market, and will be used to help the Bureau make future policy decisions on the credit card industry.

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CFPB Releases Exam Manual for Student Loan Supervision
American Banker (12/17/12) Witkowski, Rachel

On Dec. 17, the Consumer Financial Protection Bureau (CFPB) issued a manual detailing how its examiners will review private student lenders on issues ranging from advertising to disclosures to how they handle complaints. The Student Lending Examination Procedures will apply to both banks and non-banks that offer student loans. "For many borrowers, a student loan may be their first major financial decision," said CFPB Director Richard Cordray. "With student debt topping a trillion dollars, we will be working to ensure consumers are treated fairly and lenders are held accountable." The CFPB also is developing web-based tools to help consumers shop for student loans, financial aid and repayment options.

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National and State News
‘Fast Track’ Foreclosure Process Aimed at Abandoned Properties
Credit Union Journal (12/17/12)

The Illinois General Assembly passed legislation that would establish a “fast track” foreclosure process for abandoned residential properties. The measure, Senate Bill 16, is now awaiting Governor Pat Quinn’s signature. It would allow lenders to shorten the foreclosure process for abandoned properties by approximately 18 months, enabling lenders to obtain a title to the properties more quickly and assume the responsibility to maintain and secure them. Doing so would benefit neighbors, neighborhoods and local governments, said the Illinois Credit Union League. It would also benefit lenders because they will acquire properties that are less damaged and deteriorated, so they can be sold at a higher amount. Lenders also will save 18 months of costs such as property taxes, insurance and loan servicing fees. The bill imposes fees on lenders that would be used to fund remediation of abandoned property and foreclosure counseling programs.

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J.D. Power: Finance Servicing Experience Has Bigger Impact on Lender Choice, Not Dealer Selection
SubPrime Auto Finance News (12/17/12)

While a strong relationship exists between a superior vehicle loan or lease servicing experience and consumer intent to use the same finance provider again, there is little relationship between a customer’s vehicle loan or lease servicing experience and their intent to use the same dealership for a future purchase or lease, according to J.D. Power and Associates 2012 Consumer Financing Satisfaction Study. Rather, a consumer’s likelihood to return to the same dealer is significantly impacted by the in-dealership experience. However, according to Lisa Stimac, account director for automotive finance at J.D. Power and Associates, “finance providers may still influence dealer consideration by ensuring efficient approval processes and knowledgeable staff.” Stimac added that “by providing seamless, fast service throughout the loan or lease period, financing providers increase their chances of being re-selected and building brand loyalty.” J.D. Power concluded that practices relating to problem prevention, such as providing service alerts or reminding customers of a payment, increase customer satisfaction and minimize the number of interactions with the lender, which takes time and resources.
The study was conducted across the mass market loan, mass market lease, luxury loan and luxury lease consumer vehicle financing segments. It measured customer satisfaction in the billing and payment, interest rate/monthly payment, and website and phone contact factors of the new vehicle financing experience.

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CFPB Realigns Supervision Department
insideARM (12/18/12) Lunsford, Patrick

The Consumer Financial Protection Bureau (CFPB) announced on Dec. 17 that it has reorganized its supervision department into two units: Supervision Examinations and Supervision Policy. Previously, the Bureau was organized into offices for Nonbank and Large Bank Supervision. “We have now successfully launched supervision programs for both nonbanks and large banks,” the CFPB wrote. “Now our goal is to make these programs as efficient and effective as possible, and this reorganization will help us do that.”

Paul Sanford will be the acting assistant director of the examinations team, which will oversee CFPB efforts to recruit, train, and commission examiners; ensure policies and procedures are followed; and plan and execute examinations. Peggy Twohig will be acting assistant director of the policy team, which will ensure that policy decisions for supervision are consistent with both the law and the Bureau’s mission, and that they are consistent across markets, charters, and regions. The policy office will be organized by product or service market, rather than by the type of financial institution. Both teams will be responsible for developing supervision strategy and policy across both bank and nonbank markets.

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Toyota Financial Services Announces Promotions of Six Senior Executives
Toyota Financial Services News Release (12/12/12)

Toyota Financial Services (TFS) is promoting six senior executives who have been integral to the company’s performance. Chris Ballinger, who is responsible for Finance, Management Sciences and Global Treasury, was promoted to senior vice president & CFO. Mike Groff, who is responsible for Sales, Product, Marketing, Americas Region, Commercial Finance, and Vendor Management, was promoted to senior vice president, Sales, Product & Marketing. Al Smith was promoted to group vice president, Service Operations & Corporate Planning. In addition to being responsible for all CSC and Field Services Operations, the Corporate Strategy, Communications, and Corporate Social Responsibility departments will also report to him. Julia Wada, who is responsible for Human Resources, Real Estate and Operational Excellence, was promoted to group vice president, Human Resources and Business Technology Solutions. Ron Guerrier was promoted to vice president, Business Technology Solutions and chief information officer, and named a member of the Management Committee. Ann Bybee, vice president, Corporate Strategy, Communications & Corporate Social Responsibility, also became a Management Committee member.
Guerrier’s promotion and appointment to Management Committee and Bybee’s appointment to Management Committee are effective immediately, while the other promotions will be effective Jan. 1, 2013.

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December 20, 2012

Forward To A Colleague

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AFSA Newsbriefs

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