Consumer Financial Protection Bureau CFPB|Subprime Lenders CFBP Rules

Consumer Financial Protection Bureau CFPB | Subprime Lenders CFBP Rules


What is Consumer Financial Protection Bureau (CFPB)?

The AGENCY Consumer financial protection bureau (CFPB) or the bureau of consumer financial protection is the authority under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the Bureau of Consumer Financial Protection (Bureau or CFPB) is proposing a regulations rules 2017 creating consumer protections for certain consumer credit products.

The Bureau is proposing to exclude several types of consumer credit from the scope of the proposal, including:

  • Loans extended solely to finance the purchase of a car or other consumer good in which the good secures the loan;
  • Home mortgages and other loans secured by real property or a dwelling if recorded or perfected;
  • Credit cards;
  • student loans;
  • non-recourse pawn loans; and
  • overdraft services and lines of credit.

The proposed cfpb reviews rule would identify it as an abusive and unfair practice for a cfpb qualified mortgage lender to make a covered short-term loan without reasonably determining that the consumer will have the ability to repay the loan.

The proposed cfpb rule would prescribe requirements to prevent the practice. A lender, before making a covered short-term loan, would have to make a reasonable determination that the consumer would be able to make;

The payments on the loan and be able to meet the consumer's other major financial obligations and basic living expenses without needing to reborrow over the ensuing 30 days.

Specifically, a lender would have to:

  • determine the consumer's ability to repay the loan based on the lender's projections of the consumer's income, debt obligations, and housing costs and forecast of basic living expenses for the consumer;
  • forecast a reasonable amount of basic living expenses for the consumer - expenditures (other than debt obligations and housing costs) necessary for a consumer to maintain the consumer's health, welfare, and ability to produce income;
  • project the consumer's net income, debt obligations, and housing costs for a period of time based on the term of the loan;
  • verify the consumer's debt obligations using a national consumer report and a consumer report from a "registered information system" as described below;
  • verify the consumer's housing costs or use a reliable method of estimating a consumer's housing expense based on the housing expenses of similarly situated consumers; and
  • verify the consumer's net income.

What is the Dodd Frank Bill?

The Dodd Frank Bill or dodd-frank rules or dodd frank complince proposal generally would cover two categories of loans.

1.  The proposal generally would cover loans with a term of 45 days or less.

2.  The proposal generally would cover loans with a term greater than 45 days, provided that they:

  • have an all-in annual percentage rate greater than 36 percent;
  • and either are repaid directly from the consumer's account or income or are secured by the consumer's vehicle.

For both categories of covered loans, the proposal would identify it as an abusive and unfair practice for a subprime lender to make a covered loan without reasonably determining that the consumer has the ability to repay the loan.

The dodd frank rules proposal generally would require that, before making a covered loan, a lender must reasonably determine that the consumer has the ability to repay the loan.

The dodd frank wall street reform proposal also would impose certain restrictions on making covered loans when a consumer has or recently had certain outstanding loans.

If you're a subprime lender, you're well aware that new rules from the Consumer Financial Protection Bureau (CFBP) are scheduled to go into effect in 2017.

The new regulations or dodd frank compliant focus on small dollar loans and could mean substantial fines for your consumer finance practices if not implemented.

What surprises lenders most is that there is always a ways for them to profit from a new rule or regulation. This new CFBP rule is no different.

The incoming presidential administration has hinted at changing the law responsible for forming the CFPB, or to immediately remove the CFPB director.

Regardless if either happens, a subprime lender's top priority remains to be compliant with the latest government rules and regulations for electronic payments, and identify opportunities to maximize your business profitability.

How Subprime Lenders Auto Loans Can Profit from CFPB Rules 2019

Below are four ways subprime lenders auto loans billing and payments operation can comply with and benefit from CFPB's small dollar loan rule:

1.  Why do loan companies need bank statements? Send regular loan statements to consumers - According to a recent What to Expect Next from the CFPB webinar audience poll, more than 60% of installment lenders are currently not sending loan statements.

The CFPB's rules make it likely that subprime lenders will have to provide a monthly loan statement to borrowers, whether by regular mail or electronically. It's actually a smart and profitable move for all lenders, regardless of regulation.

Loan statements increase the chances consumers will remember to pay. Moving to the next generation of loan statements, interactive loan statements, enables lenders to deliver targeted messages with cross-selling opportunities to help your business grow.

2.  Accept ACH payments online! Get permission again after two failed ACH payments - After two failed ACH payment attempts, a consumer finance company must get express authorization from the borrower before making another ACH attempt.

his creates additional friction in the transaction and a bad customer experience. It can also result in additional overdraft charges to the consumer which is a cause of consumer complaints.

Subprime Lenders should prioritize debit card payments in these instances, which immediately reveal if sufficient funds are available.

3.  Notify consumers 3 days in advance of payment attempt - Whether by mail or electronic communication, lenders must give consumers 3 days written notice in advance of a payment attempt, including attempt details, to allow borrowers to make sure sufficient funds are available.

