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ConsumerFi Podcast: 2021 CFPB Update with FNI Incorporated’s David Bafumo

April 22, 2021

Episode 24


Joel sits down with FNI Incorporated President, David Bafumo, to discuss what to expect on the delinquency front as government stimulus payments dry up, why ‘proof of income’ has never been more important during the approval process, and the major points Joel discussed with CFPB representatives, including the increased focus on racial and economic equality.

To get the PowerPoint breaking down his discussion with the CFPB, email Joel at joelkennedy1 [at]

ConsumerFi is presented by Nortridge Software: Loan Software That Accelerates Change.

And special thanks to The National Automotive Finance Association: The only trade association exclusively serving the nonprime auto finance industry.


You’re listening to the consumer FY podcast powered by Nortridge loan software that accelerates dream.

[00:00:20] Joel Kennedy: Welcome everybody to the ConsumerFi Podcast .I am stoked today to have a long time, man. Everybody’s a long time ally , but you know, this is actually a good one. Versus the others that I had on , that was bottom shelf. We brought the top shelf today with David Bufumo of FNI.

[00:00:34] David, welcome.

[00:00:36] David Bafumo: [00:00:36] Thanks, Joe. Great to see you.

[00:00:38] Joel Kennedy: [00:00:38] So David specializes in all matters compliance or risk management that would really hit home for lenders, but also at dealerships. David, do you want to give folks your background and tell us a little bit about FNI?

[00:00:52] David Bafumo: [00:00:52] Sure. Thanks Joel .

[00:00:53] So FNI is a product and compliance agency. We work with lenders , consumer finance companies, auto [00:01:00] finance companies, and their dealers and associated dealers with add-on protection products for customers.

[00:01:06] Our specialty is designing the compliance piece around how those products are sold either at the finance company, through the finance company or by the dealership.

[00:01:15] That’s taken on a life of its own about eight years ago. I think we’re getting back into an environment where attention is back on how these products are sold to customers and how they’re financed by banks that provide additional financing for them.

[00:01:30] So I’m eager to hear what you heard direct from the CFPB this week. This is sounds really exciting.

[00:01:36]Joel Kennedy: [00:01:36] So as folks may know , I serve as the president of the National Automotive Finance Association. And one of my mandates when taking that role was, we needed to make sure that we had a presence with the CFPB, that they knew who we are, that we weren’t obscure to them. They knew the services that we provided. They knew a little bit about our members and they knew that they could use us as a mechanism for getting messages communicated out. The worst [00:02:00] thing is when you get these memos that come out that are vague or nebulous that say, we’re looking at this thing, but you might need a little bit more prescriptive, information in order to bring it together.

[00:02:09] And David, this is why I’m so thrilled to have you on. David’s going to provide some commentary and some feedback. We’ve not even gone through this information prior. So we’re going to poke through some of the information that I shared with the Bureau a couple of weeks back. And David is I think, invaluable in this conversation because he has experience.

[00:02:29]You’re still a road warrior to some extent. I mean, he’s in and out of dealerships along the Mid-Atlantic for sure where he resides, but also with lenders doing everything from the risk mitigation , as well as compliance programs. David, we didn’t really talk about why you have a heavy compliance resume as well.

[00:02:44] David Bafumo: [00:02:44] Well, we work with over a dozen auto finance and consumer lenders around the country. Supporting their protection product programs that they either have on their own or that they provide additional funding for through dealerships. And the compliance services that we offer are really [00:03:00] directed at those products and making sure that lenders have a documented policy for what they’re going to fund, how they’re going to fund it.

[00:03:07] Um, and as best they can to give them some structure around. How they expect the dealers. If it’s a, if it’s an indirect relationship, how they expect the dealers to sell those products. And we do some support around that. We do onsite also some onsite risk assessments. We’ve done locally in some States specifically, and, um, in New York, um, with the local agencies there.

[00:03:27] And, um, we have kind of a limited view of what we do and we pull in, um, Expert compliance people to support, uh, the areas that really aren’t our specialty outside of the product and, um, indirect auto space.

