Today's Headlines

    New Member Welcome

    Confident Financial Solutions is a consumer finance company that finances automotive repairs. The company is based in Colorado and is licensed in 38 states. www.mycfapp.com

    First Help Financial (FHF) is a technology-driven and customer-focused auto finance lending platform, based in Newton, MA. Through data analysis and an underwriting model that incorporates data beyond FICO scores and traditional income verification, FHF expands credit access to more consumers and enables dealer partners to sell to a wider array of customers. www.firsthelpfinancial.com

    Bank of the West Executive Named Chair of AFSA Vehicle Finance Division; Vice Chair Named

    AFSA Staff

    Vincent Rice, Executive Vice President with the Bank of the West, was installed as the new chair of the American Financial Services Association (AFSA) Vehicle Finance Division Board at the conclusion of the division’s 21st annual conference and exposition in New Orleans, La. This position is a one-year term.

    Rice succeeds David Paul, Senior Vice President, Financial Services, American Honda Finance Corporation, who has served in the position since March 2016. In this role, Rice will oversee the division’s initiatives and lead the division’s more than 800 members.

    Rice is executive vice president for Bank of the West, a subsidiary of BNP Paribas Group, a leading bank in the Euro-zone. As the head of the consumer lending division, Rice’s responsibilities include the consumer and commercial portfolios in the automotive, recreational vehicle, and marine industries. He was asked to join Bank of the West to build the automotive initiative in the U.S. in alignment with BNP Paribas’ global auto strategy.

    Rice has over 28 years of experience in commercial and consumer auto financing. He began his career at Chrysler Financial in an entry level position and progressively increased his responsibilities at regional offices in Omaha, San Francisco, and Denver, gaining experience in all aspects of automotive finance operations. With the merger of Daimler and Chrysler, Rice moved to the headquarters in metro Detroit and led strategic projects, developed national sales processes, and then managed major accounts for DaimlerChrysler Financial Services.

    In 2006, Rice was appointed the executive director for Chrysler Financial’s Northeast Business Center located in New York. After successfully managing the portfolio through the financial crisis and subsequent manufacturer bankruptcy, he returned to Detroit. Rice was a part of the team that engaged TD Bank to acquire the consumer portfolio and lending platforms, establishing the new TD Auto Finance, serving as the Head of U.S. Business. Rice joined Bank of the West in 2014.

    Larry Hund, President & COO, Harley-Davidson Financial Services, was also elected to serve as Vice Chairman. A 30-year financial services veteran, Hund has held a wide range of executive roles throughout his career.  Upon joining HDFS in 2002, he served as vice president of operations and chief financial officer and also was interim chief operating officer from July 2006 to January 2007.

    Hund serves on the Board of Directors of AFSA and the Vehicle Finance Board.

    VF ’17 Panel Outlines Washington Landscape

    AFSA Staff

    On Wednesday, AFSA EVP Bill Himpler, Mark Calabria, Director of the Cato Institute’s Financial Regulations Studies office, and Frank Salinger, Principal, with Frank Salinger Law outlined how, elections have consequences, and what the industry can expect in the coming months.

    Himpler described the state of affairs with the Consumer Financial Protection Bureau (CFPB) and discussed how the bureau will interact with the new administration. Last weekend, President Trump signed an executive order freezing new regulations. CFPB Director Richard Cordray noted in remarks following the order that he believed the CFPB’s mandate outweighs the Trump order. Himpler noted that he feels strongly that those comments caught the attention of the new administration.

    The freeze could have an ongoing impact on proposed rules governing arbitration, debt collection, the small-dollar loan rule and small business loan data collection.

    Salinger noted that it’s important to remember that transitions are never smooth, especially when parties switch. The transition from the Obama to Trump administrations seems so unusual and contentious because there is more media and social media attention. The regulatory freeze order by the Trump administration is also common, Salinger said.

    Salinger went on to say that today’s CFPB is similar to the Federal Trade Commission (FTC) in the 1980’s. When President Reagan took office and named Jim Miller to head the agency, it shifted focus from extreme regulation to enforcement of existing laws. This was a great improvement for business and the consumer. Salinger expects the CFPB to follow the same direction under the Trump administration.

    Calabria gave the congressional view of the situation and noted that the 2018 midterm election, by far, is a pivotal election. Sens. Elizabeth Warren (D-MA) and Sherrod Brown (D-OH), both staunch defenders of the CFPB and members of the Senate Banking Committee, are up for reelection.

    Like Salinger, Calabria felt that Director Cordray would likely not serve out his full term. He also noted that he believes the PHH lawsuit will be vacated. The bureau will take a less “gotcha” approach to enforcement in the coming months.

    Calabria noted that Senate minority leader Chuck Schumer (D-NY), is a pragmatic lawmaker and is not a diehard defender of the CFPB and he’d be prepared to cut a deal on the funding or structure of the bureau. Calabria closed his remarks by noting that the President is a busy man and so he would not have taken the meeting with former Texas Congressman Randy Neugebauer unless he intended to enact reform at the bureau. Neugebauer most recently served on the House Financial Services Committee.

    The overarching message from the panel was one of cautious optimism. Since the CFPB has done quite a bit of “regulation by enforcement” none of these things are hardwired, making it easy for the next director to make needed changes.

    A concluding question asked the panel, “What issue could pop up in the next year that no one is paying attention to?” All the panelists unanimously agreed that history shows anything that shows up on 60 Minutes or 20/20 could easily translate to regulation in Washington.

    U.S. Credit Bureaus: Consumer Data Indicates Stable Subprime Auto Market

    AFSA Staff

    Speaking at the start of AFSA’s 21st annual Vehicle Financing Conference and Expo, panelists from the three major US credit Bureaus – Equifax, Experian, and Transunion – concluded that national consumer credit data indicates a stable subprime auto lending market with no evident weakening in lenders’ underwriting practices. The panelists cited factors like low unemployment, the healthy economy and risk-based analytics tools used today by lenders as some of the reasons for their conclusions.