Like loan statements, these reminders are potentially profitable opportunities to lower delinquency rates and reach customers with targeted messages about additional products.

Supprime lenders can even bring in additional revenue by selling advertising space.

4.  Do not refinance if payments are over 7 days delinquent - This CFPB rule creates a new urgency for subprime lenders to offer multiple options that will make timely payments possible.

However, 75% of subprime lenders were already adding New Payment Options before CFPB regulations 2019 because doing so increased dollars collected by 15%.

The Consumer Financial Protection Bureau CFPB 2019

Can you guess which of the top 3 cities where mass trasit comuters are likely to pay electronically (or payelectronic)?

The answer is: Chicago, New Yourk and San Francisco. Did you get it right? Good! Press on...

The Consumer finance companies need to comply with all rules and regulations 2019.

However, lenders can also view this time as an opportunity to enhance your customer's experience, lower your service delivery costs and create new, targeted, interactive means of adding consumer touch points though the deployment of an interactive statement.

We look forward to 2019 being a year where subprime lenders not only avoid fines, but also find ways to implement changes that grow their bottom lines.

New Payment Options or New Payment Methods 2019

The new payment options or new payment methods uses NFC (near field communication) to transmit information from a mobile device to a payments reader.

If you visit a loan lender services website, you will notice that the website of a lender that didn't accept debit cards as if they don't want your money. Why?

You see when lenders offer new payment options or new payment methods processing they increase dollars collected by 15%.

To increase collections and meet growing customer expectations 75% of subprime lenders are currently adding new payment methods or new payment processing options.

Below shows the reasons why loan lender services offers new payment methods.

Reasons for New Payment Methods

1.  Loan render services competition is heating up - Many loan servicing leaders say they face growing competition in the billing and payment experience.

The billing and payment experience is the most frequent interaction you have with your customers. No wonder billing and payment determines 58% of customer satisfaction with their lender.

2.  Loan render services need to quickly respond to changing behaviuors - As competition for new loans grows, only one-quarter of loan lenders say they are flexible enough to handle new payments innovation.

Customer expectations for the payment experience are growing as they look for video eBills, text reminders and virtual collections.

As the speed of change accelerates, it's harder for lenders to keep up. Those who offer new payment methods processing options are already ahead of the game.

3.  Loan render's customer preferences shifted to electronic transactions - A major shift happened in 2016 - 2019.

The battle to provide the best payment experience now mainly takes place through electronic interactions. Now more companies do accept electronic payments than paper.

Survey of consumer payment choice


4.  As Electronic payments now dominate the auto loan payment calculator - Most of loan payments are now made electronically.

Each of these payments provide an interaction for lenders to promote additional services with targeted offers.

Auto loan payment calculator


5.  The Software as a services (SaaS) makes it faster to add new payment methods options.

SaaS (or erp saas or saas crm) frees lenders from waiting on internal IT resources to meet new customer demands.

Spending on SaaS loan payment systems or saas repayment will grow over 50% through 2024 vs. 25% for in-house systems, according to research firm Ovum.

6.  New payment methods options will boost profitability - It is expected that 75% of lenders are deploying new payment methods options as we speak.

These new payment methods (eBill, mobile and recurring payments) not only boost revenue, but also profitability by replacing paper and manual interactions with electronic interactions.

New payment methods options


7.  New payment options reduce call center volume - One loan servicing leader reduced call center calls by over a quarter. They migrated payments from their call center to a new web and IVR payment system.

8.  Tech integration benefits your bottom-line - This same loan servicing leader lowered internal infrastructure costs by a quarter by improving technology integration.

They integrated their payment system in real-time to their CRM/ERP system.

Further increasing their savings, they launched a single bill payment solution integrated across mobile, web, IVR and call center channels.

In order to hit your top-line goals and deepen customer loyalty your bill payment solution cannot remain stagnant.

WILLOW LENDING: Notice of restrictions on future loans

Willow Lending:
1-800-555-5555 or 800-555-555
www.willowlending.com or willowlending.com
Model Forms: Notice of restrictions on future loans



If you are unsure whether you will be able to pay $360.00 by November 12th, 2016, you should not take out this loan. After you repay thi sloan, any similar loan you take out within the next 30 days will have to be smaller. This restriction is required by federal law.

Borrowing limits:

The federal student loan borrowing limits or student loan borrowing limits (not fafsa or fha borrowing limits) is shown below:

  Loan order "Maximum amount that you will be able to borrow"
Loan #1 (this loan) $300.00
Loan #2 $200.00
Loan #3 $100.00

WILLOW LENDING: Notice of borrowing limits on this loan and future loans

Willow Lending:
1-800-555-5555 or 800-555-555
www.willowlending.com or willowlending.com
Model Forms for Third Loan: Notice of borrowing limits on this loan and future loans



Our records show that you have had two similar loans without taking a 30-day break.

Under federal law, this loan must be smaller than your prior loans. And after you repay this loan, you will not be able to take out another similar loan for at least 30 days.