[00:03:41] That’s great. So I’ll be going through a little bit of the slide deck that I had pulled together for any of the listeners, um, that want to get a copy of this.

[00:03:51] Uh, I encourage you to reach out to me directly. If you’re, if you’re listening to the podcast, you probably connected with me on LinkedIn. If not, uh, just hit me up at [00:04:00] Joel Kennedy, the and I will be happy to send out a copy of the slide deck that I presented to the Bureau. But slide deck is just one piece.

[00:04:11] We want to talk about, uh, reading the tea leaves. So the, the, the Bureau is. Look, I mean, my experience with the Bureau is that I work with, with folks like Damien and, and, and, and folks like that, they’re they they’re experienced people that have had operator’s experience. Okay. And they understand compliance really.

[00:04:33] So it’s not a full scale education with these folks. It’s really just more about updating them and maybe just revisiting topics that, um, perhaps. May escape, some grasp of some members on their team, but I have to tell you, it’s not really that big of a deal. Um, they, they seem to get it when we share the information.

[00:04:54] So we started out by talking about the fact that, and this was a hot topic, David, I [00:05:00] don’t know if you had read the wall street journal article that came out a couple of weeks ago that received an immediate rebuttal from the folks at APHSA, but, um, A lot of that talk was about what is the denominator of these statistics that you’re talking about?

[00:05:15] So we know that since 2015, that subprime as, as an overall participant in the market has the, the, that has been on a downward trend. So overall subprime is down 17% since three Q of 2019. And. And we’re looking at three Q 20, 20 figures as, as, as the starting point, deep subprime is down twice that 35% over three Q of 2019.

[00:05:43] Um, and, and we’ve been on a downward trend since 2015, and this was something that, uh, Melinda is a Pritzker who was one of my first podcast guests made mention to, um, this is coming from the Bureau, so, okay. So this information. Uh, is this is this, [00:06:00] this particular information is from, from Experian. David, have you seen within the lenders and within the dealerships, are they feeling this drop-off in the volume, uh, of the non-prime participants or it could be, I don’t know.

[00:06:14] Maybe you’re working with folks where they’re regional and there’s, you know, it’s, it’s, it doesn’t really amplify to their level.

[00:06:20] Well, I think there’s no question. Um, and we, you know, we have clients on the East and West coast and in the middle, and I think there’s no question that everybody in the subprime space is, uh, they’re all fighting harder, um, for a declining number of opportunities.

[00:06:36] Um, and I, I don’t know if that’s, um, because there are less. Uh, subprime, um, opportunities in general, or if the subprime quality has deteriorated to where it’s not really even subprime anymore and they just can’t be, be, be done. Um, but there’s definitely been a decline in, in origination and opportunities for, uh, around the country.

[00:06:59] Um,

[00:07:00] [00:07:00] Joel Kennedy: [00:07:00] I, for sure, I kind of blame a little bit of a hangover effect of the great recession in that a lot of the, the major bank type players that would deep, that were into subprime and even deep sub prime, uh, traded and never came back. And so I think that that creates a bit of a gap. Uh, we’re seeing low, lower vehicle held inventories.

[00:07:20] And I think just all, all across the board, less of a powerful need to take on that heavy risk-taking you see people that like to refi and buy maybe, maybe a little bit higher to your credit and shave that rate a little bit, but bring them on because they know that while they may not be getting the yield that they want, they can buttress their portfolio with more quality.

[00:07:40] Right. And so if, if, if they’re trying to replenish things, if you replenish with, with higher quality things, then they should have longer terms and, and lower default, uh, for the full term.

[00:07:52] David Bafumo: [00:07:52] But you know, there’s also now, I mean, in the last day, at least probably during this last four months, I mean, there’s also the added [00:08:00] pressure of the wholesale markets.

[00:08:02] Which, um, you know, the cost and price of inventory is getting abused. Inventory is getting to the point where, you know, a subprime deal is even harder to figure out how the math is supposed to work when the, uh, when the car is so expensive, um, to begin with. So, um, there’s some distortion there

[00:08:20] Joel Kennedy: [00:08:20] too, for sure.