    “We are happy that AFSA is providing the forum for the credit reporting agencies to set the record straight on the health of the subprime auto finance market,” said Chris Stinebert, President & CEO of AFSA. “It’s especially important coming off another record year of light vehicle sales.” 

    New research from Equifax examines auto lending dynamics and resulting performance differences. Findings point to continued strength in what has increasingly become a segmented sector within which different lender types specialize in narrow credit bands. Most lenders remain very conservative relative to their pre-recession lending habits, while some are meeting the needs of consumers with lower credit scores.

    “The fact is loan performance is good relative to historical levels and the slight weakening we are seeing cannot be attributed to a change in how lenders are underwriting their loans or call into question the stability of the subprime market as a whole,” said Amy Crews Cutts, SVP and Chief Economist for Equifax.  “Consumer data tells us that market share is shifting across different lender types and specialty lenders are lending in higher-risk segments that are not otherwise being served.”

    Experian’s data has shown that the overall automotive lending market is quite healthy. In fact, based on its third quarter data, lenders are becoming increasingly conservative, reducing their share of subprime loans and lending to customers with higher average credit scores.

    Specifically, the total subprime market is down 4.3 percent from 2015, to make up 20.39 percent of the loan origination market. Conversely, the total prime market rose 2 percent in Q3 2016 to make up 59.8 percent of loan originations. The average credit score for a vehicle loan also increased 3 points, going from 715 to 718.

    “The sky is most definitely not falling on automotive lending,” said Melinda Zabritski, senior director of automotive finance for Experian. “While we may have seen growth in subprime or deep-subprime loans in recent years, it is important to keep it in perspective - the entire market has grown from a volume standpoint across all risk tiers. Some of the more interesting trends our research has shown is that consumers, most notably prime consumers, are moving away from new car shopping and leaning towards leasing and financing used vehicles in order to keep payments more manageable.” 

    According to TransUnion’s Industry Insights Report, outstanding auto loan and lease balances for subprime consumers totaled $172 billion at the end of Q3 2016.  This represents 16% of the $1.1 trillion in total auto balances.  By comparison, subprime balances represented over 20% of outstanding auto balances at the end of the recession in Q3 2009.  While TransUnion observes an increase in 60-day+ delinquency for auto accounts, it is still below the levels observed in 2009, and auto loans and leases remain among the lowest delinquency credit products.

    “Subprime auto financing today is very different from subprime mortgage lending 10 years ago.  Subprime auto lending is much smaller than mortgage in terms of total outstanding loan balance and average loan size, so exposure from loss at a macro and micro level is likely to be less severe. Risk is also broadly distributed among lenders and investors, limiting the systemic risk stemming from one lender’s challenges,” said Jason Laky, senior vice president and automotive business leader at TransUnion. “Auto payments also continue to be a priority for consumers, and a hedge against the risk of an auto finance bubble. In fact, TransUnion research has found that – since at least 2003 – consumers have placed an emphasis on paying their auto loans before their mortgages and credit cards."

    State AGs Submit Letter Defending CFPB; Administration Still Undecided on CFPB Future

    AFSA Staff

    During a press briefing on Monday, White House Press Secretary Sean Spicer stated that President Trump has not yet decided whether to replace Consumer Financial Protection Bureau (CFPB) Director Richard Cordray before the expiration of his term. On Jan. 18, Cordray stated that he has no intention to step down before the end of his term. He also said the CFPB will continue to enforce its existing regulations while its lawyers “digest” how President Trump’s executive order halting new regulations will apply to an independent agency like the CFPB.

    The Congressional Black Caucus has sent a letter to President Trump registering their strong opposition towards any action to remove Director Cordray. The letter follows a joint op-ed they published in The Hill last week as well as a letter sent by House Financial Services Democrats.

    Seventeen Democratic state attorneys general (AGs) earlier this week filed a motion to intervene in PHH Corporation v. CFPB, the case currently before the U.S. Court of Appeals for the D.C. Circuit that challenges the CFPB’s constitutionality. The AGs argue that, “the incoming administration has indicated that it may not continue an effective defense of the statutory for-cause protection of the CFPB director,” and “a significant probability exists that the pending petition for rehearing will be withdrawn, or the case otherwise rendered moot.” They also argue that they have a vital interest in defending the CFPB because of their authority to enforce state and federal consumer financial protection laws.

    The CFPB also was discussed during last week’s confirmation hearing for Treasury Secretary nominee Steven Mnuchin. When Senator Tom Carper (D-DE) asked for his take on the CFPB, Mnuchin stated that the biggest issue he has with the CFPB is that he doesn’t believe it should be funded by the Federal Reserve. Rather, it should be funded through the appropriations process. During the hearing, Mnuchin also highlighted the Trump Administration’s belief in appropriate regulation, emphasizing how the CFPB, Federal Reserve, and other agencies often have overlapping regulations.

    While the Trump Administration has not yet announced if they will replace Cordray, Mnuchin’s comments during the hearing and in previous statements indicate the administration’s opposition to overregulation and its potential support for changes to the bureau’s structure and funding. Cordray’s comments today demonstrate how the CFPB does not intend to change its way of regulating during this transitional period.

    The Democratic state AGs general motion in the PHH case is another example of Democratic opposition to changes to the Bureau’s structure. In addition, many of these AGs have coordinated with the CFPB on enforcement actions or have used their authority under Title X of the Dodd-Frank Act to enforce federal consumer financial protection laws, including the prohibition on unfair, deceptive and abusive practices.