WILLOW LENDING: Upcoming Withdrawal Notice from Willow Lending

Willow Lending:
1-800-555-5555 or 800-555-555
www.willowlending.com or willowlending.com
Model Forms: Full Upcoming Payment Notice



On November 12, 2016, Willow Lending will attempt to withdrawal a payment of $80 from your account ending in 1234. The payment will be withdrawal by check, using check #999.

If this payment is not successful, we will add a $10 returned payment fee to your balance on loan #5432. This loan was made to you at a 533.20% APR.

Contact Willow Lending at 1-800-555-5555 if you have questions or need to stop this withdrawal. The institution where you have your account also may be able to assist you.

Payment breakdown:

The mortgage payment breakdown or mortgage payment calculator principal interest breakdown or loan payment breakdown or perhaps monthly mortgage payment breakdown is shown below:

  Payment breakdown "Breakdown of Payment"
Principal now $0
Interest $80
Total payment amount $80

When you make this payment, your principal balance will stay the same and you will not be closer to paying off your loan.

WILLOW LENDING: Alert: unusual Withdrawal from Willow Lending

Willow Lending:
1-800-555-5555 or 800-555-555
www.willowlending.com or willowlending.com
Model Forms: Full Unusual Payment Notice



On November 12, 2016, Willow Lending will attempt to withdrawal a payment of $80 from your account ending in 1234. This electronic withdrawal will be made by ACH transfer.

This payment is unusual because it is larger than your originally scheduled payment. The previous withdrawal was initiated on November 2, 2016, for $60.

If this payment is not successful, we will add a $10 returned payment fee to your balance on loan #5432.

Contact Willow Lending at 1-800-555-5555 if you have questions or need to stop this withdrawal. The institution where you have your account also may be able to assist you.

Payment breakdown:

The withdrawal symptoms, please NOT drug/opiate/methadone/opioid/morphine/heroin/alcohol withdrawal is shown below:

  Payment breakdown "Withdrawal Breakdown of Payment"
Principal $50
Interest $20
Fees $10
Total payment amount $80

WILLOW LENDING: Notice: Willow Lending is no longer permitted to Withdraw loan payments from your account

Willow Lending:
1-800-555-5555 or 800-555-555
www.willowlending.com or willowlending.com
Model Forms: Full Consumer Rights Notice



Our last two attempts to withdraw payment on your loan #5432 from your account ending in 1234 were returned because your account did not contain enough funds to cover the payment.

To protect your account, federal law prohibits us from trying to withdraw payment again without your permission.

We may contact you to talk about your payment choices going forward.

Previous Payment attempts:

The previous payment attempts of withdraw loan is shown below:

  Payment due date "Date of attempt" "Amount" "Fees charge by Willow Lending"
November 7, 2016 November 7, 2016 $80 $10 returnd payment fee
November 7, 2016 November 10, 2016 $80 $10 returnd payment fee

CFPB Consumer Financial Protection Bureau CONTACT or CFPB Contact centre

You can reach out to the contact cfpb customer (or cfpb contact support) or call centre if you have any of the following cfpb consumer financial protection bureau issues

1. Enquiries on all 1. Email Address,
2. Electronic regulations,
3. Post address,
4. Hand delivery/Courier
5. CFPB Offices,

Official business days between the hours of 10 a.m. and 17:00 p.m. eastern time.

Contact Address:

Office of the Executive Secretary,
Consumer Financial Protection Bureau,
Docket No. CFPB,
1700 G Street, NW.,
Washington, DC 20552,
United States of America USA.

Hand Delivery/Courier,
Monica Jackson,
Office of the Executive Secretary,
Consumer Financial Protection Bureau,
1275 First Street, NE.,
Washington, DC 20002,
United States of America USA.

FOR FURTHER INFORMATION CONTACT:
CFPB Staff Counsels: Eleanor Blume, Sarita Frattaroli, Casey Jennings, Sandeep Vaheesan, Steve Wrone;

CFPB Staff Senior Counsels: Daniel C. Brown, Mark Morelli, Michael G. Silver, Laura B. Stack;

CFPB Staff: Richard Cordray, Director, Bureau of Consumer Financial Protection.

Office of Regulations, at 202-435-7700.

The PDF format document file: BILLING CODE: 4810-AM-P or RIN 3170-AA40 can be found at:
http://files.consumerfinance.gov/f/documents/Rulemaking_Payday_Vehicle_Title_Certain_High-Cost_Installment_Loans.pdf

Document title: "PAYDAY, VEHICLE TITLE AND CERTAIN HIGH-COST INSTALLMENT LOANS"

Mobile: +(202) 435-7275
Telephone: +(202) 435-7275,

Fax: +234 1 2703011
Email:FederalRegisterComments@cfpb.gov , Include Docket No. CFPB-2016-0025 or RIN 3170-AA40 in the subject line of the email.
CFPB Website or Webites: http://www.regulations.gov, or www.cfpb.gov or consumerfinance.gov or cfpb.gov or cfpb.wiki

Currently there is no cfpj job opportunity for cfpb carrers/ jobs/ hiring/ agency/ report/ blog/ funding/ watch/ or cfpb taining

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