[00:08:21] Well, and now we hear today that, um, And it was only a matter of time. You know, this, the dealers who have the inventory that are rolling them through auction. Now, now I hear news today saying, uh, these cars are a little more banged up than they were last week or two weeks ago. So they’re saying screw it.

[00:08:36] Why it’s like you’re selling a house. Why would I bother to fix it up when everybody else sold their beater? For millions, why would I bother to like redo the kitchen and bath? I can just sell it as is and get that bogey. And then it’s a

[00:08:48] David Bafumo: [00:08:48] really danger point for lenders right now in the sub subprime space.

[00:08:51] And we’re seeing that a lot on even, I mean, on our product side with, uh, with mechanical breakdowns and so forth, where, um, the quality of, of [00:09:00] the file to the collateral that we’re seeing now is, is they’ve definitely declined. Uh, we have origination too. I mean, so the dealers are, um, uh, in some cases, you know, the inventories refer for sure.

[00:09:12] Joel Kennedy: [00:09:12] Yeah. So rolling into the next stage, we talked a little bit about delinquencies where, you know, I, at least what I was looking at, and I was looking at the Croll bond data, which is an aggregation of not just the bonds that Kroll has rated and chimed in on. They take a broader view. Even the ones that they didn’t, um, make a, uh, uh, a statement on they included in the population.

[00:09:34] And so, you know, all in all they, the delinquencies are meaningly, meaningfully lower on a year, over year basis. We’re seeing some little bit of a spikes and we’ve seen that due to some seasonality or some, um, transitioning of individuals from being, uh, supported by, uh, government stimulus, but all in all, um, You know, I, I was, my conclusion was that the net loss is even though the delinquencies are [00:10:00] kind of flat, but the net loss is that fluid would normally throw through flow through that are, are essentially on hold.

[00:10:04] Because a lot of the companies that we had had bit of repo, moratoriums across different pockets. And so, um, but that did kind of resolve itself toward the second half of the year, last year. Um, And so that’s, that’s what we were seeing on delinquencies. David, have you been hearing or seeing anything different on that?

[00:10:21] I mean, my, my, my kind of final thought is delinquencies and everything on through it’s, it’s artificially lower because of the stimulus. And because also because of the lender help that we, that we’ve provided with forbearance. It’s

[00:10:33] David Bafumo: [00:10:33] definitely. I mean, every, every company I’ve spoken to has, um, remarked, how, um, low delinquencies have been during this entire, uh, environment that we’ve been in for the last year and that stimulus money and assistance money is definitely been used, um, to Pitt, to pay, uh, pay debts, which is a little bit of a surprise to a lot of people.

[00:10:58] Um, but it’s also, as you said, I [00:11:00] mean, there’s, there’s a period here. Uh, down the road when it’s gonna stop and then we’re gonna really get a picture of what what’s out there. I think nobody really knows what the, what the real world looks like quite yet. Yeah.

[00:11:13] Joel Kennedy: [00:11:13] So we talked about delinquencies, so then you can, you can say, okay, delinquencies are looking pretty good, but what about roll rates?

[00:11:18] Right. So like what. What are the waves that are coming that could drive borrowers into these later stage delinquency buckets? I would say in 2020, we saw some spikes that were then resolved through some of the stimulus and some of the, um, forbearance packages. Um, but the roll rates that we had been seeing historically, it seems that we’re kind of heading back towards equilibrium.

[00:11:41] Um, But as we take away this government stimulus, and as we take away these forbearance programs or we age out of them, I do expect to see that we’re going to see some more repossessions. And then that, that, that really leads us into another part of the conversation. But in terms of roll rates, David, uh, you know, I mean, anything [00:12:00] you’ve been seeing that that is a cause of concern with any of your lenders or the dealers that you work with, that that happened to hold the paper.

[00:12:06] David Bafumo: [00:12:06] Uh, probably a little bit outside of my space. Still not a problem to address that.

