Research & Policy

Dodd-Frank Financial Reform charged the Consumer Financial Protection Bureau (CFPB) to set basic mortgage definitions that would be easily understood by lenders and borrowers alike. In January 2013, CFPB issued the Qualified Mortgage (QM) rule that requires full documentation, the elimination of risky mortgage terms and limits up-front fees to no more than three points on 30 year mortgages. Now, as other regulators move to define Qualified Residential Mortgages (QRMs), CRL urges for the two rules to use the same standards. In this issue brief, CRL warns that different standards would create...

June 20, 2013 Learn about a pair of stalled payday lending bills, a bill to authorize predatory car title lending bill, a just signed consumer installment loan law that raises rates and fees, and a predatory mortgage lending bill in committee in our June 2013 NC legislative update. Payday bills stalled (SB 89/HB 875) Car title lending bill stalled (HB 721) Consumer installment bill signed by Governor (SB 489) Predatory mortgage lending bill still in committee (HB 692) Two Payday Bills Stalled (SB 89 / HB 875) Fourteen payday lobbyists pushing to keep their bills alive. Two companion payday...

The Consumer Financial Protection Bureau (CFPB) mortgage rules strike the right balance between protecting consumers while also enabling lenders to comply with these new reforms. Throughout the rulemaking process and in the final result, the CFPB has taken a measured and reasonable approach. As a result, these mortgage rules will provide important legal protections for borrowers and for lenders. The rules - required by the Dodd-Frank Act of 2010 - address head-on a key cause of the mortgage meltdown and ensuing recession: many lenders made high-risk, often deceptively-packaged home loans...

Dual tracking is the servicer practice of simultaneously pursuing loan modifications and foreclosure proceedings. This chart offers a side-by-side comparison and analysis of how the National Mortgage Settlement, the California Homeowner Bill of Rights, and related rules from the Consumer Financial Protection Bureau have each taken steps towards eliminating this practice. The comparison includes variances in rule applications, borrower outreach requirements, denial notices, and more.

The Center for Responsible Lending responds to a recent National Bureau of Economic Research working paper "The Vulnerability of Minority Homeowners in the Housing Boom and Bust," outlining flaws in the paper's analysis and methodology. Most importantly, CRL disputes the authors' conclusions that disparate default rates should call into question the value of homeownership in addressing the racial wealth gap.

Dual tracking is the servicer practice of simultaneously pursuing loan modifications and foreclosure proceedings. This chart offers a side-by-side comparison and analysis of how the National Mortgage Settlement, the California Homeowner Bill of Rights, and related rules from the Consumer Financial Protection Bureau have each taken steps towards eliminating this practice. The comparison includes variances in rule applications, borrower outreach requirements, denial notices, and more.

As the Consumer Financial Protection Bureau refines mortgage rules, CRL addresses how mortgage put-backs by GSEs should affect the Qualified Mortgage status of mortgage loans. CRL also support CFPB's rule that state servicing standards will not be preempted by Federal rules.

We write to thank the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) (collectively, the Agencies) for the proposed guidance addressing bank payday lending, particularly the underwriting requirements and limits on repeat loans. These critical provisions address a central problem with payday lending: lenders’ failure to verify the borrower’s ability to repay the loan, and meet other expenses, without reborrowing, leading to a destructive cycle of repeat loans that trap borrowers in long-term debt. This proposed guidance is urgently needed...

A key mortgage reform included in the Dodd-Frank Wall Street Reform and Consumer Protection Act is at risk of being weakened by new legislation submitted during the 113th Congress. House bill H.R. 1077 would create loopholes in the definition of "Qualified Mortgage" and, as a result, allow higher-fee mortgages to improperly gain Qualified Mortgage status. The Qualified Mortgage designation is intended to benefit borrowers by restricting these mortgages from having risky features such as high origination fees. This fact sheet highlights the fees and loopholes that would hurt America's economy...

Should federally-insured credit unions push payday loans with triple-digit interest rates? CRL and the National Consumer Law Center (NCLC) say no, urging the National Credit Union Administration (NCUA) to stop its members from making these types of predatory loans. Most credit unions conduct responsible lending that does not include payday-type loans. However, NCLC has identified nine federal credit unions that offer short-term loans with triple-digit rates. These credit unions either make the loans directly or have an arrangement with a third party that uses the credit union's name and makes...

This brief, co-authored by CRL and Consumers Union, examines recent legal and regulatory efforts to help troubled homeowners avoid foreclosure. These include rules by the Consumer Financial Protection Bureau to standardize how servicers act and communicate with homeowners, the National Mortgage Settlement negotiated with major servicers by 49 state Attorneys General, California's Homeowner Bill of Rights, and other state laws. The brief then recommends ways for state policymakers to close gaps in these efforts to prevent unnecessary foreclosures.

