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Comments on Qualified Mortgages to the Consumer Financial Protection Bureau

The Center for Responsible Lending, Consumer Federation of America and The Leadership Conference on Civil and Human Rights responded to the CFPB's request for comments on qualified mortgages. Much of the comment letter focuses on an appropriate "bright line" debt-to-income ratio standard for QMs. Setting a narrow debt-to-income ratio for QMs would unnecessarily exclude a large share of borrowers from QM protections. This letter supports setting a baseline debt-to-income ratio on QMs while also giving lenders flexibility to go above it by considering other "compensating factors" that affect a...

Oppose HR 1909--Don’t Undermine State, Federal Consumer Protections

Carve-Out Undermines New Federal Consumer Oversight Infrastructure At the root of HR 1909 and similar legislation is an effort by non-bank lenders to circumvent new federal oversight and undermine consumer protections recently provided under the Dodd-Frank Act. HR 1909 will allow non-bank lenders selling a broad range of predatory products, including payday loans and car-title loans, to be chartered and regulated by the Office of the Comptroller of the Currency. With a national charter, the lenders could escape the jurisdiction of the newly created Consumer Financial Protection Bureau (CFPB)...

Foreclosure Reduction Act: CRL Refutes California Bankers Association's Flawed Claims

The Foreclosure Reduction Act (AB 278 & SB 900) is designed to provide Californians with better safeguards and fair treatment in the foreclosure process. The California Bankers Association and other industry groups recently released a flawed report purporting to show how the bill will extend the foreclosure process and have detrimental economic consequences. The proponents' claims are unsubstantiated and are a deceptive attempt to derail carefully-crafted protective measures for California homeowners. The industry's report, "Foreclosure Reform in California: An Economic Analysis," is based on...

Expanding, Streamlining Mortgage Refinances

A Bipartisan Opportunity to Help Homeowners (Excerpt) Read the entire document (PDF) >> A bill in the U.S. Senate would more than double the number of homeowners who could refinance under a federal mortgage program and more than double their potential savings, a Columbia University Business School study estimates. Senate bill 3085, introduced by Senators Robert Menendez and Barbara Boxer, would expand and streamline refinancing opportunities under the existing Home Affordable Refinance Program (HARP). The study estimates this new legislation would increase the total number of homeowners who...

California Foreclosures: New Data Support Policy Reforms to Encourage Effective Loan Modifications and Prevent Avoidable Foreclosures

Read the press release >> Although the national foreclosure crisis is now in its fifth year, it is far from over—particularly for California. The Center for Responsible Lending estimates that there are still nearly 700,000 California homeowners who are at least 30 days delinquent or in the foreclosure process. While not all of these impending foreclosures can or should be prevented, new CRL analysis sheds light on the impact of loan modifications on preventing avoidable foreclosures and how many and which Californians are at risk. California's legislature stands on the brink of extending key...

Compromises in the California Homeowner Bill of Rights

During the course of negotiations, the Joint Conference Committee on Mortgage Foreclosures has substantially narrowed the scope of the bill and limited the protections to borrowers relative to the version of the bills that were before the Assembly and Senate Banking Committees earlier this year. Specific changes include: Narrower Scope of Coverage: the final bill includes a number of changes which narrow the loans and servicers that are covered by the bill, including Limits covered loans to first liens of owner-occupied, one-to-four unit principal residence mortgages. Previously, coverage...

California Homeowner Bill of Rights Summary

California is only halfway through the foreclosure crisis, with more than 670,000 California households at risk of foreclosure: Data from CRL's report, Lost Ground, 2011 show that 9.3 percent of all loans originated between 2004 and 2008 – 581,000 – have already resulted in completed foreclosure, but that another 8.9 percent (549,000) were at immediate risk of foreclosure. At the end of 4Q 2011, more than 454,000 mortgage loans – or more than 1 in 14 – were past due (but not yet in foreclosure), while almost 217,000 loans were in the foreclosure process, bringing the total California loans at...

Effects of the California Foreclosure Crisis on African Americans and Latinos

As the nation struggles through the sixth year of the foreclosure crisis, there are no signs that the flood of home losses in America will recede anytime soon. California, through its African-American and Latino homeowners in particular, has and will continue to suffer dramatic losses of both homes and wealth, and will see an erosion of decades of socioeconomic progress in our communities. California is only halfway through the foreclosure crisis: Data from CRL's report, Lost Ground, 2011 show that 9.3 percent of all loans originated between 2004 and 2008 – 581,000 – have already resulted in...

Are prepaid credit cards helping or hurting consumers?

Good afternoon. The Center for Responsible Lending is a non-profit research and policy organization dedicated to protecting home-ownership and family wealth. Let's begin with the following premise: In terms of technology and hence core product costs, general purpose reloadable prepaid cards are indistinguishable from debit cards associated with checkless checking accounts. Both prepaid and debit cards must maintain a database of individual account records; both access the same payments system through a bank member of a funds transfer network such as Visa or MasterCard. Both prepaid and debit...

Predatory Credit Card Lending: Unsafe, Unsound for Consumers and Lenders

What hurts consumers financially also hurts business Watch report author and CRL Senior Researcher Josh Frank discuss the report findings. Read the full report >> Read the executive summary >> CRL research shows losses on credit cards in the current downturn rose faster at banks using unfair, deceptive practices. High-cost penalty fees and interest rates didn't mitigate risk—as credit card issuers claimed—but instead were the risk that pushed consumers into hardship and default. The same holds true for high-cost fees and interest banks charge for overdraft and payday loans. Reforms have ended...