[00:12:11] Joel Kennedy: [00:12:11] Yeah. Yeah. I’d love to put you on the spot. Alright, so collateral recovery, um, uh, what I, and my data’s from Cox automotive, uh, that the 2020 volume definitely softened, but we’re probably going to see an uptick here this year.

[00:12:32] And at the time that I built it, it was pre this extra next stimulus package that came out. So now it’s just really about playing this game of. When is the other shoe going to drop at what point in 2021? And we, we all do believe it’s going to drop. Yeah.

[00:12:48] David Bafumo: [00:12:48] And I, I don’t know if there’s any way of knowing what it’s going to look like.

[00:12:51] I mean, it so much depends on, um, on the rest of the recovery of, of our industries, of, of the industries that support our, our [00:13:00] segment of, of business. I mean, what’s going to happen to the restaurant workers what’s going to happen to what’s going to happen to all those, all of those service areas, um, that.

[00:13:10] All right. You know, 50% capacity and not even any more because of government closure, just because people aren’t doing those things anymore. Um, the, the real impact of, of what happened last year and, um, is I just don’t think anybody knows what it, what it’s gonna look like yet for a well segments of industries that support our, that support the incomes that we, uh, you know, We use for, uh, you know, in our industry for

[00:13:37] Joel Kennedy: [00:13:37] financing, you know?

[00:13:38] Yeah. I, I too am concerned about the folks that are on the losing side of the case shaped recovery, which you named hospitality. Oh, commercial commercial,

[00:13:47] David Bafumo: [00:13:47] Apple commercial office space. I mean, for example, I mean, look at my rent is super low here. All these people.

[00:13:59] Yeah, we have [00:14:00] here, even in North Carolina, I’m in Raleigh, uh, which is a huge growth area, you know? And, and, um, we’ve got, I just drove through a karaoke office park area, which is kind of hidden in a forest and there’s numerous giant office buildings back there. And I don’t think anybody’s in them anymore.

[00:14:18] I mean, they’re all spaces available. All the restaurants around them are closed for lunch now because there’s nobody going to work in them. Uh, so it’s not just the service. I mean, there’s going to be some repercussions that, uh, trickled down to everybody when, uh, when, when commercial property now is, uh, is kind of in limbo in a lot of cases,

[00:14:39] Joel Kennedy: [00:14:39] opinion here, nothing it’s not worth anything, but my opinion is that this is more akin to a structural economic, uh, unemployment situation that is going to require, uh, Additional support through to the individuals, whether it’s continued benefit for unemployment based on the [00:15:00] job type or the industry segment or what have you.

[00:15:03] But. We have to, we have to keep fighting for these people. The problem for us as lenders is that if you’re not gainfully employed, it’s really hard for me to rationalize giving you an idea.

[00:15:14] David Bafumo: [00:15:14] Hopefully, hopefully, you know, hopefully that’s not happening. I mean, that’s just, uh, that’s really the only, the only, I don’t see a lot of sub subprime crisis things, but if, um, if there’s a bunch of loans going on, With people with no income, that’s a problem.

[00:15:32] But obviously, you know, I hope that that’s not happening. Uh, and it seems to me from what. Um, from what I’ve gathered from, uh, our business partners that, uh, POI in particular is one of the things that definitely, um, got the magnifying glass, um, last year and then that’s continued. So I think even companies that were, um, More flexible or less or less conservative on proof of income have in this environment, [00:16:00] tightened all those rules, buttoned all that up.

[00:16:01] And that’s in my opinion, which is also probably fairly worthless. Um, that’s smart and, and imperative in this environment for risk mitigation.

[00:16:12] Joel Kennedy: [00:16:12] One of the things that the Bureau was really interested in hearing us talk about David was, um, kind of the voice of our lenders. The, the, the members of the national automotive finance association, we provided them a number of points.

