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    AFSA’s Consumer Credit Reporting Resource Available on AFSAonline.org

    The American Financial Services Association (AFSA) recently released a resource guide with legal principles to consider when implementing policies and procedures regarding the accuracy and integrity of the consumer information furnished to the Consumer Reporting Agencies (CRAs). AFSA’s “Credit Reporting Do’s and Don’ts” also highlights practices that AFSA members providing information to the CRAs should avoid. The practices that are highlighted resulted in CFPB enforcement actions. The guide touches upon employee training, handling of consumer disputes, and monitoring for inaccurate information on consumer files.

    The document is available in the Compliance area of the AFSA website.

    CFPB Changes Comment, RFI Deadline for Small-Dollar Rule

    AFSA Staff

    The Consumer Financial Protection Bureau (CFPB) has published the proposed small-dollar lending rule in the federal register. The rule would drastically alter the landscape of small-dollar credit in the United States, restricting access for many. While the rule’s target is the payday and title loan industries, traditional installment loans also will be affected. Installment loans are also the target of a request for information (RFI) in the proposed rule, as the CFPB seeks to gather more information from the public and industry on the lending product. According to an announcement from the CFPB’s David Silberman on July 21, the date to submit comments to the bureau on the small-dollar rule itself has been extended to Oct. 7, while the RFI date has been extended to Nov.  7, 2016. 

    CFPB Issues Proposed Rule on Debt Collection

    AFSA Staff

    On Thursday, the Consumer Financial Protection Bureau (CFPB) unveiled its proposed rule governing debt collection in conjunction with a field hearing in Sacramento, Calif. The rule specifically covers third-party debt collectors, or those who operate on behalf of creditors. The CFPB noted that first-party collectors - financial institutions who collect directly on their own behalf - will be addressed at a later date.

    The Wall Street Journal reports that some 70 million American consumers have debts in collection proceedings. The industry encompasses nearly 9,000 businesses with #13.7 billion in annual revenue. Many of the larger players have said that they welcome the regulation, as a way to remove ambiguity over key issues.

    According to a study the bureau released earlier this year, one-in-three consumers one in three had been contacted by a debt collector in the past year. The bureau reports that debt collection is the most common complaint it receives.

    The proposed rule would overhaul the debt collection marketplace considerably. A few highlights of the rule are below.

    • Debt collectors would have to substantiate a debt by confirming name, address, telephone number and information about the debt before collection can begin.
    • Collectors would be limited to six communication attempts per week though any point of contact.
    • Debt collection companies would be required to include more information about the debt itself in initial calls with the consumer.
    • Disputing a debt would be made easier for consumers.
    • If a consumer disputes the validity of the debt in any fashion, collectors would be forced to stop collection completely until the necessary documentation is checked. If information is discovered that may be inaccurate or fraudulent, the collector would have to resolve the issue before continuing.
    • If a disputed debt is transferred to another collector, the new collection company must still resolve the dispute before collection is attempted.

    The bureau announced the proposed rule in preparation for its Small Business Review Panel to gather feedback from industry. 

    AFSA will continue to monitor the proposed rule to ensure the activities of first-party creditors are not affected by undue regulation.

    AFSA Signs Amicus on Disirate Impact Rule Case

    The American Financial Services Association (AFSA) joined several other trade associations in an amicus brief asking the U.S. District Court for the District of Columbia to vacate the U.S. Dept. of Housing and Urban Development’s (HUD) disparate impact rule. The HUD rule interprets the Fair Housing Act (FHA) to prohibit housing-related activities which, although not motivated by intent to discriminate, result in a disparate impact on certain protected groups.

    The amicus brief stated, “Amici and their members vigorously support the Fair Housing Act and strongly oppose discrimination in any aspect of housing or lending. And amici have serious concerns that in promulgating the Rule at issue, the U.S. Department of Housing and Urban Development … adopted an incorrect and improper standard for disparate-impact liability under the Fair Housing Act—a standard that is inconsistent with Wards Cove Packing Co. v. Atonio, 490 U.S. 642 (1989), 2 and that ignores the limitations on the application of disparate-impact claims required by Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., 135 S. Ct. 2507 (2015) (‘Inclusive Communities’).”

    AFSA is concerned that if the rule stands, it will substantially increase both the risk and cost of litigation well beyond that which its members would face in complying with Supreme Court precedent.

    Non-Prime Automotive Finance Sector Experiences 5th Straight Year of Growth

    AFSA Staff

    The non-prime automotive financing sector experienced the fifth consecutive year of market growth in 2015, according to the 2016 Non-Prime Automotive Financing Survey. Co-sponsored by the National Automotive Finance (NAF) Association and American Financial Services Association (AFSA), the survey is a benchmarking tool to identify trends and guide policy decisions.

    This year’s survey studied 50 finances sources representing 2.1 million active accounts with an outstanding principal of $21 billion.

    Some key findings from the survey regarding 2015 include:

    • Fifth consecutive year of market growth: 70% of Survey Participants experienced a YOY increase in portfolio value. 67% of participants experienced an increase in account volume.
    • Mixed Risk Indicators: Several indicators showed a trend towards improved quality including higher credit scores for new and used, decreases in payment-to-income, decreases in average annual net charge-off, and stable cost of funds. Several indicators show a less than favorable trend including increases in delinquency and repossession rates.
    • Credit scores improve - YOY increase: Average consumer credit scores increased across the board.
    • Average loan rates increase: Average loan rates increased in 2015. Both new and used experienced an increase greater than 4% YOY.

    The survey features a wealth of actionable information for finance company executives.

    Benchmark Consulting International administered the survey and provided the report analysis. Participating finance sources responded to survey questions covering topics such as originations, servicing, and loss mitigation operations. Contributing to the report are TransUnion and FactorTrust who provide additional market insight by supplying data and analysis on non-prime auto financing.

    The survey results will be provided complimentary to all survey participants.  Non-participating finance companies may purchase the survey for $500.To purchase, contact Diane Merino at the National Automotive Finance Association at (717) 676-1533 or email Diane.merino@nafassociation.com.