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Latest Press Releases

In many smaller American towns banks and credit unions are finding usual sources of loan demand dwindling — and that was before the COVID-19 recession. Community banking institutions may find trouble if they market their credit services further afield. The solution may be to dig deeper for loans in the communities they already know, marketing loans to be evaluated with new alternative data sources (like some fintechs do).
The CFPB issued a blog post noting the potential inclusion benefits of using AI and machine learning models for credit underwriting, as well as risks and compliance challenges with respect to the delivery of “adverse action” disclosures. The agency emphasized the “built-in flexibility” in the regulatory framework and recognized emerging work by lenders and technology companies to enhance the explainability of AI underwriting models.
The CFPB issued a no-action letter template to the Bank Policy Institute recognizing terms for a standardized, small-dollar credit product, including those designed to function as “guardrails.” The template is intended to ease approval of plans by individual regulated entities to offer a product based on these standardized terms, subject to submission and approval of further information specific to each lender. Underwriting based on the applicant’s cash-flow data is specified among the essential terms set forth for the standardized product.