Collector - November 2020 - 7

INDUSTRYNEWS
INDUSTRY NEWS

CFPB Consumer Credit Data Shows Decline in Delinquencies

T

he Consumer Financial Protection
Bureau issued findings that
consumers have not experienced
significant increases in delinquency or
other negative credit outcomes during the
COVID-19 pandemic.
These findings mirror experiences of
ACA International members working with
consumers on their accounts in the last
several months.
Debt collectors continue to help
consumers manage their payments,
provide resources on hardship programs
and suggest solutions that fit with their
financial situation. Calls from consumers to
agencies were on the rise in recent months.
Consumers sought help managing their
finances and exploring hardship options
as a result of the ongoing COVID-19
pandemic.
The steady flow of calls experienced
by ACA members and the accounts
receivable management industry also
coincided with consumers' receipt of
stimulus payments under the Coronavirus
Aid, Relief, and Economic Security
(CARES) Act.
According to the CFPB Office of
Research report, "The Early Effects of
the COVID-19 Pandemic on Consumer
Credit," on mortgages, student and auto
loans and credit card accounts, new
delinquencies declined between March
and June 2020.
"The analysis shows a decrease
in delinquency since the start of the
pandemic and an increase in consumer
assistance," the CFPB reported.
Creditors and lenders also increased
payment assistance to borrowers, according
to the report, which notes that outcomes
may reflect payment assistance provided to
consumers through the CARES Act.
"Student loan and first-lien mortgage
accounts had the largest increase in
assistance in terms of magnitude, but
increases in assistance on auto loan
and credit card accounts were substantial
given that there was effectively zero
assistance reported for consumers
prior to the COVID-19 pandemic,"

COLLECTOR 11.20

according to a news release on the report.
"Assistance appeared to be concentrated
among borrowers residing in areas
that were more severely affected by the
COVID-19 pandemic and the associated
shocks to employment."
Additional findings include:
*	 There was a slight reduction in
the availability of credit card debt
between March and June 2020. Credit
limits on existing credit cards declined
slightly, where prior to March 2020
there was a general trend of increasing
limits. There was also an uptick in
the closure of accounts by credit card
issuers. In absolute terms, borrowers
with very high credit scores accounted
for most account closures.
*	 Credit card balances also fell
substantially at the start of the

COVID-19 pandemic, then continued
a steady decline through June 2020. The
decrease in credit card balances was
consistent across groups when broken
down by credit score and various
demographic factors.
*	 Consumers did not appear to be
accumulating credit card debt as a
means of staying afloat financially. On
average, credit card balances decreased
by around 10% between March 2020
and June 2020, a drop consistent with
other data that show a decline in
consumer spending.
ACA members continue to work with
consumers in setting up alternative
payment arrangements for people
experiencing unexpected hardships or, for
example, during natural disasters like
floods or storms.

7


https://files.consumerfinance.gov/f/documents/cfpb_early-effects-covid-19-consumer-credit_issue-brief.pdf https://files.consumerfinance.gov/f/documents/cfpb_early-effects-covid-19-consumer-credit_issue-brief.pdf https://files.consumerfinance.gov/f/documents/cfpb_early-effects-covid-19-consumer-credit_issue-brief.pdf

Collector - November 2020

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