Research & Policy

CRL joined a sign on letter with over 100 consumer, student, education, civil rights, labor, and veterans groups detailing their concerns about the lack of oversight of student loan servicing.

HUD/FHA is proposing to amend language on their certification forms where lenders certify that a loan is eligible for FHA financing (insurance). We believe the proposed language is a step in the right direction, but we offer additional suggestions. The components of our recommended framework to FHA include providing a certification that includes provisions for all of the following: The requirement that a lender exercise due diligence and good faith in underwriting a FHA-insured mortgage loan A strong quality control obligation on the part of all FHA insurance lenders An automatic obligation to...

On July 13 CRL submitted this comment letter detailing its concerns with the state of student loan servicing.

From the letter: We, the undersigned organizations, are based in states throughout the U.S. that ban payday lending and other types of high-cost, predatory small-dollar loans. We write to you from our perspectives as military associations, social service providers, faith leaders, affordable housing agencies, legal service providers, labor organizers, and civil rights advocates. Read the entire letter. (PDF)

Comment of the Center for Responsible Lending and the National Consumer Law Center (on behalf of its low income clients) on the Proposed Amendments to the Cash Management Rule, 34 C.F.R. Part 668. Also see broad coalition comments to the Department of Education

A letter to the president of the National Automobile Dealers Association, calling on him to release the data showing the amount customers who finance cars pay in dealer interest rate markup.

Today, the Center for Responsible Lending (CRL) filed a public comment on urgently needed rules proposed by the California Department of Business Oversight (DBO) that would require payday lenders to follow California law by prohibiting the use of electronic transfers and debit cards in payday transactions. The rules would also create a new real-time electronic database to enforce existing law requirements that borrowers take out only one loan at a time. CRL Senior Policy and Enforcement Strategy Counsel Caryn Becker said: The DBO's proposals will limit payday lender practices only to those...

In this final chapter of The State of Lending in America and its Impact on U.S. Households series, we demonstrate the cumulative high costs of lending abuses, discuss lessons learned from efforts to address predatory lending, and suggest steps for further action. This chapter comprises the following sections: Lending Abuses and Their Costs describes how various types of lending abuses create excessive costs for families, communities, and the economy. Specific estimates are included where available. Who Pays discusses ways that consumers use credit and who is most affected by lending abuses. It...

State of Lending provides an across-the-board survey of financial products that Americans use to handle everyday transactions, buy homes and automobiles, and build savings and wealth. The report outlines predatory lending practices in various fields of consumer lending, and explains why protecting fair, affordable access to credit is vital for both consumers and the U.S. economy. The report also describes the regulatory and legislative actions needed to halt the predatory lending practices that exist today and prevent the rise of new abuses. It is intended to inform the critical debate on how...

On May 12, 2015, the Senate Committee on Banking, Housing, and Urban Affairs' Chairman, Senator Richard Shelby (R-AL), introduced a discussion draft of "The Financial Regulatory Improvement Act of 2015" ("Chairman's Draft"). The proposal comes at a time when offering community banks relief from recently created laws and regulations for the mortgage market is dominating some discussions about Congressional efforts to secure the future of housing finance and policy.

CRL, The Public Good Law Center, and the National Association of Consumer Advocates filed an amicus brief supporting an appeal by plaintiffs asserting that loans made by the payday lender CashCall were unconscionable and violated California's Unfair Competition Law. Courts and the common law have long recognized that excessive interest rates and prices are unconscionable and therefore "unfair" and "unlawful." Under the terms of loans made by CashCall, borrowers taking out $2,600 loans would pay $11,000 to pay them back if carried to full term—over four times the amount originally borrowed.

The Center for Responsible Lending applauds the CFPB for its continued focus on student loan servicing. Good loan servicing benefits both the borrower and the lender by helping borrowers successfully pay down their loans. As the CFPB holds a field hearing on student loan servicing today in Milwaukee, we offer seven ideas for a fair student loan servicing system: Prevent default by identifying at-risk borrowers and taking aggressive steps to enroll them in income-based repayment plans or providing other loan modifications Re-enrollment should be as simple as possible Fair allocations of...

In a new report, the Center for Responsible Lending – along with Americans for Financial Reform – examines the impact of advocacy efforts of policy and regulation. Download a summary of the full report. The report take stock of both gains (actions that support or defend consumer protections) and losses (actions that jeopardize or reduce consumer protections) – specifically in the following areas: Federal legislation State legislation Federal regulatory actions Federal judicial actions State regulatory actions State judicial actions Industry practices In addition, the report takes stock of...

A recent blog on the Washington Post site took Senator Elizabeth Warren to task for citing a statistic in a report from the Center for Responsible Lending (CRL). Our report quantified the amount that consumers pay in auto dealer markups. Auto dealers are paid large bonuses to raise the rate on auto loans above the rate that consumers qualify for. Auto loans are a big business--$955 billion in loans are currently outstanding, dealers provide 80% of these loans, and these bonuses can be more than $1,000 per loan. This adds up to a lot of money. The blog criticized our analysis, but on...

