MonJa’s Digital Banking and Lending Monthly Roundup | March 2023

In Commercial Lending, Industry News, Small Business Loan Underwriting, Underwriting Automation by Rebecca WilliamsLeave a Comment

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MonJa’s Digital Banking and Lending Monthly Roundup – Why Subscribe?

Digital banking and lending are evolving rapidly. Recent fintech-banking partnerships and innovation in technology with the introduction of AI, ML and blockchain herald a new era in lending. Fintech’s are changing the competitive ecosystem, empowering lenders to process loans faster and smarter.  In a world full of noise, understanding how the technologies and developments may impact your financial institution’s credit decisions and credit portfolio is of critical importance, while also you can improve your finance by learning online trading, as there are resources like trade fx that help you with this. With MonJa’s Digital Banking and Lending Monthly Roundup, it’s easy to stay up to date on what’s happening in the space. Get the latest updates, analysis and commentary on digital banking and lending segment!

03/13/23 Regulators backstop SVB deposits, launch emergency lending facility (Banking Dive)  

Silicon Valley Bank’s depositors have been granted full access to their funds by the Federal Deposit Insurance Corp, which took emergency measures to prevent the spread of financial instability in the banking industry. In addition, the Federal Reserve has established a $25 billion lending facility to provide liquidity to banks affected by the collapse of Silicon Valley Bank. Regulators also declared they would apply the same “systemic risk exception” to Signature Bank, a New York-based firm focusing on cryptocurrencies. The state regulators had also closed down Signature Bank. The regulators were looking for a purchaser for the beleaguered Silicon Valley Bank, and both PNC and JPMorgan Chase showed interest in acquiring it. The recently established emergency facility by the Federal Reserve is also aimed at preventing any possible bank runs following the collapse of Silicon Valley Bank.

03/11/23 Adjustable-rate mortgages are growing in popularity, but they come with some big risks (CNBC)  

As interest rates increase, adjustable-rate mortgages (ARMs) tend to gain popularity among borrowers who want to save on interest. ARMs can be advantageous for those who don’t plan on residing in their home for a prolonged period in a high-interest rate environment. It is crucial to compare the rates, fees, and types of ARMs provided by different lenders if considering an ARM loan. One major disadvantage of an ARM is that when the introductory period ends, there is a possibility of an increase in the monthly payment, and borrowers should be ready to bear this risk. On the other hand, for a 30-year fixed-rate mortgage, the principal and interest rate payments remain constant. Therefore, as income rises, the housing expenses will make up a smaller portion of the overall income.

03/10/23 Biden proposes investments in CDFIs, affordable housing, small biz (NAFCU) 

President Joe Biden has released his proposed budget for 2024, which includes measures to enhance communities, tackle tax concerns, and strengthen defenses against worldwide risks. The proposed budget includes $341 million for the CDFI Fund within the Treasury, representing a 5% increase from its 2023 enacted level. NAFCU is actively engaged in CDFI issues to ensure credit unions can avail of the program and better serve their communities. Additionally, the budget authorizes $58 billion for lending through SBA’s various loan programs, such as the 7(a)-loan guarantee, 504 loan, SBIC, and Microloan programs, to boost access to affordable capital, particularly in underserved areas. The Treasury Department’s 15% increased funding includes $229 million for FinCEN to support the launch of the Beneficial Ownership Secure System and promote corporate financial accountability. The budget also allocates $73.3 billion for HUD to increase affordable housing stock, expand rental assistance, and strengthen underinvested communities.

03/07/23 A bumpy road ahead for credit union auto lending (American Banker)

Due to the increase in vehicle prices and interest rates, as well as concerns about a possible recession, many consumers are hesitant to take out an auto loan from their credit union, leading to a decrease in auto sales. The National Association of Federally-Insured Credit Unions reported a month-over-month decline of 6.7% or 1.1 million in auto sales in February. On a seasonally adjusted basis, total vehicle sales dropped from 16.4 million annualized sales in January to 15.3 million in February. While banks are also feeling the pressure, they may have a more diversified portfolio that enables them to better withstand the lending suspension. For credit unions like Embold, the pressing issue at hand may be related to deposits. Members are quickly using up the funds they saved during the COVID-19 pandemic, which has altered the calculation for determining the credit union’s competitiveness regarding auto loan rates.

03/03/23 Supreme Court Review of CFPB Could Imperil Lending Rules (Credit Union Times)

A far-reaching ruling could cause “disorder” by eroding the legitimacy of various regulations that credit unions rely on to finalize mortgages and other loans. The Supreme Court has agreed to consider a case that could potentially dismantle the agency. Should the CFPB be declared unconstitutional, there is a possibility that its actions could be deemed invalid. This could then create doubts about the legitimacy of a range of existing lending regulations, including those that oversee mortgage and auto lending. It has been suggested that this could potentially undermine the validity of these lending rules, which credit unions have invested significant resources into complying with, regardless of whether these rules are considered beneficial or not. 

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