Four Things To Ponder On An August Weekend

August 17, 2018 at 9:31 am Leave a comment

Judging by the numbers a good chunk of you have better things to do on a Summer time Friday than read my blog. I’m deeply insulted but also a realist so here are three things you should know when you get around to reading this.

First, New York’s Federal Reserve released its quarterly report on consumer household debt and I don’t think I will ever get used to just how dependent the American economy is on people spending money they don’t have. The “good news” is that household debt rose sharply for the 16th straight quarter to a mere $13.29 trillion. This means that consumers are spending at a record pace 20% higher than the low point way back in 2013.

When you look inside the numbers there is even more good news. Mortgage debt rose by $60 billion. Interestingly, HELOC continues to decline and the median credit score remained at about 760 for first time home buyers so maybe we have learned some lessons after all. Then again, California is once again gouging on mortgage fueled consumer debt as are many other west coast states. New York is relatively stable but growing.

Credit Report on Procedures Are Improving…So are credit scores

It takes a big man to admit when he’s wrong so I’m coming up huge today. When the CFPB and Attorney Generals began releasing reports, critical of credit reporting procedures, I thought this was much ado about nothing. The occasional technical mistake is inevitable and I was incredulous at the suggestion that people’s credit was being materially harmed by reporting mistakes.

Well, in its quarterly credit report the New York Fed also did an analysis of debt collection procedures and its findings indicate that faulty credit reporting was a bigger problem than I certainly thought it was. According to the bank, 40% of Americans have third-party collection accounts opened against them. But there has been a sharp decrease in negative reports since 2017. According to researchers this decrease was a direct result of the implementation by the credit reporting agencies of the National Consumer Assistance Plan which is basically a joint settlement between state regulators and reporting agencies on adopting and enforcing best practices. It appears that people love being wrongly harmed by inaccurate credit reports after all.

Escrow Case Appealed To The Supreme Court

A request for the Supreme Court to review a recent ruling in California mandating that Federal banks comply with a State law mandating the payment of interest on mortgage escrow accounts has been filed. This case is emerging as the one with the greatest potential direct impact on credit unions in New York State. As I explained in this blog, New York has a similar law to California’s and currently Federal Credit Unions and banks are exempt from the state’s escrow requirement. If the Supreme Court takes the case we will have definitive guidance on whether or not all credit unions have to comply and pay interest.

Second Quarter Medallion News

The second quarter was another rough ones for New York’s taxi medallion credit unions as summarized in this article by the CUTimes. Remember, of course this quarter doesn’t reflect the impact that restrictions placed on Uber and Lyft services in NYC may have on medallion prices.

On that note, enjoy your weekend.

Entry filed under: Compliance, Economy (?), Legal Watch, New York State, Regulatory. Tags: , , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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