[00:16:26] And I don’t call out a couple and just jump in when something strikes a chord with you. But, um, you know, what we’ve been hearing is that lenders are saying that there’s increased competition among them, and they have kind of a, uh, a murky forecast for the next couple of years. And. So we have that increased competition and we also have a relatively low cost to capital.

[00:16:48] Um, and that, that should generally mean that lenders can take on some more risk. Um, we have the increase in wholesale prices and that’s obviously impacting them. And you look at your [00:17:00] portfolio in certain ways about. You know, which vehicles to repossess and when, and what kind of vehicles do you really want to replenish on your portfolio?

[00:17:07] I can see some, some things maybe changing there, but now we get into some points of pain and unless these, and then I’ll, I’ll, I’ll double back with you just so I can get through it. But so credit reporting complexities, right? So during the pandemic, uh, some. Companies took different measures to change reporting, or to make sure that the really just that the consumer wasn’t hurt based on the situation and the forbearance programs that were offered.

[00:17:32] And so I think there’s some confusion there because we know from a compliance standpoint, if you mess something like that up, you expose yourself and the consumer can take you to court for something like that, where, or get the, the, the debt kind of, um, Uh, wiped. Um, one of the big fears that the automotive lenders had that we wanted to make sure we got through to the Bureau is that we as automotive lenders, we distinguish ourselves and differentiate ourselves rather squarely and [00:18:00] flatly versus the payday lenders.

[00:18:02] We are not payday lenders, and that’s an item of concern that we get lumped in with them, because that is just. Two totally different business models, two totally different instruments, two totally different situations. Um, as you know, David, many of us who came up, worked in financial services, companies that are not bank entities and, and are not debt collectors.

[00:18:28] There are certain statutes that we tend to, I think most of us tend to follow as though we were a debt collector, even though if you’re collecting on your own originated debt. Um, It’s not, it doesn’t meet the definition, but what we’re, what we’re hearing. And we told them was, you know, we still don’t feel comfortable with the definition that, you know, we, you won’t come after us.

[00:18:52] You know, as though we were a bank and hold us to that level of scrutiny, um, And then the last two, you [00:19:00] mentioned one about consumer fraud, which I, from what I hear is definitely up, but then the other big one that I think is, is going to continue to be discussed. And I just saw the lended, I think lended or one of these other conferences, they’re going to talk about the role of, of, um, of artificial intelligence within underwriting.

[00:19:17] Right? So these models. When they train themselves, they don’t know how to, they don’t know how to remove bias and they tend to, they have a likelihood to impose that. I think you can control for it. I think you can put some parameters around it, but okay. So there, there we go. So I said too much. You’re I’m supposed to let you talk, you’re saying, are you saying

[00:19:36] David Bafumo: [00:19:36] you’re talking about bias?

[00:19:37] Like what kind of bias, like discrimination bias or, or.

[00:19:43] Joel Kennedy: [00:19:43] Inadvertent bias. So the models are going to, you know, as they train themselves, they don’t have an appreciation for protected. Oh, for, yeah. For discrimination. Yeah. And so, you know, somebody who may argue that there are certain [00:20:00] characteristics of a protected class that came from being underserved.

[00:20:07] Has resulted in certain, uh, things that are showing up on their credit Bureau in terms of performance. They just didn’t have as many options. The only options they were given were high cost options, or maybe they high cost option with a low quality vehicle. Right. So, um, I think with the artificial intelligence models, you purposely don’t train them to take into the account that the gender or race of an individual, however, as the model is deployed, if you don’t back test it and check to make sure that it’s not.

[00:20:41] Uh, hurting these individuals, then they kind of, this is how they’re looking at it. It’s a very HUD based approach. I don’t know if you remember the, the BISG with HUD.

[00:20:50] David Bafumo: [00:20:50] Well, I can tell you what you’re talking about. Joel, to me is probably the biggest threat to our industry in this, in this environment that we’re in right now.

[00:20:57] You know, I, I backed these back eight [00:21:00] years ago. Um, I was worried about, um, The impact on the product business. And it was definitely a high profile thing in some, in some cases, in some States this, uh, add on product stuff is still very hop of mind, uh, from a compliance and regulatory, um, consumer protection effort by local regulators and so and such.

