Press Releases
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...
November 15, 2007
The Honorable Barney Frank
The Honorable Spencer Bachus
Chairman
Ranking Member
House Financial Services Committee
House Financial Services Committee
Dear Chairman Frank and Ranking Member Bachus:
We, the undersigned organizations, write to present our views on H.R. 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007. While we greatly appreciate your efforts to reduce predatory lending and to restore balance to the mortgage market, we believe this bill requires improvements in...
November 14, 2007
U.S. House of RepresentativesWashington, DC 20515
Dear Representative:
The undersigned groups are writing in anticipation of floor action on H.R. 3915, the "Mortgage Reform and Anti-Predatory Lending Act of 2007." We appreciate the bipartisan effort on this important issue and look forward to working with the Congress to pass a strong law to protect consumers from predatory lenders. Unfortunately, however, despite some important consumer protections, we cannot support the legislation in its present form, given the lack of strong remedies for borrowers who receive unaffordable loans...
November 14, 2007
Take it from former payday borrowers: loan sharks who left the state will not be missed.
A new report from the North Carolina Commissioner of Banks has found that the absence of the payday loan shops that once dotted North Carolina's strip malls and street corners has made little difference to most survey respondents. Of the former borrowers who have noticed a difference, twice as many report that they are better off without payday lending.
This comes as no surprise to those who understand the predatory nature of payday lending. These loans are structured so that borrowers typically...
November 13, 2007
Subprime foreclosures are resulting in a severe drain on property values—even for families paying their mortgages faithfully every month—and will cause 44.5 million homes to lose a total of $223 billion in wealth over the next few years, most of it in 2008 and 2009, according to the Center's report.
In addition to foreclosed homeowners, the $223 billion drain—which amounts to $5,000 per nearby household—will have a severe impact on many cities and communities, because lower property values translate into less revenue to fund schools, hospitals, and other vital...
October 24, 2007
We commend Chairman Frank and Representatives Watt and Miller for taking the lead in addressing the underlying problems that have led to the escalating foreclosure crisis in this country. Banning prepayment penalties in the subprime mortgage market, requiring lenders to assess each borrower's ability to repay, and eliminating the bonuses lenders now pay to brokers to put people in more expensive loans than those for which they qualify would go a long way to protecting families from the deceptive and abusive loans that ultimately lead to a decline in home ownership.
We are glad the...
October 12, 2007
As the nation's foreclosure epidemic continues to worsen, the Center for Responsible Lending (CRL) has formed the Institute for Foreclosure Legal Assistance (IFLA) to support groups giving legal representation to families facing foreclosure and financial ruin because of abusive subprime mortgages. The National Association of Consumer Advocates (NACA) will manage the project, which recognizes that one of the biggest barriers families face to avoid losing their homes is the lack of access to quality legal services.
The Institute, launched with a $15 million grant from investment management...