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February 7, 2008
New legislation introduced today by House Financial Institutions and Consumer Credit Subcommittee Chairwoman Rep. Carolyn Maloney (D-NY) and Financial Services Committee Chairman Barney Frank (D-MA) curbs some of the most abusive credit card lending practices, consumer groups said. "This legislation is an important step forward in eliminating the worst credit card tricks and traps that sap billions of dollars from Americans' wallets every year and illegitimately pump up issuers' profits," said Travis B. Plunkett, legislative director of the Consumer Federation of America. "We commend...
January 31, 2008
Recently the Center for Responsible Lending (CRL) released an analysis showing that during the third quarter of 2007, mortgage lenders initiated foreclosures seven times more frequently than they modified mortgages, and 13 times more frequently than they modified problematic adjustable-rate subprime loans. In addition, CRL estimated that under the Treasury Department's voluntary plan, only 3% of homeowners (118,200) with adjustable-rate subprime mortgages are likely to receive a streamlined loan modification from their lender. In a defensive rebuttal, the Mortgage Bankers Association (MBA...
January 28, 2008
Read our Analysis>> An updated analysis by the Center for Responsible Lending shows the Treasury Department's plan involving streamlined loan modifications of distressed mortgages will prevent only 118,200 foreclosures—about 3% of the outstanding subprime mortgages with adjustable interest rates that are causing the current market turmoil. This analysis shows the Treasury plan, plus existing lender modifications, barely make a dent in the growing foreclosure crisis and will allow subprime damage to continue spreading through the entire economy. The Center's analysis is based on...
January 25, 2008
As the economy continues to suffer from fall-out from subprime mortgage foreclosures, Mortgage Electronic Registration Systems, Inc. (MERS) is accused of skipping legally required steps to remove people from their homes in Minnesota. Today a group of Hennepin County homeowners with subprime mortgages filed a class action lawsuit to stop illegal foreclosures by MERS, a Virginia-based company. The suit alleges that MERS, which handles 40% of the foreclosures in the seven-county metropolitan area, violates Minnesota law by expediting foreclosures without following mandatory procedures. Some...
January 11, 2008
Bank of America has the resources and the will to begin cleaning up the subprime mess that Countrywide has played such a large role in creating. We have nine months between now and the official merger date. This will be the most important period since the Great Depression for dealing with the millions of bad Countrywide loans that have pushed families to the brink of foreclosure. The number one priority during this critical period is fixing these bad loans and keeping people in their homes. Over the past few years, by steering millions of people into bad loans, Countrywide has been the...
December 18, 2007
The Federal Reserve Board (FRB) is uniquely positioned to restore confidence in the housing market because it is the one federal agency with the authority to set standards for all home loan originators. Unfortunately, the proposed rules issued by the FRB today represent yet another missed opportunity for the agency to rein in practices that have hurt millions of American families. The FRB's proposed rules are riddled with loopholes. Rather than eliminating the root causes of the subprime foreclosure crisis, which in turn would encourage a truly competitive market for home loans, the FRB'...
December 13, 2007
Center for Responsible Lending research finds that the payday lending debt trap persists even in states that restrict payday loans while exempting them from interest rate caps. In "Springing the Debt Trap," CRL finds that high numbers of borrowers are still caught in payday loans for long periods of time, even in states that have passed certain provisions intended to stop this cycle. No measure short of an interest rate cap has effectively addressed the repeat borrowing that advocates, policymakers, and the industry itself agree is the central problem with payday lending. "Enforcing an...
December 11, 2007
The payday lending trade group Community Financial Services Association (CFSA) is using a working paper based on insufficient data to claim that working families are worse off in states with strong consumer lending laws that cover payday lending. (Read CRL's critique of the paper.) Payday loans trap borrowers in loans they cannot afford to pay off at interest rates in the range of 400 percent. Payday lenders are not operating in a dozen states that have interest rate caps at or around 36 percent for consumer loans. Two researchers affiliated with the Federal Reserve Bank of New York...
December 6, 2007
With 2 million foreclosures predicted over the next two years, the plan announced by President Bush for targeted loan modifications for some subprime borrowers is a positive, but very limited, first step. CRL estimates the President's plan will only help about 7% of subprime borrowers—about 145,000 families—because of the program's limited scope. For example, the plan does nothing to help hundreds of thousands of subprime borrowers who received "exploding" 2/28 adjustable-rate mortgages in 2005 (because these will have reset before the effective date of this plan) and those...
November 20, 2007
Gov. Arnold Schwarzenegger and California mortgage lenders Countrywide, GMAC, Litton and HomeEq announced today that they plan to follow the direction of FDIC Chairman Sheila Bair and institute systematic loan modifications for borrowers with resetting ARMs. This unprecedented move is expected to provide relief for tens of thousands of California borrowers and, if properly implemented, should serve as a model for other states experiencing record numbers of foreclosures. "Loan modifications that place borrowers into sustainable, affordable loans are the best ways to stem the foreclosure...

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