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...
Media outlets continue to report on the potential dangers of the rise in subprime auto lending. Auto lenders, particularly in the subprime auto lending market, are increasingly using risky practices to fuel lending growth. The New York Times, Fortune, NPR and other news outlets reported on recent news in the subprime auto loan market, providing opportunities to explain both the...
In Debt Collection Agencies and the Supply of Consumer Credit, Viktar Fedaseyeu examines state-level data to assess the effect of state laws limiting third-party debt collectors on the availability of revolving lines of credit (i.e., credit cards). The debt-buying industry claims that this paper demonstrates that consumers are harmed by these laws and thus regulations should be rolled back, or...
A new policy brief released today by the Center for Responsible Lending provides a state-by-state snapshot showing predatory payday and car title lenders increasingly moving into installment loans. The lenders are continuing to offer unsafe loans with excessive interest rates, which are carefully designed to trap borrowers in a cycle of debt they cannot escape, and actively seeking to expand...
A recent Lake Research poll finds strong enthusiasm for new mortgage lending rules that require verification of ability to repay. Voters of all political parties express a strong desire to keep these rules in place. More than nine in ten voters (91%) support requiring mortgage lenders to verify a borrower’s ability to repay before making a loan. Nearly three quarters...
Payday loans – whether made online, in stores or by banks – are designed to trap individuals in long-term debt. Data consistently show that the majority of payday loan revenue comes from repeatedly churning borrowers, and that borrowers are typically indebted for most of the year. Recognizing the damaging structure of payday loans and their devastating impact on families' financial...
Read the Executive Summary This report by Pew's Safe Small-Dollar Loans Research Project—the first in Pew's Payday Lending in America series—answers major questions about who borrowers are demographically; how people borrow; how much they spend; why they use payday loans; what other options they have; and whether state regulations reduce borrowing or simply drive borrowers online. Pew: Who Borrows, Where...
And guess what! That's a GOOD thing Good news! Bank of America has announced it will stop its costly, automatic approval of debit card and ATM overdrafts. Bank of America joins Citibank in covering debit card and ATM overdrafts only if their customers have signed up for more reasonably priced coverage, by linking their savings or line of credit to...
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...
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...