OCCC set to report to Finance Commission Friday
OCCC set to report to Finance Commission Friday
The OCCC is all set to report to the Finance Commission this Friday, December 13th. Below for the key take-aways for CABs offerring payday, installment, and title loans in Texas. The report will compare September-October 2018 vs. 2019. The Septermber-October 2019 part of the OCCC “fiscal year to date 2020”).
· Examinations are down across the board at every license type except Pawn (89 in 2018 vs. 100 this year).
· OCCC is reporting they are below target on exams and that they have been doing training and certifications.
· As well, they are heavily focused on an “enterprise” examination of a large CAB that is taking up 20% of their focus / target.
· CABs went from 13 examinations in the same period of 2018 compared to just 6 this year.
· For whatever reason CABs are way below all of the other license groups in terms of the “acceptable level of compliance” which is a term used for how well we are being examined. We are hovering in the 55-65% range over thre last year whereas everyone else is in the 80-100% range. This has been the trend since q4 2018 and would mean that us CABs have not been getting examined much and from our perspective many would agree.
· Investigations – zero so far for payday and title categories in FY 2020 compared to just 1 on a title loan business same period last year.
· Complaints – 8 in payday and 10 in title compared to 17 payday and 11 in title which is always good to report.
· CABs are looking very good with their ratio of complaints to total licenses. We are at .9 of 1,920 licensees which is at the lower end of the spectrum.
Link to the packet: https://www.fc.texas.gov/sites/default/files/2019-12/121319-fc-packet.pdf
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.
Texas CAB Credit Access Business Solutions
Lenders
With over 3,000 registered payday loan businesses and 25 million people, Texas represents one of the most prolific markets for Lenders in the industry. One significant reason for this is the state’s licensing structure, called the “CSO Model” or “CAB Model.” You can read more about each of these models on our web-site’s “CSO – Old Way” and “CAB – New Way” pages.
The model requires that Credit Services Organizations (CSO’s), and Credit Access Businesses (CAB’s) operate alongside the 3rd Party Lender who provides the funds for loans to consumers.
Yes, despite the fact that many CSO’s and CAB’s do have the assets for loan funding they can never be used for that purpose, and arm’s length relationships with other entities must be established to play that role if they wish to participate in the robust Texas market.
In the arrangement, a CSO or CAB functions as a broker who markets its services, administers the loan process, and assists the consumer in attaining the loan much like a co-signer.
The 3rd Party Lender’s role is often a silent and secure one. Interaction with the customer is rare, and it is common for the Lender’s proceeds to be guaranteed by the CSO / CAB with collateral in a number ways.
Are you a CSO or CAB that needs a Lender?
Have the new requirements and rules related to the Credit Access Business licensing process forced you to seek another Lender?
Are you interested in exploring the opportunities available to investors serving as Lenders in the CSO / CAB Model?
Call or email C.A.B. Consulting and Brokerage for details!
Helping Green Dot and other pre-paid card holders get funded on loans…good or bad idea?
Helping Green Dot and other pre-paid card holders get funded on loans…good or bad idea?
Lending to Green Dot Card Customers – is this a good or bad idea? Many feel these and other pre-paid card accounts carry too much risk because the card holders are not as “married” to the card versus the commitment assumed is had with a traditional bank with local branches.
We had one TOFSC member call about working with Green Dot consumers and it was brought up that another well-known East Texas operator has been doing it with a high degree of success. So TOFSC asked this former “CAB of the Year” and “TOFSC All-Star” to share his experiences with this so far.
Below are some excerpts from the conversation…
Positives:
· Accepting Green Dot has been viable for (4) years now.
· Green Dot is loadable at a lot of places – this is good for customers because each load location really acts as a bank.
· Green Dot cards have a routing #, acct #, bank statement, username, password.
· Takes direct deposit, SSI, etc.
· Some customers get paid 2 days early.
Negatives:
· They offer a “vault” where vendor access to funds is blocked…so cardholders can turn card off / on.
· Direct Deposit hits at 2am, sends alerts to customer that alert them to debit attempts.
· You will lose all disputes on chargebacks.
Many storefronts may not be seeing many pre-paid cards as their system is pre-programmed to automatically deny applications with most of the common pre-paid card brands entered into the bank account field. If you are ready to experiment with Green Dot (largest card brand in the US) then remove that filter and move forward with caution as you learn this niche of potentially higher risk applicants.
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.
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