Newsroom

NAFCU's widely read NAFCU Today is credit union leaders' go-to source for the latest on issues impacting the credit union industry. For those short on time, here's a roundup of this week's top need-to-know updates and resources.

CFPB takes action on auto finance

The CFPB shared two updates related to auto finance: First, an action against TitleMax for violating the financial rights of military families and other consumers in providing auto title loans, and second, an announcement on its auto finance data pilot.

In the TitleMax action, the bureau said the company violated the Military Lending Act by extending prohibited title loans to military families and by charging nearly three times over the 36 percent annual interest rate cap. The bureau alleges that TitleMax tried to hide its unlawful activities and increased loan payments for borrowers by charging illegal fees. The CFPB ordered TitleMax to pay more than $5 million in consumer relief and a $10 million civil money penalty.

Last year, the bureau initiated efforts to “build a new data set that will allow for a more robust understanding of market trends” by collecting data from industry stakeholders and other agencies. In a blog post Thursday, the bureau announced it’s piloting a new collection of auto lending data. Based on public input from its initial outreach, the CFPB said it identified three areas where additional data visibility would be important, which will guide its pilot efforts:

• lending channel differences;
• data granularity, consistency, and quality; and
• loan performance trends.

In addition, the bureau issued orders to nine large auto lenders to provide information about their auto lending portfolios.

NAFCU has shared concerns about the method the bureau used to collect feedback and data on the auto lending market and asked it to clarify its rulemaking intentions.

Federal banking agencies warn of crypto-related liquidity risks

The Federal Reserve, FDIC, and Office of the Comptroller of the Currency (OCC) released a joint statement Thursday detailing liquidity risks to banks associated with certain sources of funding from crypto-assets. The statement also provides practices to effectively manage the risks.

“In particular, certain sources of funding from crypto-asset-related entities may pose heightened liquidity risks to banking organizations due to the unpredictability of the scale and timing of deposit inflows and outflows,” the statement says, flagging specifically:

• deposits placed by a crypto-asset-related entity that are for the benefit of the crypto-asset-related entity’s customers; and
• deposits that constitute stablecoin-related reserves.

NAFCU will continue to engage lawmakers and regulators on digital assets to ensure a clear regulatory framework is in place.

FHA cuts 30 basis points off annual mortgage insurance premiums

The Department of Housing and Urban Development Wednesday announced the Federal Housing Administration (FHA) was cutting 30 basis points from the annual mortgage insurance premiums (MIP) charged to homebuyers who obtain an FHA-insured mortgage in an effort to provide overall savings to borrowers and help more people qualify for a mortgage.

The reduction from 0.85 percent to 0.55 percent for most homebuyers is estimated to save $678 million for American families in 2023 alone and will benefit roughly 850,000 borrowers in the coming year.

The 30 basis point annual MIP reduction will apply to almost all Single Family Title II forward mortgages insured by FHA. The reduction applies to all eligible property types, including single family homes, condominiums, and manufactured homes, all eligible loan-to-value ratios, and all eligible base loan amounts.

The annual mortgage insurance premium reductions are effective for mortgages endorsed for insurance by FHA on or after March 20, 2023. The announcement includes additional details on MIPs and what borrowers can expect to save.

Q4 GDP revised down

The second estimate for 2022 fourth quarter gross domestic product (GDP) was revised down 0.2 percent due to reduced consumer spending. The initial estimate showed consumer spending at 2.1 percent, but the revision downgraded it to 1.4 percent. It was the second smallest increase in consumer spending since the onset of the pandemic.

Although consumer spending, which accounts for roughly 70 percent of the nation’s economic activity, was down, business investment was revised to 3.7 percent in the second GDP estimate – up from 1.4 percent. Inflation rose 3.7 percent during the fourth quarter, and was up 6.8 percent for 2022 – the biggest increase in 40 years.

Biden nominates former Mastercard CEO to lead World Bank

President Joe Biden Thursday nominated Ajay Banga – former CEO of Mastercard – to become president of the World Bank. Current World Bank President David Malpass earlier this month announced he would step down from the position at the end of the bank’s fiscal year.

“Ajay Banga will be a transformative World Bank President as the institution works to deliver on its core development goals and address pressing global challenges, including climate change,” Biden said in the announcement. “Since I was elected Vice President, Ajay and I have worked closely together on a new model of public-private partnership designed to address the root causes of migration in Northern Central America. Through that partnership, nearly 50 businesses and organizations have mobilized to generate more than $4.2 billion in commitments that will create opportunity and hope for people in the region. Ajay has brought great insight, energy, and persistence to the challenges of promoting economic development and tackling the root causes of migration.”

The World Bank provides financial and technical assistance to developing countries around the world. As the largest shareholder in the bank, the U.S. nominee has historically led the bank. Other countries can also submit nominees until March 29.