See below for a recent email sent out to OCCC stakeholders:

“On December 9, 2019, at 2:30 p.m., the OCCC will hold a stakeholder meeting on credit services organizations and attorney general opinion KP-0277.

A stakeholder meeting notice is available at: https://occc.texas.gov/publications/attorney-general-opinions. On this webpage, click the link labeled “Stakeholder Meeting Notice.” The meeting notice provides additional details and questions on which the OCCC is seeking input.

Stakeholders are invited to attend the meeting in person at the Finance Commission Building, or to listen and participate through an online webinar. To listen or participate online, please follow the instructions available at: https://attendee.gotowebinar.com/register/3659168503230489611

The OCCC will accept comments and suggestions on the questions in the meeting notice until December 12, 2019, at 5:00 p.m.”

OCCC is asking stakeholders for comments and suggestions on the topics below:

1. Does the opinion’s analysis affect the regulatory landscape for CAB transactions (i.e., deferred presentment transactions and motor vehicle title loans)?

2. Must persons engaged in non-CAB transactions comply with all requirements of Chapter 393 other than those that apply specifically to CABs (i.e., Section 393.201(c), Subchapter C-1, Subchapter G)?

3. Are persons engaged in non-CAB transactions subject to the enforcement authority of the attorney general under Section 393.502?

4. Are persons engaged in non-CAB transactions subject to local ordinances and the enforcement authority of local governments?

5. Are persons engaged in non-CAB transactions subject to federal law and the enforcement authority of federal agencies (e.g., the Consumer Financial Protection Bureau, the Federal Trade Commission)?

6. Sections 14.101 and 14.201 of the Texas Finance Code give the OCCC authority to investigate and enforce violations of Chapter 393 with respect to a credit access business. What is the proper role of the OCCC in light of the opinion?

7. Section 393.602 of the Texas Finance Code says a person may not use a device, subterfuge, or pretense to evade the application of Chapter 393, Subchapter G. Under the opinion, what would constitute a device, subterfuge, or pretense to evade the application of Chapter 393, Subchapter G?

8. Section 393.303 of the Texas Finance Code says a credit services organization may not charge or receive from a consumer valuable consideration solely for referring the consumer to a retail seller who will or may extend to the consumer credit that is substantially the same as that available to the public. Under the AG opinion, what would constitute a violation of Section 393.303?

9. Does the opinion’s analysis raise other significant policy issues? 

10. Should the OCCC and the Finance Commission engage in rulemaking related to any of these issues? If so, what is the statutory basis for the rulemaking?

This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers.  He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.

Some stores need deeper assessment and others do not because they are excellent performers.  Let’s look at one store and with the desire of loosening up in some areas where perhaps underwriting is too tight.   Dylan and Jeremy at Cashmax call it “turning a knob” or “moving a lever.” Let’s move a knob or lever with this one store and see what happens.

Doing an assessment and would love TOFSC opinions.  First, we are looking back at recent leads that have been sold through a lead buying network, what are others paying (we are going to assume it is a “FinTech”) for the leads they buy from you? After studying the sold lead what are your takeaways? If the smart FinTechs with all the “AI” and “Machine Learning and “Data” who own over half the Texas market are going for approvals with these customers who apply through you, then how can you learn from that and instead approve more for yourself versus letting go of potentially good paying customers?  See below for some key data points from three recent sold applicants.

$88 – Customer A:

No FT ran.

Online app – Google

Time at address: 5yrs

Time at bank: 2yrs

Bank: Bank of America

Time at employer: 7yrs

Employer: Filtration Group

Income: $6,594.77

**Customer was denied for having too many open loans and frequently being negative. He has loans out with Lend nation, Cash Store, Check n Go, TX Car Title & Payday, World Finance, Integrity Funding, and Easy Financial.

Comment: long time at address, bank, and employer, strong income over $6k, tons of loans out and the buyer did not care.  Also, did not care about account being so far in the negative. 

$83 – Customer B:

FT: 111

Online app – Google

Time at address: 2yrs

Time at bank: 2yrs

Bank: A+ FCU

Time at employer: 5yrs

Employer: Travis County

Income: $3,600 (per app)

Comment: customer was denied for having too many open loans. FT shows loans with a total of $4,508 in outstanding balance. On her banking it shows Credit Ninja ($700 borrowed on 09/14) and Cashnet ($800 borrowed on 08/03).

$18.50 – Customer C:

FT: 111

Online: Google

Time at address: 3yrs

Time at bank: 8yrs

Bank: United Heritage CU

Time at employer: 3yrs

Employer: HCA Healthcare

Income: $2,500 (per app but it was verified at $1660.91)

Comment: FT denied due to having too many open loans and too many loans in collections. FT shows 5 loans totaling $897 outstanding balance and 3 loans in collections. However, we cannot find any loans in her banking history.  Lower income and thus a lower sale amount.  But address, bank, and employer were in the same ranges as the other two customers above.  So, is the income the key factor here? Does that trump all other concerns?

Another one of our generous members shared his opinions on lead sales and how quoting lower first-time loan amounts can hinder growth”

“Typically, a loan selling for greater than $50.00 is auto approved with VERY little underwriting with Fintech. The issue you may run into is loan amount. The consumer most likely will not be interested in a loan less than $500, and sometimes the amount of fees will drive them away. But I would most definitely always reach out to them. Sometimes a local company makes them feel more comfortable, and you can close the deal. Regardless, a lead that sells for greater than $50.00 is a very good lead and most definitely worth your time to reach out.”

Going further with the assessment: pull the last (3) months of denial reasons, break that out by month, by store.  Look at what the largest set of denial reasons is per store.  Perhaps loosen up in one of the largest areas of denial.  Maybe go one or two layers on the 2^nd and 3^rd most common denial reason and.  Loosen slightly implement the lever move with the lowest perceived risk.  Might that lever be “too many loans out” if the income is there? How far will you go on a negative balance?  Also, per the comments above, go back and look at the leads that have sold over the last (3) months over $50 to study again and see what patterns exist.   

Would love to hear from our clients, TOFSC members, and industry friends on this.   Send feedback where you can!