Tag: cfpb

24
Jan

Payday Loans: Good News Continues – CFPB & Payday Loan Ability to Repay Analysis

Payday Loans: Continued Good News for Consumers & Lenders!

WHAT IT IS

Ronald Mann, a Columbia University law professor was hired by our industry to survey 1000 payday loan borrowers.

The question put to our customers? How accurately could they estimate how long it would take the borrower to pay us back and how well the borrower understood our loan product.

No hand cuffs were put on the professor.

Payment to him did not hinge on his findings.

The results of this study per Professor Mann?

WHAT THIS MEANS

Mann said, “That while many borrowers are desperate for cash, they understand the cost of the loans, which typically charge an upfront fee of roughly $15 for every $100 borrowed.”
“The problem isn’t that payday loans are expensive, it’s that we live in a capitalistic society and don’t have a safety net, and lots of people make less than other people and can’t make ends meet,” he said.

Why all the hullabaloo?

Depending on the agenda of the reviewer of his findings, Professor Mann’s 2012 study strongly suggests that underwriting standards are often not necessary. Then again, in other circumstances thay maybe. “The relevant policy question is whether borrowers, deciding to start borrowing from a payday lender, understand what will happen to them,” said Mann in an interview.

The CFPB – Consumer Financial Protection Bureau referred to Mann’s research 30+ times in their effort to place new, crazy restrictions on payday loans, title loans… small dollar loan products.

Ironically, the recently appointed CFPB Director K. Kraninger and her Team are using this same study produced by Professor Mann to refute the attempt by Richard Cordray – previous administartions head of the CFPB – to constrict loan offerings to sub-prime, cash strapped consumers

Interestingly, Professor Mann argued how the CFPB, under former Obama-appointed Director Richard Cordray, interpreted his research, suggesting that “the current rule overemphasized cases where consumers borrowed beyond their means.”

The study revealed that 60% of first-time payday loan borrowers accurately predicted within two weeks when they could repay a small-dollar loan. But it also indicated that in many cases the flip side was true — that 40% of borrowers had no idea when they were going to pay back a loan.

WHY IT’S IMPORTANT: TRENDS

Today, the new CFPB is using this study to undermine Richard Cordray’s craziness. The study seems to strongly suggest that consumers can reliably predict when they can pay back the small dollar loan lender and thus no “ability to repay” determination is required!

In court documents, the CFPB under former acting Director Mick Mulvaney cited Mann’s study as a key piece of evidence in support of “revisiting” the underwriting requirements in the payday rule.

Last year, Mulvaney sided with two payday loan trade groups suing the CFPB to invalidate the rule, which relies on federal law banning “unfair” and “abusive” practices.

Citing Mann’s study, today’s CFPB advocates that our payday loan industry trade groups HAVE presented “a substantial case” demonstrating that most payday loan borrowers DO KNOW “what they’re getting into when they take out a payday loan.”

A judge recently agreed to delay the compliance deadline for when much of the Cordray rule will take effect to give the bureau time to propose and finalize a revamp.

“Basically the only thing that has changed the Bureau’s analysis is the people doing the analyzing.”

So, what’s the premise of our new CFPB to throw out the “ability to repay” analysis requirement? “If borrowers understand the product, then it cannot be abusive. Elements of abusive include “a lack of understanding on the part of the consumer of the material risks, costs, or conditions” of the loans as well as “the inability of the consumer to protect the interests of the consumer in selecting or using” the loans.

Again, according to who interprets Professor Mann’s study, it can be concluded that our consumer understands our payday loan product and “what can happen to them if they do not repay their loan.”

So… our products and processes are not unfair or abusive.

From Professor Mann: “The premise of the rule was that so few people understand that they are going to roll the loans over a lot that the product is unfair and abusive. That’s the real difficulty. It’s difficult to regulate out of existence a consumer finance product because some percentage of people don’t understand how the product works.”

“The funding came from an industry trade association, which hoped that the study would produce favorable findings, but the arrangement, as always, was that I could publish whatever I wanted whether the results struck them as good or bad,” Mann said. “There was not really any relationship with the payday lender.”

BOTTOM LINE

This “ability to repay” analysis WAS a big, black, ugly cloud hanging over our industry!

