The American Financial Services Association (AFSA) emphasized the importance of preserving access to credit in response to the Department of Treasury (Treasury) and Community Development Financial Institutions’ (CDFI) Fund revised CDFI certification application proposed by the respective agencies. CDFIs are private financial institutions which offer affordable financial products and services to low-income and disadvantaged communities.
AFSA strongly supports the agencies’ efforts to ensure that CDFI applicants engage in responsible lending practices, but writes that the criteria for measuring responsible lending practices should not be whether the applicant lends above a 36% Military Annual Percentage Rate (MAPR).
In its letter to Treasury and the CDFI Fund, AFSA cited a recent Federal Reserve study showing that implementing a 36% MAPR cap would reduce access to credit by the very borrowers CDFIs should be serving. Specifically, the study found that a loan amount of $2,530 is necessary to break even at a 36% Truth in Lending Act (TILA) APR. For a loan to be made profitably with a total cost of credit of 36%, the loan would have to be between $3,500 – $4,000. The authors concluded, “If small loan revenue is constrained by rate ceilings, only large loans will be provided. Consumers who need a small loan or only qualify for a small loan would not be served.”
AFSA instead believes that the criteria for measuring responsible lending practices should be whether the lender offers transparent, fully-amortized loans that are repaid in substantially equal payments, whether it evaluates a borrower’s ability to repay, whether it reports to a credit bureau, and whether it requires a balloon payment or the use of ACH.
AFSA Supports Access to Credit in Proposed CDFI Application
Nov 11, 2020
The American Financial Services Association (AFSA) emphasized the importance of preserving access to credit in response to the Department of Treasury (Treasury) and Community Development Financial Institutions’ (CDFI) Fund revised… Read the rest
CFPB Report Examines Servicemember Debt
Nov 10, 2020
The Consumer Financial Protection Bureau (CFPB) yesterday (November 9) released a report showing that a “sizeable fraction of young enlisted servicemembers go delinquent on debt payments or have severe derogatories (for example, defaults)… Read the rest
LISTEN | AFSA Extra Credit Podcast w/ AFSA Chair Tom Hudgins
Nov 10, 2020
In this episode of the AFSA Extra Credit Podcast we talk with Tom Hudgins, 2021 AFSA Chair and President & COO of Western Shamrock. Tom has been an integral part of AFSA leadership for many years and has served on many committees and working… Read the rest
The CFPB Debt Collection Rule: Compliance Considerations
Nov 09, 2020
Join us on November 17 at 1:00 p.m. ET for The CFPB Debt Collection Rule: Compliance Considerations, presented by Hudson Cook & Weltman. The CFPB has issued its first of two anticipated final rules on debt collection. While the rule is… Read the rest
Auto Loan Accommodations: Insights from the Past, Applications for the Present
Nov 06, 2020
Join us on December 3 at 2:00 p.m. ET for Auto Loan Accommodations: Insights from the Past, Applications for the Present, presented by TransUnion.
The COVID-19 pandemic significantly impacted consumers and businesses, and the auto industry… Read the rest
AFSA Requests TCPA Exemptions for Consumer Finance Industry
Nov 05, 2020
The American Financial Services Association (AFSA) replied to the Federal Communications Commission’s (FCC) proposed rulemaking regarding certain exemptions under the Telephone Consumer Protection Act (TCPA) for companies making… Read the rest
Start Your Engines for the 2021 Vehicle Finance Conference!
Nov 04, 2020
AFSA is excited to announce that the 2021 Vehicle Finance Conference will be held online from February 23 through February 25; AFSA committees will meet the preceding week, February 16 through February 18 (more details to come).
Each day will… Read the rest
CFPB Issues Final Rule Amending Disclosure of Records and Information Regulation
Nov 03, 2020
The Consumer Financial Protection Bureau (CFPB) finalized a rule amending its Disclosure of Records and Information Regulation. In the rulemaking, the CFPB addresses the confidential treatment of information the agency obtains while… Read the rest
OCC Adopts AFSA’s Suggestions, Finalizes ‘True Lender’ Rule
Nov 02, 2020
This week, the Office of the Comptroller of the Currency (OCC) finalized the “true lender” rule. At issue is partnerships between third-party nonbanks and federal savings associations or national banks which have led to loans being underwritten… Read the rest
November Business Partner Spotlight: GOLDPoint Systems
Nov 01, 2020
The featured Business Partner for November is GOLDPoint Systems, which offers one of the most complete Loan Management Software Systems in the Direct and Indirect market, covering the complete loan life cycle. We asked them a few questions… Read the rest