SDBA eNews: August 17, 2017

In This Issue

Housing Starts Declined in July

Housing starts decreased to a seasonally adjusted annual rate of 1.155 million in July, according to the U.S. Department of Commerce. The decline was 4.8% below the revised June rate of 1.213 million and is 5.6% below the July 2016 rate.

Housing activity decreased in three of the four regions with only the South showing growth, increasing 0.6%. The Northeast and Midwest both saw large declines after a strong June report, falling 15.7% and 15.2%, respectively. The West fell at a slower rate as housing activity decreased 1.6%.

New building permits decreased during the month, falling 4.1% to 1.223 million. However, permits were up 4.1% from the July 2016 rate.

Housing completions were at a seasonally adjusted annual rate of 1.175 million, down 6.2% from the revised June estimate but 8.2% above the July 2016 rate.

Read the Census release.

Demystifying .BANK: Implementing Security Requirements & Educating Customers

On September 18, fTLD Registry Services will host the webinar, Demystifying .BANK: Implementing Security Requirements & Educating Customers. The webinar, scheduled from 1-2 p.m. ET, will feature banks who have successfully launched their .BANK sites and email. The call will also include experts who can who can speak to the technical aspects of the .BANK Security Requirements, as well as the processes for enabling the value of a .BANK domain to enhance marketing efforts.

Question of the Week

Does the bank also have to take a security interest in the primary residential structure for the flood detached structure exemption to apply?

Answer: No, the bank does not necessarily have to also take a security interest in the primary residential structure for the exemption to apply to a detached structure. For example, assume the primary residential structure and a detached garage are in a flood zone, but the bank only takes the detached garage as collateral for the loan. As long as the detached garage meets the three conditions of the exemption, the bank does not have to require coverage for it, even if the primary residential structure does not also secure the loan.

Not a Compliance Alliance member? Learn more about membership with Compliance Alliance by attending one of our live demos:

Compliance rules and regulations change quickly. For timely compliance updates, subscribe to Compliance Alliance’s email newsletters.

Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call 888.353.3933 or email.

Upcoming Events

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Contact Alisa DeMers, SDBA, at 800. 726.7322 or via email.

Special Room Block Price Deadline Nearing for Upcoming SDBA Events

Make your room reservations today to receive a discounted price at the same hotel the event is hosted at. See below for details.

Room Block Name: SD Bankers Association

Bank Technology Conference (Sept 19-20), Ramkota Hotel, 605-336-0650, Room Block Deadline: Aug. 21. Register Online Now.

Annual Security Seminar (Oct. 5), Sheraton Sioux Falls, 800-325-3535, Room Block Deadline: Sept. 6. Register Online Now.

Onsite Certified Banking Security Manager (Oct 18 & 19), Sheraton Sioux Falls, 800-325-3535, Room Block Deadline: Sept 18. Register Online Now.

For more information, contact Halley Lee via email or at 800-726-7322.

CFPB Data Shows Growing Numbers with High Student Debt Levels

The percentage of student loan borrowers leaving school with at least $20,000 in student debt has doubled from 20 percent to 40 percent from a decade ago, according to data released by the Consumer Financial Protection Bureau yesterday. The percentage of borrowers owing $50,000 or more tripled in that time -- rising from 5 percent to 16 percent.

The study also found that an increasing number of borrowers are unable to cover the interest on their loans when making their monthly payments. Today, 30 percent of borrowers have not paid down their balances after five years in repayment, compared with 16 percent in 2008. Of those, more than 60 percent are delinquent. The number of borrowers who reported repaying their loans in full after five years fell from 50 percent to 41 percent, while 12 percent of borrowers’ saw their debt grow in the first five years of repayment, up from 8 percent in 2008.

As student debt burden continues to increase for both young people and their parents, ABA is leading the way in encouraging banks to offer student loan repayment plans as an employee benefit through its endorsed provider, Gradifi. The CFPB study noted the advantages of such repayment plans -- for example, “with a 10-year, $30,000 loan at 6 percent interest, an employer paying $100 a month will save the borrower more than $11,000 over the life of the loan,” the CFPB said.

Fed Divided Over Timing of Next Rate Hike

The Federal Open Market Committee was divided over when it will next raise the target federal funds rate, which they decided to hold at 1 to 1.25 percent, according to minutes from the FOMC’s July 25-26 meeting. “Some” FOMC members expressed uncertainty about inflation, saying that the committee “could afford to be patient” in deciding when to raise rates, while others said the labor market has neared full employment and a delay in raising rates “would likely be costly to reverse” or “could lead to an intensification or financial stability risks or to other imbalances that might prove difficult to unwind.”

The committee also said its plans to begin reducing the Fed’s balance sheet will be “formally announced next month.” The balance sheet is swollen with $4.5 trillion in securities purchased as part of quantitative easing programs between 2008 and 2014.

FOMC members said they expect continued economic growth and job gains in the near term, and agreed that the timing and size of future rate hikes “would depend on their assessment of realized and expectation economic conditions.” Read the FOMC minutes.

SBA Seeks Feedback on Burdesome, Excessive Regulations

In response to President Trump’s executive order requiring all federal agencies to reduce regulatory burden, the U.S. Small Business Administration has issued a request for input on regulations could be repealed, replaced or modified. Comments will be due 60 days after the notice is published in the Federal Register.

You may submit comments, identified by Docket Number SBA- 2017- 0005, using any of the following methods:

  • Federal eRulemaking Portal: Identify comments by “Docket Number SBA-2017-0005, Reducing Regulatory Burden RFI,” and follow the instructions for submitting comments.

  • Mail: Holly Turner, Regulatory Reform Officer, U.S. Small Business Administration, 409 Third Street, SW., Washington, DC 20416.

ABA Supports Changes to CFPB's Prepaid Card Rule

The American Bankers Association yesterday provided feedback on the Consumer Financial Protection Bureau’s proposed changes to its final rule on prepaid products. The proposal includes several revisions to error resolution requirements and limited liability provisions of the prepaid rule, which is set to take effect on April 1, 2018.

ABA generally supported the changes and recommended that the CFPB delete certain cards from its definition of “prepaid accounts,” such as jury duty cards that have no fees, cannot be registered and are not marketed to the general public. ABA also recommended that the bureau delete certain language that would require credit card companies to treat prepaid accounts offered by a related company as credit cards for purposes of merchant disputes and error resolution. Finally, the association noted that the April 2018 compliance deadline may no longer be sufficient, and urged the bureau to extend the deadline to Oct. 1, 2018. For more information, contact ABA’s Nessa Feddis.

Retail Sales Jumped to 7-Month High in July

There were $478.9 billion in retail and food service sales in July, up 0.6% from the previous month and 4.2% from July 2016, according to the U.S. Census Bureau. July’s retail sales were the largest gain in seven months. June’s number was upwardly revised to reflect 0.3% growth.

Core retail sales – excluding automobiles and parts – grew 0.5%. Year-over-year core sales increased 3.8%.

Retail trade sales increased 0.6% from June, up 4.3% from last year. Sales at nonstore retailers increased 1.3% from June, the largest monthly gain since December 2016. Nonstore retailer sales are up 11.5% year-over-year as online retailers continue to grow their market share.

Sales at gasoline stations decreased 0.4% during July, the second consecutive monthly decline, but are up 2.1% from a year ago.

Read the Census release.