Sure, maybe some lawyers, lobbyists and more than a few vendors serving “The BUSINESS of LENDING MONEY to the MASSES” would bill for more hours.

THE WORST CASE SCENARIO

Our customers would have zero ability to get a few hundred dollars in their hand to pay an emergency bill, get their prescription filled, keep the lights on and avoid reconnection fees, pay their traffic ticket, fix their car to keep their job…

SMB’s all over America would shut down, jobs lost, landlords vacancy rates climb…

Banks & credit unions want NSF fees! They do not want to go through the hassle of lending $300 to “the masses.”

What do YOU think? Email: Jer@PaydayLoanIndustryBlog.com

Payday Loans, Car Title Loans, installment loans, signature loans

How to Lend Money to the Masses

08
Nov

Great News: CFPB Payday Loan Lending Rule Stayed! Opportunities Abundant

Consumers WIN BIG! CFPB payday loan rule shut down!! And DEALS/OPPORTUNITIES are immense today.

Frankly, there has never been a better time to be “lending money to the masses.”

  • Demand for credit by borrowers is huge.
  • Stats are all over the map – depending on the source – but something like 60% of US households do not have access to $1000 cash in an emergency.
  • The big sub-prime lending season is almost upon us.
  • Jobs and ability to pay us back are through the roof.
  • Consumer optimism is sky high.
  • Washington D.C is not likely to devise too many roadblocks that could stifle all this enthusiasm.

THE BIG NEWS TODAY?

U.S. District Judge Lee Yeakel reversed a previous order and grantedContinue Reading..

31
Oct

The CFPB- Like Giving Whiskey & Car Keys to Teenagers – More Good News for Lenders

Giving money and power to government is like giving whiskey and car keys to teenage boys. [P.J. O’Rourke.]

It’s a fact that things are looking really good for those of us who make it our “business to lend money to the masses!”

Yeah, it’s competitive out there! Yep, there is a lot of fraud. FTD [first time defaults] are scaling up.

CAC ‘s are on the increase. Elevate revealed a funded loan costs them $225 each. Enova is close. On the other hand, we have portfolios with <$80 CAC’s and <12% FTPD’s.

The economy is blazing along, average folks feel good about Continue Reading..

30
Nov

CFPB Elephant Dies-The PDL Industry is Dancing in the Streets WITH Their Customers

By Jer– New Sheriff at CFPB: The PDL Industry is Dancing in the Streets WITH their Customers!

As pointed out on several industry media sources, “There is a new sheriff in town at the CFPB!” 
Euphoria is overtaking the private, Tribe and publicly owned payday loan, small dollar loan, unsecured loan, car title lending… industry.
It’s as if an elephant has been sitting on our chests since August of 2013 and finely wandered off TO DIE!
CFPB

CFPB

You know the old story about the matriarchs of the elephant families leaving the herd to wonder off to their elephant graveyard?

Well, now we can add a similar story to the bunglers, meddlers, hypocrites and unelected, ivory enshrined bureaucrats who  pontificated from their lofty perches about what THEY think is good for consumers in America.
All of us took a hit by CFPB government employees. Firearms dealers, payday lenders, car dealers, ammo dealers, shooting ranges, gaming, marketing companies… hell, even strippers!
World Acceptance, Santander, PHH, Enova, EZcorp, Avant… are all shrugging off any future unwarranted attacks against them by the CFPB while worried consumers of these small dollar loan products are relieved by the obvious continued access they’ll have to short-term loans for solving their financial worries.
YEP! We live in wonderful times!! Eventually, persistence pays off! For ALL of us.
And, on the heels of the latest CFPB defeats, new lenders continue to launch via both State and Tribal collaborations, industry veterans continue to participate in capital raises, the “big boys” in our space expand, and the biggest seasonal demand by consumers is about to begin!
Curo Group: Raising $100M with the sale of 6.7M shares at hoped-for range of $14-$16 each.

Entreprenurs with serious experience in the unsecured lending space going “balls to the wall” with teams of tech and finance at their helm.

Over the last five sessions a group of payday lenders and other former or potential CFPB targets have been partying: World Acceptance Avant, Lendup, Lending Club, Dave, WRLD, OneMain Holdings, Santander Consumer, PHH Corp. Enova, Ezcorp and on and on!

Let the GOOD TIMES ROLL!!!!!