[00:21:21] Um, but right now, uh, is starting in January without anything to everything that we’ve learned about the direction of, um, of government’s involvement. Uh, in consumer protection from last, from last year through the election into now, is that the, um, But what you’re referring to is really what’s emerged as disparate impact back then it did come from the mortgage lending world and all that stuff.

[00:21:51] That’s that to me is without any doubt, the number one issue, and it’s not limited to artificial intelligence and, and scorecards, [00:22:00] it’s going to, it applies in this environment we’re in now it applies to any kind of. Uh, underwriting that’s going on. If you’ve got, um, a portfolio where a protected class is paying more money than somebody else, for whatever reason.

[00:22:16] It’s going to come under scrutiny. And I don’t know how you defend against that, to be honest with you because, um, most companies, even the ones that are doing it right, and most all of our folks are trying to do the right thing. Nobody’s building a discriminate discriminatory. Underwriting system. It’s the stupidest thing you could do.

[00:22:34] So it’s certainly not done intentionally, right. Intention doesn’t matter anymore. A lot of these things. And that concerns me probably the most about, about the future for everybody is when you lose that intention, um, piece.

[00:22:49] Joel Kennedy: [00:22:49] Yeah. Yeah. The Bureau is very concerned about the treatment of the deep subprime consumers.

[00:22:54] Yes. And you know, there’s a part of me that really feels very. Justified in saying, well, nobody has more [00:23:00] experience in dealing with them than us in our market, where we are the. And in one light where the lender of last resort in another light, we’re the, we’re the only game in town for a lot of these people.

[00:23:11] And so, and we understand that and you know, what we actually love and respect our customers. We really do do our part.

[00:23:17] David Bafumo: [00:23:17] Our clients are trying to help people get cars that they can’t otherwise possibly get. And nobody knows bank, uh, or, or even credit union is willing to help them. And our, our clients are.

[00:23:31] Uh, probably do it the right way. There’s just a, when the rules change, uh, without telling anybody or, um, you know, there has to be certainty in expectations and rules, um, so that everybody can, can do it, right? Yeah.

[00:23:46] Joel Kennedy: [00:23:46] Well, one of the things that I’ve been beating a drum for that, um, we’re on the same page with the Bureau is, you know, think about backing during COVID or any other time.

[00:23:56] If you’re in a bad way as a borrower, please. [00:24:00] Don’t go silent. Just at least, even if it’s just sending an email or a text or something, just saying, I’m not going to be able to make this payment. I got laid off. I don’t want to give up the car, you know, whatever the situation is. I think you’ll be surprised at how much assistance you can open yourself up to if you’re just open and honest.

[00:24:22] Um, and, and that was something that we, we had a really solid common ground on, and I was just really pleased to hear the Bureau mentioned that. They also talked about the future of risk-based pricing as it pertains to dealer participation. And this was an issue that had come out, I think, at the advent.

[00:24:40] Yeah. Dodd-Frank yeah,

[00:24:42] David Bafumo: [00:24:42] that was one of the

[00:24:43] Joel Kennedy: [00:24:43] original issues. Yeah. Are you seeing, uh, is dealer participant? I do not track dealer percent participation within lender programs at all, but I think you, you kinda, you might be in a better position, David, is that something you’ve been seeing? Have you seen any change to that or is it about the same, know, a [00:25:00] lot of change

[00:25:00] David Bafumo: [00:25:00] to it?

[00:25:01] Um, really what the, the dealer, um, the NAD da the net, the franchise dealer association. Um, did a great job of, uh, getting in front of that back when it’s years ago. And so I think it’s certainly in the franchise dealer space, there’s a lot of structure around how that, how that impacts at the, at the time of sale at the customer level.

[00:25:25] There’s a lot of changes that have been made to protect consumers in that case, and be more transparent about, um, uh, about the, uh, the rates and the cost of the money, which is what the whole concern was, um, on the lender side. It’s a very rare thing, um, in subprime. So I, I don’t think that it’s something that necessarily applies particularly in, in, in subprime finance.

