Category Archives: Risk & Compliance

Risk & Compliance How Consumers Can Protect Their Credit When Disaster Strikes

Protecting Credit After a Natural Disaster

In the wake of a natural disaster such as Hurricane Florence, people worry about how to put their life back together. One of the concerns is how to handle finances and mitigate issues with things like mortgages, credit cards, and other loans. How should people protect themselves and monitor any changes to their credit after a natural disaster? Tom Quinn, vice president of Business Development for myFICO offers some insight on what consumers should consider when they have to deal with their finances after a natural disaster.  Check out his piece on the myFICO blog.

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Risk & Compliance Infographic: The State of the Non-Prime Vehicle Finance Industry

2018 non-prime auto financing survey

In a previous blog post, Ben Werner wrote about the report FICO helped coordinate with the National Automotive Finance (NAF) Association for the non-prime auto financing market. The report serves as a key source of benchmarking for those who participate in or support non-prime automotive financing. Below is an infographic which provides a more visual representation of the findings.

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Risk & Compliance Digitizing Credit Originations at SunTrust

Digitizing Credit Originations

Earlier this year at FICO World 2018, we held a session with SunTrust about how they rebuilt their origination process to become truly customer-centric. SunTrust set about digitizing credit originations to implement an origination system that offered the path of least resistance for customers, and in the process also rebuilt its existing business processes. SunTrust wanted to deliver a significantly simpler and more engaging experience for their customers. The result has been an origination process, infused with automation and self-service communication capabilities, that has enabled the bank to wildly outperform their most optimistic ROI projections. Check out this short video where Angela Baker, senior vice president, business lending & payment solutions group product manager at SunTrust explains why optimization was a priority for the online retailer. Digitizing Credit Originations To Meet Customer Expectations – Transcript:  Angela Baker, senior vice president, SunTrust  What was the challenge facing SunTrust? Sun Trust is located in Atlanta Georgia.... [Read More]

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Risk & Compliance Fintech Policy in the US – Things Are Heating Up

fintech policy in the US

It’s August and it’s hot in Washington DC.  Yet in the nation’s capital, fintech policy may actually be hotter than the temperatures outside.  Much of the latest buzz has come from the recently released Treasury report which focuses largely on the Trump administration’s outlook for financial innovation. This document is the fourth in a series of reports in response to Executive Order 13772 that details the President’s core principles for financial regulation. The 222 page report contains more than 80 recommendations. The issues that grabbed the headlines included recommendations urging the OCC to move forward with a special purpose bank charter for fintechs (it must have worked  since the OCC made a major announcement just a few hours after the report was released), encouraging U.S. regulators to develop a system similar to a regulatory sandbox, establishing a national data security and breach notification standard and calling for the rescission of... [Read More]


Risk & Compliance CECL for Auto Finance – How to Get Set for CECL?

How to get set for CECL

How to get set for CECL In my last blog post, I started to outline my “10 Requirements for an Effective CECL Software Solution,” where I focused on three requirements your organization needs to do to get ready for CECL implementation. This post will address four requirements for getting set for CECL, i.e. what capabilities your solution must have to provide a stable platform for CECL execution and analysis. 4) How to get set for CECL – Seamless process orchestration A robust CECL software solution will orchestrate all end-to-end expected credit loss (ECL) calculations from data input to component model calculations to final reporting and detailed outputs. It will automate processes wherever possible but will also allow manual intervention where required to incorporate management overrides. This orchestration will occur “behind the scenes” but the effects still need to be transparent to the user. All inputs, models, calculations, parameters and key outputs... [Read More]

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Risk & Compliance FICO Research: Broader Mix of Consumers Obtaining New Mortgages

Abstract graphic of house

For many people, owning a home is still a significant milestone in their financial and credit journey. We recently studied the impact of millennials’ student loan debt on their willingness and ability to obtain new mortgage loans. As the housing market continues to remain competitive, we looked at key trends in FICO® Score distributions and default rates for those who have proven they would like to and are able to obtain mortgage loans. The first clear trend observed around newly originated mortgages is that as we get further away from the Great Recession, underwriting criteria seems to have eased and a broader section of consumers are obtaining mortgages as a result. Figure 1 contains a FICO® Score distribution for mortgages opened in different periods between 2009 to 2017. We see that the percent of new mortgage account openings with FICO® Scores less than 750 has climbed significantly in recent years,... [Read More]

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Risk & Compliance Expenses Abuse: What Is The Cost Of A $4 Beer?

Expenses Abuse

Expenses Abuse Gets Media and Tax Payers In A Froth Recent news articles out of Ohio ($4 beer dings Butler County Visitors Bureau in state audit) highlights the reputational risks that can impact an organization when it fails to monitor spending for non-compliance or expenses abuse.  The audit uncovered a single $4 Beer which was part of a payment for $11,554. While the applicable statues clearly prohibit this purchase from being reimbursed, it is important to put this in perspective. This was a single $4 purchase and it represents 0.035% of the total amount. There are many ways this reimbursement request could have been identified. If the expense request had been stopped because a supervisor had noticed the purchase during the approval process, or an automated system had identified the non-compliant item then the requestor would simply have removed the item, and the remaining amount would have been reimbursed.  In this... [Read More]

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Risk & Compliance FICO Research: Does Student Loan Debt Impact Millennial Homeownership?

Student Loans and Homeownership

In April, we highlighted some of the positive behaviors that people with student loans are exhibiting to help improve their FICO® Scores.  Following National Homeownership Month, we examined whether student loan debt appears to impact decisions about when to begin another important step in their financial and credit journey: purchasing a home. Using a nationally representative sample of FICO scorable consumers as of October 2017, we compared homeownership rates (using presence of an open mortgage loan as a proxy) across Millennial consumers age 25 to 34. Within this population, we distinguished rates of homeownership between those with no student loans on their credit file, those with closed student loans, and those consumers with one or more student loans actively in repayment. Key Findings: Consumers with closed student loans are more likely to begin their homeownership journey We found that the 11% of consumers with closed student loans are almost two-thirds... [Read More]

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