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07/15/2020

Another "Outstanding" CRA rating released

Our review of the Federal Reserve Board's publication of CRA evaluation ratings in June revealed that eleven evaluations were made public, with ten banks garnering Satisfactory ratings. Our congratulations to Goldman Sachs Bank USA, New York, for its Outstanding rating.

07/14/2020

CFPB study on credit builder loans

The CFPB yesterday released a report indicating that a credit builder loan could increase the likelihood of establishing a credit record for consumers without one, and could help improve the credit scores of those with no current outstanding debt. The Bureau issued “Targeting Credit Builder Loans: Insights from a Credit Builder Loan Evaluation” report and an accompanying practitioner’s guide to broaden insight for community-based organizations and financial institutions working toward expanding financial inclusion.

In a typical credit builder loan agreement, the lender advances the loan funds to a locked savings account. The consumer then makes payments to the lender over 6 to 24 months. Funds are advanced from the locked account to the consumer's savings account either as payments are made or when the program has been completed. The lender reports the consumer's payment record to a credit reporting agency.

Among the report's findings:

  • For participants without an existing loan, opening a CBL increased their likelihood of having a credit score by 24 percent. Almost all participants with existing debt already had a credit score, so the CBL had minimal effect on their likelihood of having score.
  • Participants without existing debt saw their credit scores increase by 60 points more than participants with existing debt.
  • The CBL was associated with an average increase in participants’ savings balances of $253.

07/14/2020

Student-loan debt-relief operator and attorneys sued by CFPB

The Consumer Financial Protection Bureau yesterday filed a complaint in the U.S. District Court for the Central District of California against GST Factoring, Inc., which runs a student-loan debt-relief business in Texas, and two of its owners, Rick Graff and Gregory Trimarche, as well as Champion Marketing Solutions, LLC, a customer service and marketing company, and its owner, Scott Freda. The Bureau also filed suit against four attorneys, California attorneys Amanda Johanson and Jacob Slaughter, Arizona attorney David Mize, and Florida attorney Daniel Ruggiero. The Bureau alleges that the companies, their owners, and the attorneys were part of a nationwide student-loan debt-relief operation that charged thousands of consumers saddled with private student-loan debt approximately $11.8 million in illegal upfront fees in violation of the Telemarketing Sales Rule. Concurrent with the complaint, the Bureau and four of the defendants filed proposed stipulated final judgments and orders to resolve the claims against them. If entered by the court, the orders will ban Trimarche, Slaughter, Mize, and Ruggiero from participating in certain activities, impose monetary judgments to provide consumer redress totaling approximately $11.8 million, and impose a civil money penalty.

07/13/2020

CFPB report on debt settlements and credit counseling

The CFPB has released a report examining recent trends in debt settlement and credit counseling. The report documents changes over time in how consumers have used these debt relief options for unsecured debt.

The report shows that nearly one in thirteen consumers with a credit record had at least one account reported by the creditor as settled or with payments managed by a credit counseling agency from 2007 through 2019. It also shows debt settlements rose dramatically during the Great Recession to a peak of $11.4 billion. More than half of these settlements occurred within a year of the account first becoming delinquent. Debt settlement and credit counseling became less common after that recession, but recently settlements have been on the rise following changes in delinquencies and credit tightness.

07/13/2020

OCC launches Project REACh

The Office of the Comptroller of the Currency has announced the launch of Project REACh to promote financial inclusion through greater access to credit and capital. REACh stands for Roundtable for Economic Access and Change and brings together leaders from the banking industry, national civil rights organizations, business, and technology to identify and reduce barriers that prevent full, equal, and fair participation in the nation’s economy.

07/10/2020

$1M in refunds mailed to victims of student loan scam

The Federal Trade Commission reports it is mailing checks totaling more than $1 million to individuals who lost money to a student loan debt relief scam. American Student Loan Consolidators and BBND Marketing, which did business under other names including United Processing Center, settled FTC allegations that the companies’ operators pretended to be affiliated with the U.S. Department of Education or with loan servicers to trick consumers into paying hundreds of dollars in illegal upfront fees for help with their student loans. The FTC alleged that the defendants falsely promised to forgive student loans, lower monthly payments, and reduce interest rates. The FTC is mailing 41,048 checks to victims of the scam.

07/10/2020

PA communities on FEMA suspension list

The Federal Emergency Management Agency has published [85 FR 41195] a notice identifying communities in Pennsylvania scheduled for suspension from the National Flood Insurance Program for noncompliance with the program's floodplain management requirements on Wednesday, July 8. The notice lists the communities of Bethel, Cleona, Cornwall, East Hanover, Heidelberg, Jonestown, Lebanon, Millcreek, Mount Gretna, Myserstown, North Cornwall, North Londonderry, Palmyra, South Lebanon, South Londonderry, Swatara, and West Cornwall.

If a listed community took the required floodplain management measures before the July 8 effective date, it was not suspended. Lenders should verify the status of the listed communities before proceeding with any loan to be secured by real estate in those areas.

07/09/2020

Student-loan debt-relief business settles with CFPB

The CFPB has reported that it has settled with Timemark, Inc., a company based in Deerfield Beach, Florida, that provides debt-relief services to consumers with federal student-loan debt, and with its owners and officers, Timothy Lenihan Sr., Mark Nagler, and Casey Gassaway. The Bureau alleged that the defendants charged illegal advance fees in violation of the Telemarketing Sales Rule (TSR) to consumers who were seeking to renegotiate, settle, reduce, or alter the terms of their loans. A complaint filed by the CFPB alleged that from 2016 through October 2019, the defendants used telemarketing campaigns to convince more than 7,300 consumers to pay up to $699 in fees to file paperwork to reduce or eliminate their monthly payments for their federal student loans, through loan consolidation, forgiveness, or income-driven repayment plans.

If the proposed stipulated judgment is approved, the defendants would be permanently banned from providing debt-relief services. The order would impose a judgment on the defendants, jointly and severally, in the amount of about $3.8 million for consumer redress. Full payment of this amount will be suspended if, within 10 days after the order is entered, Timemark pays $5,000, Nagler pays $7,000, and Gassaway pays $10,000. The full amount of redress was suspended because of defendants’ purported limited ability to pay more based on sworn financial statements. The defendants would also be required to each pay a $1 civil money penalty, in light of their financial circumstances.

07/09/2020

Consumer credit down in May

The Federal Reserve Board has posted the G.19 Consumer Credit Report for May 2020, which indicates consumer credit decreased at a seasonally adjusted annual rate of 5-1/4 percent. Revolving credit decreased at an annual rate of 28-1/2 percent, while nonrevolving credit increased at an annual rate of 2-1/4 percent.

07/09/2020

FHA home retention measures expanded

Yesterday the FHA announced additional home retention measures to help homeowners with FHA-insured single family mortgages who are financially impacted by the COVID-19 pandemic to bring their mortgage current at the end of their COVID-19 forbearance. Effective immediately, mortgage servicers will be able to use an expanded menu of loss mitigation tools, known as a “waterfall,” to assess homeowners’ eligibility for other options to bring their mortgages current if they do not qualify for FHA’s COVID-19 National Emergency Standalone Partial Claim. These options are available for homeowners whose mortgages were current or less than 30 days past due as of March 1, 2020.

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