Need help making money by lending money to the masses? Start Here!

That’s all folks: TrihouseConsulting@gmail.com

21
Nov

CFPB-Unsecured Loan Industry to Prosper Under New CFPB Head

CFPB

This originally appeared on Mortgage News Daily-by BY: ROB CHRISMAN  here: Here’s something to think about. If the CFPB “dials things back,” wouldn’t the states step in and increase their consumer-focused regulatory levels? Multi-state lenders certainly wouldn’t like that. Since the state regulators have been in regular communication with the CFPB and knowledgeable as to the Bureau’s regulations and impact upon consumers (the protection of whom the states have always viewed as their primary function) it can be expected that we will see more state regulation as the CFPB’s role is reduced. In Pennsylvania, for example, a recent bill supported by the Department of Banking and Securities to license mortgage servicers, incorporated the CFPB servicing regulations. This is a trend that may become viable for other states regarding those CFPB regulations that might be eliminated or reduced in effect.  This is, of course, speculative at this point but it should be considered as we move ahead representing the industry in the states.

Payday Loan ConsultantsAccording to media sources, President Trump is expected to select Mick Mulvaney, the current Director of the White House Office of Management and Budget (OMB), to serve as the interim Director of the CFPB upon Richard Cordray’s resignation at the end of this month. The CFPB is not going away, and neither is Dodd-Frank, although policies and procedures may change. And do we really want it to, given that lenders and vendors in the industry spent billions of dollars implementing the Dodd-Frank framework in our businesses.

Mulvaney is a former South Carolina congressman and served on the Financial Services Committee. Mulvaney had previously been quoted during interviews as being dissatisfied with the CFPB’s performance and even said its lack of accountability showed it to be a “joke”. He was one of those in Congress who reportedly wanted the CFPB to be eliminated. Certainly, the administration intends to reduce federal regulations and the CFPB would make a prime target.

Julian Hebron of The Basis Point issued his thoughts on the future structure of the CFPB.

Ever heard of Think Finance? It doesn’t matter – the CFPB has. On November 15, the CFPB announced it had filed a complaint against Think, a Texas-based service provider, alleging that it had assisted in the collection of loans that were, in whole or in part, void under state law. The complaint filed in the U.S. District Court for the District of Montana alleges that the service provider, which provided services to three tribal lending entities engaged in the business of extending online installment loans and lines of credit, along with two companies responsible for the collection process (collectively defendants), assisted in the collection of loans that consumers were not legally obligated to pay based on identified states’ usury laws or licensing requirements.

Rob Chrisman began his career in mortgage banking – primarily capital markets – 27 years ago in 1985 with First California Mortgage, assisting in Secondary Marketing until 1988, when he joined Tuttle & Co., a leading mortgage pipeline risk management firm. He was an account manager and partner at Tuttle & Co. until 1996, when he moved to Scotland with his family for 9 months.
He returned to the United States in mid-1997 and ran Secondary for Standard Financial, a sub-prime lender in northern California. In late 1997 Rob was hired by CrossLand Mortgage to start, and be the president of, a sub-prime company named OnCall Mortgage (a division of CrossLand). OnCall Mortgage was in existence until Wells Fargo purchased First Security Bank (the owner of CrossLand) at the end of 2000.
Rob then joined CMG Mortgage, a wholesale mortgage bank, as the Director of Secondary Marketing. In early 2003 and re-joined Tuttle Risk Management Services, Inc. TRMS (now Compass) provides mortgage pipeline risk management for mortgage companies and thrifts that seek to originate and sell loans into the secondary mortgage market. In November of 2006 Rob left TRMS to become the Director of Capital Markets for RPM Mortgage, a retail residential lender, leaving there in late 2008 to focus on not only publishing a widely read daily market commentary on current mortgage events but also on his family.
He is on the board of directors of Peoples Bank, a mid-sized depository in Kansas, and of IFC, a financial services company which advances capital to heirs, He is also an associate of the STRATMOR Group, a member of the California Mortgage Bankers Association, and of the Mortgage Bankers Association of the Carolinas and its membership committee. Rob has provided expert witness services for mortgage and real estate-related cases, has lectured to groups around the country.
Rob holds a BS from Cal Poly, San Luis Obispo, and an MBA from UC Berkeley.