California Foreclosure Statistics: The Crisis is Not Over

California foreclosure statistics show record losses in recent years are likely to continue into the future On average, more than 500 California families have lost their homes every day since 4Q 2007, and the data show few signs of a return to the pre-crisis housing market. California foreclosure activity remains elevated, with more than 30,000 completed foreclosures each quarter, compared to less than 3,500 foreclosures in 3Q 2006. In addition, large numbers of California homeowners continue to fall behind in their payments, and would benefit from more effective policies to prevent avoidable...

Comments to the Consumer Financial Protection Bureau on Payday Lending Abuses

CRL and other allied organizations are pleased to submit the following comments on payday lending abuses in response to the Consumer Financial Protection Bureau's request after its January field hearing in Birmingham, Alabama. CRL and the other organizations appreciate the chance to comment on the debt trap inherent to payday lending, and are grateful for the supervisory guidance on payday lending that the Bureau has issued since the Birmingham event. The comment letter analyzes research results to demonstrate the following points: Payday loans are structured to create a long-term debt trap...

Deal or No Deal: How Yo-Yo Scams Rig the Game against Car Buyers

Download the Full Report (PDF) >> Read our Comments to the FTC on Yo-Yo Scams (PDF) >> View a Brief Presentation on the Report (Powerpoint)>&gt Learn How Yo-Yo Scams Work >> How Dealers Rig the Game Watch this video to learn more about yo-yo scams and the latest paper. Throughout 2011, the Federal Trade Commission convened a series of roundtables to explore abusive practices in the auto lending market. One abuse that received particular attention was the "yo-yo scam". The yo-yo scam occurs when a dealer leads the car buyer to believe that the financing is final. The dealer then lures the...

Dealer Markup of Interest Rates is an Unfair and Deceptive Practice

The Federal Trade Commission (FTC) Act makes unfair and deceptive acts and practices (UDAP) unlawful and empowers and directs the FTC to prevent such acts and practices through rule-making and enforcement. The Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") provided clear FTC jurisdiction over most auto dealers, particularly when entering into finance transactions with consumers, while freeing the FTC from the cumbersome procedural requirements that otherwise apply to FTC UDAP rule-makings. In easing these requirements, Congress signaled its intent that the FTC use...

The Party’s Over for Quickie Tax Loans: But Traps Remain for Unwary Taxpayers

The NCLC/CFA 2012 Refund Anticipation Loan Report Read the report >> Chi Chi Wu, National Consumer Law Center Contributing author: Jean Ann Fox, Consumer Federation of America ? Executive Summary Refund anticipation loans (RALs) are one to two week loans made by banks, facilitated by tax preparers, and secured by the taxpayer's expected tax refund. RALs can carry triple digit APRs, and expose taxpayers to the risks of unpaid debt if their refunds do not arrive as expected. This is the twelfth annual report on the RAL industry from the National Consumer Law Center and Consumer Federation of...

Letter to Bank Regulators: Stop Bank Payday Lending

Some 250 advocates urged four federal regulators to end the predatory practice of bank payday lending on February 22, 2012. The CFPB, OCC, FDIC and Federal Reserve Board can and should stop Wells Fargo, US Bank, Fifth Third Bank and Regions Bank from trapping their customers in long-term debt at 400% annual interest. The Honorable Ben S. Bernanke Chairman Board of Governors, Federal Reserve System 20th Street and Constitution Avenue, NW Washington, DC 20551 The Honorable Richard Cordray Director Consumer Financial Protection Bureau 1500 Pennsylvania Ave. NW Washington, DC 20220 Mr. Martin...

Letter to Bank Regulators: Stop Bank Payday Lending

Some 250 advocates urged four federal regulators to end the predatory practice of bank payday lending on February 22, 2012. The CFPB, OCC, FDIC and Federal Reserve Board can and should stop Wells Fargo, US Bank, Fifth Third Bank and Regions Bank from trapping their customers in long-term debt at 400% annual interest. Maps, video, slides and the latest news on bank payday lending. The Honorable Ben S. Bernanke Chairman Board of Governors, Federal Reserve System 20th Street and Constitution Avenue, NW Washington, DC 20551 The Honorable Richard Cordray Director Consumer Financial Protection...

National mortgage Settlement is a game-changer

"Rampant, Pervasive Fraud" Maryland's AG, Doug Gansler, gives a quick overview of the national mortgage settlement, noting that "this is just a down payment by the national banks," not the end of the story. As foreclosures mounted in recent years, the mortgage servicing industry often responded with illegal shortcuts, illegal fees and incompetent management. The situation became so bad that our nation's attorneys general (AGs) joined forces with federal agencies to take action against "robo-signing" and other loan servicing abuses by the nation's largest banks. The result is a legal settlement...

High-Cost Loans Among the Unbanked

Using tax filing data, this fact sheet from the Urban Institute demonstrates dramatic behavioral differences among the banked and unbanked in their use of two at-times costly tax-time financial products, refund anticipation checks (RACs) and refund anticipation loans (RALs). Banked tax filers are much more likely to avoid such products. Even for those who are otherwise similar in income and background, the banked are 57 percent less likely to use a RAC and 83 percent less likely to use a RAL.
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