Testimony by Paul Leonard from the May 6, 2015 Informational Hearing on the Consumer Financial Protection Bureau Rulemaking for Payday, Vehicle Title and Similar Loans before the California Senate Banking Committee. The CFPB aims to cover payday and similar loans under its rule regardless of the provider or channel offering the loans (storefront and online; bank/credit union, non-depository, tribal entity). The Bureau’s proposal would create a single consistent regulatory floor, while maintaining the prerogative of states to strengthen its consumer protections as they see fit.

When colleges and banks team up to market bank accounts to students, protecting students' loan funds may take last place in the deal. Instead of helping students find the best account for them, these deals may push students into accounts with high overdraft fees and other harmful features. CRL research shows that overdraft fees alone on these accounts may reach over $700 year – more than the price of textbooks. The Department of Education has the opportunity to protect student loan dollars from overdraft fees in an upcoming cash management rulemaking. But there is no need to wait for a rule...

On April 23, 2015, the New York Senate Banks Committee held a public hearing on subprime auto lending. Lisa Stifler (policy counsel at CRL) submitted written testimony on the predatory and abusive practices that have thrived due to the lack of regulation and transparency in auto financing.

Recent enforcement actions against debt buyers by state and federal law enforcement agencies illustrate widespread problems in the debt buyer market that must be addressed. The Federal Trade Commission recommends in its 2013 and 2010 reports that states adopt reform efforts to address these market problems. Based on its review of enforcement actions, industry data, and the FTC's reports, CRL recommends that to be effective, state reforms must include protections that ensure people are not sued in connection with time-barred debt, debt they do not owe, or for amounts they do not owe. At a...

In this letter to Consumer Financial Protection Bureau Director Richard Cordray the Center for Responsible Lending and the National Consumer Law Center respond to the agency's Request for Information about the Student Safe Account Scorecard, which would guide colleges to select safe bank accounts if they enter into marketing partnerships with banks. In the letter, the two organizations support the Scorecard as a way to help protect students, and call for: An end to college-bank partnerships that threaten students with unfair marketing practices and harmful fees The elimination of revenue...

Fifteen consumer, student, civil rights, and legal aid groups co-signed a letter to Consumer Financial Protection Bureau Director Richard Cordray in response to the agency's Request for Information about the Student Safe Account Scorecard. The organizations supported the Scorecard and stated: Colleges and universities must begin to put the best interest of students first when negotiation with banks and prepaid card issuers The Student Safe Account Scorecard is a voluntary tool for schools to use in their bidding process with financial institutions The Scorecard would help schools select safe...

Fifteen student, consumer, civil rights, and labor groups co-signed a letter (4 pages) in support of the Consumer Financial Protection Bureau's proposed rule on prepaid cards. The groups suggest that the new rule would support similar actions by the Department of Education, aimed to protect students using prepaid cards. The groups state: College students are a key segment of the prepaid market – but prepaid cards lack essential consumer protections Exclusive revenue-sharing and other marketing agreements between colleges and prepaid card issues exacerbate the lack of consumer protections...

On April 15, 2015, Mitria Wilson testified before the U.S. House Committee on Financial Services: Subcommittee on Financial Institutions and Consumer Credit. The hearing at which Mitria testified was called "Examining Regulatory Burdens on Non-Depository Financial Institutions." In her testimony (19 pages), Mitria offered: An overview of the importance of financial regulations - and the role such regulations currently play in protecting consumers, taxpayers, and the nation's economy Recommendations concerning the regulatory environment for non-depository mortgage lenders Recommendations on the...

Debt buyers purchase old debts from creditors for pennies on the dollar and then hire debt collectors or attorneys to force consumers to pay up, often by suing them in court. Recent enforcement actions by state and federal regulators show widespread abuse and improper lawsuits brought to try to collect the old debt. Abuses include things like robo-signing affidavits in support of collection lawsuits and illegally suing residents for time-barred debt.

In response to a request for comment, CRL offered feedback to the Consumer Financial Protection Bureau about the agency's proposed rule addressing prepaid cards. The CFPB's proposed rule would expand consumer protections on prepaid cards in significant respects. The CRL comment focuses on credit products associated with prepaid cards – with a particular focus on overdraft fees. The CRL comment strongly urges the CFPB prohibit any overdraft charges on prepaid cards. CRL's comment supports that CFPB's proposal would apply stronger regulations to overdraft fees on prepaid cards than the wholly...

This paper's findings highlight that the lack of underwriting for payday loans creates economic distress for borrowers from the very first loan: Nearly half of all payday borrowers defaulted within two years of their first loan. Of borrowers who defaulted, nearly half did so within the first two payday loans. Default does not necessarily signal the end of payday borrowing, with many defaulters going on to repay their loan and even borrow (and possibly default) again at a later date. Nearly one in five borrowers had a loan charged off by the lender. One-third of payday borrowers experienced at...