California payday loan borrowers get caught in a cycle of repeat borrowing of 459% Annual Percentage Rate (APR) loans. Reforms are necessary to ensure that payday loans serve their advertised purpose and better protect consumers. SB 515 proposes a series of reforms to allow payday loans to better serve their advertised purpose while making the loans safer for consumers. Read the bill summary >>

SB 515 includes three principal reforms California payday loans: it caps the number of payday loans per borrower at four per year; extends the minimum term of a payday loan, so that borrowers will have more time to accumulate the amounts necessary to repay it; and requires all lenders to apply standardized underwriting guidelines to ensure that borrowers have a reasonable ability to repay their loans.

Banks pitch payday loans as short-term borrowing that allows their customers to deal with a financial emergency, repay the loan, and move on. In fact, CRL's research shows that their triple-digit interest rate loans trap borrowers in a long-term cycle of repeat loans. Read the full report Read the summary Banks continue to claim that their payday products are intended for short-term emergencies, but this report shows that short-term loans are not typical. Although some participating banks have made small, recent changes in the product, bank payday loans are continuing to trap borrowers in high...

The Monitor of the National Mortgage Settlement recently detailed progress on the $20 billion obligation of the nation's five largest mortgage servicers, under their agreement with 49 state Attorneys General and the Administration. This report, Ongoing Implementation, reported on efforts made over a 10-month period, March 1, 2012 to December 31, 2012, towards home retention, loan modifications, and other assistance. In this policy brief, CRL offers an independent analysis of the Monitor's findings and also poses remaining questions on issues not yet addressed.

As the U.S. Senate Banking Committee prepared for a March 20, 2013 vote on the reappointment of CFPB Director Richard Cordray, CRL urged committee members to swiftly act and confirm him.

Dear Chairman Bernanke, Director Cordray, Director Gruenberg, and Comptroller Curry: One year ago, we wrote to urge the federal regulators of our nation's banks to take immediate action to stop banks from making unaffordable, high-cost payday loans. We were encouraged by the FDIC's May letter indicating that it was deeply concerned and was investigating the practice, and we have also been encouraged that the OCC has not finalized the guidance it proposed in 2011 that would have essentially legitimized the practice. But we are also concerned that a year has passed without decisive regulatory...

Banks that engage in payday lending have been in the media spotlight. Here we give a large sample of recent media coverage, legislative proposals, and public concerns directed at debt-trap lending by banks.

Joint Recommendations from CRL and Consumers Union States have yet to recover from the foreclosure crisis that has stripped trillions of dollars from homeowners and devastated local communities across the nation. Industry analysts estimate that 6 million borrowers remain at risk of foreclosure. States are in a strong position to prevent unnecessary foreclosures, stabilize local housing markets and protect homeowners from mortgage servicing abuses. Through practical enhancements to the standards set by the Consumer Financial Protection Bureau (CFPB) and California's Homeowner Bill of Rights...

Joint research from CRL and the Consumer Federation of America finds that car-title loans—small-dollar loans secured by the title to a vehicle owned outright—cost U.S. consumers $3.6 billion a year in interest on $1.6 billion in loans. Read the Full Report Read the Executive Summary These products share many of payday loans' predatory features: triple-digit interest rates, balloon payments at the end of the loan's term, and—critically—a failure by the lender to evaluate a borrower's ability to repay. Car-title loans also produce the same effect that payday loans do: A debt trap that leaves too...

Applying safety and soundness standards to bank payday loan products follows longstanding principles and policy of the prudential regulators. Consistently, the prudential regulators, including the OCC, FDIC and the Federal Reserve, have addressed problems with a variety of consumer lending products by citing not only consumer protection concerns, but also safety and soundness concerns, even when those products are very profitable for the bank. As discussed further in this memo, bank payday lending shares key troubling characteristics of all the products addressed above and should, likewise, be...

On February 23, the New York Times published an article describing how some banks enable Internet payday lending. In this brief, CRL provides additional legal context to supplement that article.

The Center for American Progress, Center for Responsible Lending, Consumer Federation of America and the National Council of LaRaza respond to the Consumer Financial Protection Bureau proposal on the Ability to Repay Standards. The allies offered specific practices to ensure affordable access to mortgage credit. Two specific issues formed the crux of their concerns: How mortgage lending compensation is defined and preserving lending programs that offer a gateway to safe and affordable credit. The mortgage compensation concerns heavily focus on yield spread premiums (YSPs).