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Press Releases

July 14, 2008
(Revised July 23, 2008) Today the Federal Reserve helped return the home lending industry to common-sense business practices by issuing new rules for mortgage lenders. We are pleased to see that the Fed has adopted key protections for borrowers who receive subprime loans, including: Addressing the most substantial cause of current foreclosures, lenders must carefully evaluate a borrower's ability to repay a subprime loan, and verify the income used to do so; Lenders cannot impose abusive prepayment penalties that trap borrowers in short-term subprime ARMs; Lenders must escrow for...
July 11, 2008
While Washington continues to debate how to rein in the risky lending practices that fueled the foreclosure crisis, states are taking action. Earlier this week the North Carolina General Assembly became the first in the nation to ban "yield-spread premiums"—kickbacks that encourage brokers to overcharge—on subprime mortgages. These kickbacks, which brokers received for delivering subprime loans with higher interest rates than the lender had set, are one of the main reasons that subprime borrowers have typically paid thousands of dollars in unnecessary costs on brokered loans. "Consumers...
July 3, 2008
The payday lending industry doesn't want you to know it, but when it comes to protecting paychecks at the Arizona ballot box this November, "no" will mean "yes"—yes to capping payday loans at 36 percent once and for all. The signature-gathering period ends today for a ballot initiative from the payday lending industry. In less than four months, payday lenders have spent nearly $2 million to create a smokescreen around their attempt to legalize predatory payday lending in Arizona forever. Similar desperate industry tactics have so far failed to undo recent payday lending reform in Ohio. By...
July 2, 2008
HOPE NOW claims in a press release today that the mortgage lending industry's program of facilitating voluntary workouts for distressed mortgage holders has helped 1.7 million borrowers stay in their homes. Once again, a closer look at HOPE NOW's data shows these numbers greatly overstate the help being provided and that the foreclosure crisis continues to accelerate and overwhelm industry's voluntary attempts to renegotiate unaffordable home loans. HOPE NOW servicers have been at this for a year now. Clearly they have failed. Delinquencies and foreclosures keep going up, and tens of...
June 30, 2008
Read the report (PDF)>> As IndyMac Bancorp battles questions about its financial stability, a new report from the Center for Responsible Lending provides evidence that IndyMac put itself in a hole by engaging in unsound and abusive lending during the nation's mortgage boom. The report, "'IndyMac: What Went Wrong?," finds substantial evidence that IndyMac routinely made loans with little regard for their customers' ability to repay the loans. CRL's interviews with former employees and a review of lawsuits in 10 states indicate that IndyMac pushed through loans based on...
June 25, 2008
Both CRL and the American Banker's Association have surveyed accountholders regarding overdraft preferences. CRL's research found that an overwhelming percentage of consumers (80%) would rather have their debit card transaction denied at the counter than be charged an overdraft fee. The ABA's survey concludes most Americans want unexpected overdrafts to be covered for a fee. CRL and the ABA got different answers because they asked the question differently. The ABA's survey question ignored the distinction between paper checks – which, when denied, typically cost consumers a "non-...
June 18, 2008
Americans 55 and over pay $4.5 billion in fees annually for overdraft loans they haven't asked for and typically don't want, a new study by the Center for Responsible Lending finds. Of that, nearly $1 billion is stripped from people heavily dependent on Social Security income. The new report "Shredded Security: Overdraft practices drain fees from older Americans," shows that overdrafts triggered by debit card use hit people at or approaching retirement age hard even though they use plastic less than younger debt-card holders. The cost – $1.65 in fees for every $1 advanced – reinforces CRL'...
June 18, 2008
Thank you for being with us today. I want to thank my co-author on this report, Peter Smith, who is also a researcher at the Center for Responsible Lending Our nation is in a crisis of debt that reaches beyond the foreclosure epidemic and deep into the pockets of Americans who are living paycheck-to-paycheck. Banks and Credit Unions compound this problem through a problematic practice that strips billions in fees for a so-called service that their customers don't ask for and typically don't want. Today, consumers are typically enrolled automatically into their bank's most expensive...
June 5, 2008
New reports from lenders show that families falling behind on their mortgage payments, as well as those facing imminent foreclosure, have reached record highs. The trend indicates the mortgage crisis continues to worsen and is overwhelming the industry's voluntary efforts to help borrowers renegotiate unaffordable home loans. The market has shown that it cannot fix itself. Federal and state policymakers need to do more to hold lenders accountable and stem the foreclosure crisis that is damaging our economy. According to the Mortgage Bankers Association's National Delinquency Survey,...
June 2, 2008
One third of the nation's population will soon be free of a practice that has stripped billions per year from the paychecks of low-wealth Americans over the past two decades, as Governor Ted Strickland signs a law today capping interest rates at 28 percent in Ohio. Enforcement of a two-digit rate will save citizens $1.74 billion per year in fifteen states plus the District of Columbia, where 33 percent of the US population lives. Just a year ago, only about 20 percent of citizens lived in payday lending-free zones. In a faltering economy marked by debt saturation, payday lending threatens...

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