NY Proposed Budget Would Expand NYDFS Authority over FinTech Lending Companies

Lender license requirements recently included in the New York governor’s proposed 2017-2018 budget would expand the jurisdiction of the New York State Department of Financial Services (NYDFS) to cover many financial technology (FinTech) credit-lending companies that are currently exempt from license requirements. The proposed budget would prohibit businesses that are not registered as licensed lenders from making personal loans with a principal of $25,000 or less, and commercial loans of $50,000 or less, regardless of interest rate. Current New York state banking law only requires a license if the charged interest rate is above 16 percent. The budget would additionally apply the licensing requirement not only to any company that solicits and “makes, purchases or acquires” loans for New York residents, but also to any that “arranges or facilitates” the origination of such loans.

NYDFS’ expanded lender licensing authority would apply to marketplace lenders–online platforms that facilitate small-scale loans by matching credit lenders with consumers–as well as to merchant cash advance companies, big data credit startups, and any other companies that provide or facilitate smaller-scale loans online or offline. The proposed budget provides that the NYDFS superintendent may allow an exemption from the licensing requirement “when necessary to facilitate low cost lending in any community.” However, neither the proposed budget nor NYDFS has offered further guidance as to how the exemption would be applied.

NYDFS currently imposes significant registration requirements on licensed lenders. Among other hurdles, businesses must file and maintain compliance documentation, implement internal controls, and undergo background checks, examinations, and annual assessments. Businesses seeking licensed lender status are not permitted to make loans while registration is pending.

New York’s proposed expansion of the lender license requirement continues an ongoing dispute between federal and state authorities over the regulation of FinTech companies. In December, the Office of the Comptroller of the Currency (OCC) announced it would consider granting FinTech companies special-purpose national bank charters that would treat them similarly to national banks from a regulatory perspective, and generally preempt state laws. The OCC’s proposal would enable non-bank FinTech companies to seek a single banking license from a single national regulator, as opposed to numerous licenses across multiple states. In response, NYDFS Superintendent Maria Vullo submitted a letter opposing the OCC’s proposal, and claiming FinTech activities would be better regulated by the states. The proposed expansion of NYDFS’ lender license requirements appears to follow Superintendent Vullo’s views.

FinTech companies and marketplace lenders in particular should be cognizant of these and other continuing efforts to regulate FinTech, and should prepare accordingly. Steps that FinTech companies can take now to prepare for future regulation include engaging directly with potential regulators; conducting self-assessments of compliance with existing lending and finance laws, such as the Gramm-Leach-Bliley Act; assessing the retention of company data and records; and crafting and implementing internal compliance policies and controls.

Paperless personal loans – How to make the most of them

Adhil Shetty

With the government steering India towards being less cash-dependent, individuals and enterprises including retailers and banks are increasingly adopting paperless means to carry out regular transactions. After the demonetization move, several economic activities have shifted online – and availing personal loans being one of them.

From applying for the loan to submitting documents and getting it sanctioned, personal loans are just a few clicks away. It can be availed without any human interventions and without the hassles of paperwork.

Here is everything you need to know about paperless personal loans:

What are paperless personal loans?

From applying for it to getting it sanctioned, paperless personal loans are entirely processed online. Unlike pre-approved loans, paperless loans are not pre-approved on the basis of the customer’s profile with the bank. You need to fill out an application form and furnish soft copies of all documents online, verifying which, banks sanction the loan. This process can be carried out remotely with a few clicks without any paperwork involved.

A paperless personal loan can be availed through an online loan aggregator, a bank, or financial institution selling such a product. For applying from a bank or financial institution directly, candidates can apply on the website by submitting scanned copies of documents online. While applying for a loan through an aggregator, you can upload documents on the website and the aggregator forwards the documents and gets the loan sanctioned on your behalf.

Before you zero in on a loan, make sure you run your research and compare with loans offered by other banks. The terms and conditions vary with banks so go through all the relevant notifications and clauses.

Benefits of paperless personal loans

o You get the loan instantly – With the entire process carried out online, the turn-around time is reduced. Time taken for physical submission of documentation and verification is cut down. As a result, loans are funded within the shortest possible time.

o Presence-less, paperless – Hassles are minimized in this process, as there’s no need for visiting the bank in person or sending documents through courier. You can compare different loans, pick the one that suits you and get it sanctioned, all through a few clicks while sitting on your couch.

o Safe – With banks and financial institutions adopting updated information security measures, documents submitted online are protected from anti-malware and are safe. To upgrade your security, you can always have anti-malware and anti-virus installed in your devices. However, with your documents stored online, you don’t have to worry about losing them or misplacing them.

Paperless personal loans are easy to avail compared to the traditional ones but the onus of repaying it still lies with the borrower. So, before you get yourself in debt, make sure you have a repayment plan in place. Paying back on time will help you be on the good books of any bank in terms of credit history and repayment habits, thus improving your chances of availing loans in future.

The author is CEO of bankbazaar.com

5 Reasons To Get Prequalified Before Shopping For A Home

In my 19 years originating home loans in the state of Alaska, I’ve met a lot of people with a lot of different home shopping situations. Most people know that getting prequalified for the mortgage is an important step in the process, but really don’t know when they should start. Should they find the home they want and then come to me to get the details on the down payment and monthly payments? Should they get prequalified well in advance of house hunting? If they have a house to sell or rent, does that change when prequalifying should happen?

In my experience the answer is always get prequalified as soon as you think you might be moving into another home. Here are some reasons why…

1. You need the knowledge of monthly payments before you shop. Finding the perfect home and then finding out the payments are much higher than you can comfortably afford or qualify for isn’t a pleasant way to go through this process. You’re not going to want to be house poor, so confirm the range you can shop in before you tease yourself with properties that have payments beyond your comfort.