[00:25:49] Um, we don’t see a lot of that of rate participation options, even when you get to that subprime and deep subprime level, unless maybe you’re talking about a very large [00:26:00] national bank possibly, but it’s diminished at a minimum.

[00:26:06] Joel Kennedy: [00:26:06] So the final one, and this, this will, this was, is probably the most interesting topic of conversation because it’s extremely murky and it’s this concept of racial and economic equality.

[00:26:19] So if the Bureau were to say, we’d like to understand you, we’d like you to cut your data, your results of consumer performance in the portfolio by. Uh, gender or race or things of this nature, right. Because we want to see if there’s, if there’s a disparate treatment happening at repossession or with escalating, uh, and skip tracing or what have you.

[00:26:48] Yeah. My answer to that is. I can’t do that. It’s impossible because I don’t have that information. If I were to have that information, it would have to have, it would have to reside [00:27:00] behind a firewall with only a lawyer on staff being the only one, not even the CEO, not even the chief legal officer, just one.

[00:27:12] Well, it could be chief legal officer, I suppose, but one individual legal to have that information. And then they come out with here are actions for how we’re going to remediate something. If there’s an issue. HUD obviously is a totally different world. And we see they’re taking a page from HUD, but we don’t have our loans packaged up and bought by these government entities that ultimately support the industry for automotive.

[00:27:40] That doesn’t happen. It still happens in mortgage. So David, this is the big one. So if we’re going to head into a space where we need to manage racial and economic equality, Uh, but also be able to measure and monitor and track against it. Posthumously, how are we going to do that? [00:28:00] Yeah,

[00:28:01] David Bafumo: [00:28:01] it’s, it’s virtually impossible and I it’s the, it’s the issue of when we started just talking about a minute ago, it’s it’s the biggest risk and.

[00:28:08] The risk is, I don’t think that anybody really wants you to even do that. I think they’re going to look at the portfolio and say, well, you know what? It looks like from our data analysis, based on these X, Y, and Z factors, which they, which they’ve done in the past, they did this with the original

[00:28:25] Joel Kennedy: [00:28:25] districts.

[00:28:25] It’d have to, it’d have to be starting with some kind of geography.

[00:28:29] David Bafumo: [00:28:29] Well, it’s, it’s 70. I mean, it’s, it was like, I think back back when this happened originally, I think it was like 70 or 80% accurate or something like that. Uh, at best, at best. And they would say, okay, it looks like we think 70% of these people based on their badge, their last name or their zip code, or their first name and their zip code or whatever, they had some secret sauce there that was sort of right.

[00:28:51] You know, like blackjack, you know, it was a percentage, but it was not perfect. And it was far from perfect. Um, I think that’s really all they care about and they, [00:29:00] they, you know, uh, I don’t see anybody saying you’re going to be able to track those things because that way, as you said, creates a whole nother.

[00:29:07] Nightmare of potential. More problems than it could solve. So having that data

[00:29:14] Joel Kennedy: [00:29:14] of the around. Yeah. And that’s the big one, right? So I kind of feel like this in terms of bringing it all home. I feel a lot more comfortable with our industry’s ability to manage, to changing directions, regulatory, et cetera, because.

[00:29:30] We have it, I mean, just through the NAF alone, and obviously there’s other training programs, apps that has some good training programs as well, but David we’ve graduated over 650 in the consumer credit compliance cert certificate program, which is like the certified manager program. And David we’ve graduated over 4,200.

[00:29:48] The NAF has in the compliance certificate program. So this is for all of your frontline associates, right? So we’ve already gone through all of this. And we’re prepared. Whereas I think when Dodd-Frank [00:30:00] came out before, I don’t know what the numbers were. I have to say for a lot of the smaller regional lenders, they might’ve bought a package from a lawyer and 20 years ago and never updated it or whatever.

[00:30:11] I feel like we’re in a better position, but that’s the one that it’s going to take some navigating. It’s going to take some smarts to really kinda. Figure our way forward on that issue.

[00:30:22] David Bafumo: [00:30:22] It is. And you’re right, but that’s you’re right. The, the advantage is that everybody is definitely much better prepared, um, for what lies ahead now than, than we all were in 2012 or 11 or 10, whatever that was, um, definitely better prepared.

[00:30:38] And the, you know, the only thing I would, I would leave you with on that is to say, look, the best you can do is keep on doing everything. The right way. Um, but, um, also make sure if you haven’t already make sure you can prove you were doing it the right way, and that means a lot of extra documentation around all of your processes and your, and your [00:31:00] policies.

[00:31:00] Joel Kennedy: [00:31:00] Um, I forget one of the great, I forget if it was, I forget if it was Eric, John, I think it was Eric Johnson at the, uh, at one of the training sessions. And he said, uh, is, is it, is it ethical to create evidence. Yes it is. And you should be creating evidence. You should be creating evidence as you go through.

[00:31:20] And if you’re not creating evidence yeah.

[00:31:24] David Bafumo: [00:31:24] The audit and you audit it’s all happening and that’s more evidence. So yeah, absolutely.

[00:31:31] Joel Kennedy: [00:31:31] Yeah. So, David, um, You know, we talked about some of the stuff that you do within, um, within dealerships and within lenders, a lot of great stuff with, with risk management and, and some compliance thrown in.

[00:31:44] If folks want to get ahold of you, maybe pick your brain. Um, what’s, uh, what’s a good contact for them to reach you. Yeah,

[00:31:52] David Bafumo: [00:31:52] you can find me pretty easily on LinkedIn. I’m probably the only Buffalo on there. Um, and you can also, uh, check out my website is, um, [00:32:00] my F N

[00:32:03] Joel Kennedy: [00:32:03] at my F as in Frank, N as in Nancy, I, as in India, Indigo, is it what’s, what’s the I call sign.

[00:32:12] It’s India. I think India, India, India, I’m out here in India is like a, a neighborhood out in, uh, like Coachella. Oh man. I’m like all California now. I grew up back East and I left it all there. Um, David. Thank you so much for being on the podcast today. And I did mention earlier, I have that presentation that we shared with, with the consumer finance protection Bureau.

[00:32:37] Again, if anybody wants a copy. Yeah, that please email me at Joel Kennedy. The number one, Joel Kennedy, Be happy to share it with you and also in a special invitation to everybody. Look, if you’re listening to the podcast is providing some value. Please seek out. David and I were going to be [00:33:00] at the Absa independence conference in Fort Lauderdale, Florida at the end of may.

[00:33:05] Okay. So this is the only message you’re going to get on this. So you come and you see me or David, and if you want a Pappy van Winkle, David will pop your tab. No, I’m just kidding. We’re good for a drink. I think we’re both always good for a drink, right. But please let us know if you’ve listened to the podcast, you have something to say.

[00:33:22] We like to keep the dialogue going, you know, we’re not just here to, to, to, to, to slang our products, right. Or we do care about the greater ecosystem and the American consumer, obviously, otherwise we wouldn’t be involved in things like APHSA and NAF.

[00:33:39] David Bafumo: [00:33:39] Thanks for having me, Joel really appreciate it. And I’m really looking forward to seeing you and everybody, uh, for the first live experience in, in quite a long time in Fort Lauderdale.

[00:33:48] Joel Kennedy: [00:33:48] So I’ve never been so excited to get a second shot of anything, although, I mean like a shot in the arm of other shots, right? That’s maybe another conversation we can have at APHSA.

[00:34:01] [00:34:00] David Bafumo: [00:34:01] Thanks, David. Thank you, John. Have a good one.

[00:34:05] Joel Kennedy: [00:34:05] The consumer fi podcast has been brought to you by Northbridge loan software.

[00:34:10] That accelerates change. We’d also like to thank the national automotive finance association, the only trade association, exclusively serving the non-prime auto financing industry. [00:35:00]

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