2. Getting prequalified improves your position as a buyer in the marketplace. Sometimes homes are in high demand with multiple offers – buyers with their prequalification letter from a trusted local lender in hand have a leg up on buyers who do not. Many sellers also do not want to show their homes to buyers who are not prequalified – be the person who is ready to go and improve your power in the market.

3. Sometimes issues arise on a credit report that need fixing before the best loan terms can be achieved. With enough lead time, credit repair services can be used when needed, or paying down debts can improve credit scores and loan terms. These issues that can make or break your ability to purchase or get you a better interest rate, and it’s much nicer to have time to pave the way to home ownership in the best way possible instead of under duress when you’ve already found your dream home.

4. Down payment requirements are important to know up front. You’re going to want to have enough to close on the house and maintain a buffer for repairs or emergencies. Knowing what you need ahead of time gives you time to plan and prepare to buy when you are actually ready financially. The source of funds can also require some planning ahead to avoid delays in closing a home – it’s good to know these things up front.

5. The most important reason to get prequalified? Knowing that your finances are in shape when you are out shopping in the marketplace. Shopping for a home with the confidence that you can afford what you’re doing is such a better way to go through this experience, so why would you want to do it any other way?

Please give me a call if I can help you with this next big step in your life. There’s no charge to get prequalified, it will make your experience so much better, and I would love an opportunity to help you make this part of the process as pleasant as possible.

Click here to prequalify. Its free.

Credit Coach: Filing a personal assignment in bankruptcy

Over the past several weeks my blogs have been walking you through the progression of steps that need to be taken when facing a budget crunch or a debt crisis. We started with “What to do when debt becomes a problem,” followed by “Taking control of your finances with a budget,” and then “Consumer proposals and debt settlements.” This final blog in the series looks at filing a personal assignment in bankruptcy.

A filing of a personal bankruptcy, is a statutory or legislative option for people facing a debt issue that is unsolvable using any of the options mentioned in my earlier blogs. It is the last-resort solution after you have explored all other debt solutions. The bankruptcy option can only be accessed through a Licensed Insolvency Trustee (LIT) and each individual looking at this option will go through the assessment process with an LIT.

Bankruptcy is generally available to someone who is unable to pay their debts, also known as an insolvent individual. Bankruptcy provides for the opportunity to seek a discharge from your debts — essentially, you get a fresh start financially. When you file a bankruptcy a bankruptcy estate will be opened with the LIT responsible for handling your bankruptcy affairs from start to finish. When you file your bankruptcy, you immediately get the protections provided in the Bankruptcy and Insolvency act, which is referred to as a stay of proceedings. The filing of a bankruptcy essentially wraps a protective credit shell around you while you work through to the end of the bankruptcy. Creditors generally cannot call you, garnish your wages, harass you or take action against you to seize assets.

The bankruptcy process usually lasts between 9 and 21 months (the process is longer for subsequent bankruptcy filings). The bankruptcy will be noted on your credit file and affect your credit rating for a much longer period. You as the bankrupt individual will be given a set of duties to complete in order to obtain the discharge from your debts at the end of the process. The duties you will face when filing a bankruptcy include the following:

  1. Attendance at two financial counseling sessions
  2. The filing of monthly budget sheets
  3. Possible required attendances at a meeting of your creditors or an attendance for examination of your credit conduct leading up to the filing of the BANKRUPTCY
  4. A possible monthly payment of a portion of your income into the bankruptcy estate for the benefit of your creditors, referred to as surplus income
  5. The forfeiture of certain of your assets for sale

If you want to do your own research on what’s involved in filing for bankruptcy, a good place to start is the Office of the Superintendent of Bankruptcy (OSB) website. The OSB provides information, resources, definitions and videos that explain in more detail the steps involved in filing for bankruptcy and the role of an LIT. The BDO First Call Debt Solutions website provides an excellent overview of the bankruptcy process and can answer some of your questions on the Bankruptcy FAQs page.

If you think bankruptcy might be your only option, an initial assessment with an LIT is generally free of charge and comes with no obligations. The initial assessment is usually an hour-long information session with an LIT. The LIT will explain your duties in detail as well as review your personal situation and inform you as to how a bankruptcy will affect your current situation. Please remember it is only information — there’s no obligation on your part to file for bankruptcy. Don’t let the myths you might have heard about bankruptcy stop you from getting help. I often see people during their initial assessment that have been struggling with debt far too long due to their fear of bankruptcy.

Questions such as: will I lose my car, what happens to my credit rating, do I get to keep my RRSPs, what assets do I lose, how much to I have to pay, is my spouse or partner affected, are all best answered by an LIT in this initial assessment.

Although the Bankruptcy and Insolvency act is a federally legislated process, each province has rules and legislation that effect what happens in a bankruptcy. Items such as a portion of household equity, value in an automobile, pensions, RRSPs, personal effects and furnishing often will be exempt from seizure in their entirety or to certain values in a bankruptcy.

Having worked with BDO First Call Debt Solutions for 15 years I have assisted many individuals with different debt relief strategies — from working with a budget to filing of a personal bankruptcy. Arming yourself with good information and then making a plan and seeing it through is the most beneficial path to follow, regardless of what option winds up being the right one for you.

Jayson Stoppel is a Licensed Insolvency Trustee and Chartered Accountant with BDO First Call Debt Solutions. With over 15 years in practice, Jayson assists individuals, families and companies with financial difficulties in Thunder Bay and throughout Northwest Ontario. To reach Jayson by email: JStoppel@BDO.ca