Research & Policy

In the Dodd-Frank Act, Congress required lenders to make a reasonable and good faith determination that the borrower has the ability to repay a mortgage loan (ATR) before the loan is made. It also created a category of loans, called Qualified Mortgages, or QM, that are presumed to comply with the ATR requirement given product and borrower credit characteristics that...

The considerations prescribed by the RFA strongly support strengthening protections against overdraft fees on debit card and ATM transactions. More broadly, comprehensive reform of unfair and abusive overdraft practices is badly needed. The RFA sets forth five factors to consider in an RFA review. Consideration of these factors in the opt-in rule context shows clearly that any effort to weaken...

The 24 undersigned community, consumer, civil rights, and faith groups write regarding the Consumer Financial Protection Bureau (CFPB or the Bureau)’s review of the 2009 Regulation E overdraft opt-in rule under the Regulatory Flexibility Act (RFA). Weakening the opt-in rule in any way is clearly unsupportable; rather, protections against unfair and abusive overdraft fees should be substantially strengthened. Today’s overdraft...

A coalition of national consumer and civil rights groups wrote letters to three top banking regulators – the FDIC, OCC and Federal Reserve – on the importance of preventing the reemergence of debt-trap bank payday loans. View the letter to the FDIC, letter to the OCC, and letter to the Fed. These letters were signed by Americans for Financial Reform...

Student loan borrowers of color disproportionately bear the brunt of America’s student debt crisis, and sadly, the extraordinary levels of delinquency and default across these communities is preventable. The most vulnerable student loan borrowers have a right under federal law to make affordable student loan payments—a powerful protection that should make student loan defaults extremely rare. However, mounting evidence shows...

The Center for Responsible Lending (CRL), as part of a coalition of civil rights, consumer, and labor groups, submitted an official comment letter to the Consumer Financial Protection Bureau (CFPB), excoriating CFPB Director Kathy Kraninger’s plan to gut a 2017 CFPB rule that was issued to stop payday loan debt traps. The coalition’s comment letter, submitted on the last day...

Homeownership is the primary way that most middle-class families build wealth and achieve economic stability. Wide access to credit is critical for building family wealth, closing the racial wealth gap, and for the housing market overall, which in turn, contributes significantly to our overall economy. Today, the opportunity to purchase, maintain and refinance a home has not reached significant portions...

On April 30, 2019, the House Financial Services Committee’s Subcommittee on Consumer Protection and Financial Institutions convened a hearing on “ Ending Debt Traps in the Payday and Small Dollar Credit Industry.” Download the full written and oral testimony of CRL's Diane Standaert below: Download the full testimony. (PDF) Download the oral testimony. (PDF) Watch Diane Standaert's opening statement and...

Payday and car-title loans typically carry annual percentage rates (APR) of at least 300%. These high-cost loans are marketed as quick solutions to a financial emergency. Research demonstrates, however, that they frequently lead to debt that is nearly impossible to escape. In addition, these loans are related to a cascade of other financial consequences, such as increased overdraft fees, delinquency...

Until 2010, for-profit institutions constituted the fastest growing sector in higher education. Coinciding with this growth, online college courses and programs expanded rapidly, driven initially by the adoption of online technologies by huge for-profit institutions like the University of Phoenix, Grand Canyon University, and Walden University. The business model for the online component of these schools was characterized by institutional...

Our Housing Finance System and the GSEs provide essential services to families and lenders across the country. Rural borrowers, small lenders and lower wealth borrowers particularly benefit from these services because the GSEs provide access to a national market, making home loans more affordable overall. The GSEs, though, had critical flaws leading up to the crisis. Since then, fundamental reforms...

A car purchase can expand economic mobility; but tricks and traps in auto financing can lead to harm and abuse. Among those tricks and traps is dealer interest rate markup. Car dealers can add extra interest to a car loan, and keep some or all of the difference. This practice has a long history of unfair and discriminatory impact. CRL...

Financial institutions drain billions of dollars annually from their customers through abusive overdraft fee practices. Frequently marketed as a “customer service,” overdraft fees are charged when a customer’s account lacks sufficient funds to cover a transaction and the institution pays the transaction anyway. The institution then repays itself the value of the overdraft transactions and all accompanying fees from the...

Explore each of the factsheets below for statistics related to that issue area and suggested reforms that could help to bring financial fairness to all. Auto Lending Debt Collection Mortgages Overdraft Fees Payday Lending Student Debt

Although debt collection plays an important role in how credit markets function, it can also expose American households to unnecessary abuses, harassment, and other illegal conduct. Unscrupulous debt collectors sometimes use incorrect data and illegal collection tactics to file lawsuits or pressure consumers into making payments on debt they may not owe. Even worse, millions of consumers become aware of...

Although marketed as quick cash for financial emergencies, payday and car-title loans typically become long-term debt that drains hundreds of dollars—if not thousands—from consumers. These small dollar loans carry average annual percentage rates of 391% that make it very difficult to escape a cycle of debt that can last months or years. Either through direct access to borrower bank accounts...

A home is more than just where families come at the end of the day—it is also where children are raised and memories are created. Homeownership is the primary way families of modest means build wealth, which can be passed on to the next generation. In recent years, most mortgages approved for lower wealth families and consumers of color were...

Higher education can be the gateway to a better life. Yet the rising costs of a college education and poor oversight of student loans have left some graduates and former students deep in debt—especially when enrolled in for-profit colleges. The Center for Responsible Lending (CRL) found that students of color enroll more frequently in for-profit colleges than other students, graduate...

The organizations listed below submitted this comment letter to the Consumer Financial Protection Bureau (CFPB) on its new leadership’s proposed delay of a 2017 rule the agency had issued to stop payday and car title loans from trapping consumers in debt. The letter rebuts the CFPB’s rationale for proposing a 15-month delay of the payday rule, which the agency is...

Debt collection efforts around the United States rely heavily on litigation to collect past due debt. The ease of obtaining default judgments and garnishment orders has led debt buyers to use the courts as a critical tool for extracting payments from consumers, despite the lack of documentation showing that the consumer actually owes the amount claimed. Debt buyers are skilled...

SB 613 increases the rates for existing consumer loans in Indiana, adds additional high-cost loan products to the marketplace, and significantly increases the rates that are considered to be criminal loan sharking. For each of these changes, lenders are provided extraordinary leverage over the borrower, are able to structure the loans in a way that incentivizes repeat re-borrowing, and are...

In early February 2019, the current Consumer Financial Protection Bureau (CFPB) Director Kathy Kraninger released a proposal to gut the CFPB’s 2017 rule aimed at stopping payday and car title loans from trapping people in debt. Director Kraninger’s plan would repeal the heart of the 2017 payday rule, which generally requires that lenders determine a borrower’s ability to repay a...

This written testimony focuses on three key areas of concern in support of HB 2588 to protect Oregonians from abusive practices by student education loan servicers: Oregon’s student loan debt crisis deepens the racial wealth gap and harms older Oregonians Abuses by student loan servicers prolong and deepen the student loan debt crisis, further increasing the racial wealth gap and...

The Center for Responsible Lending1 (CRL) appreciates the opportunity to provide comments on principles for the reauthorization of the Higher Education Act (HEA). We commend your dedication to reauthorizing the Higher Education Act with the intention of achieving an affordable, accountable, accessible and equitable and safer higher education system. We hope that you will continue to push for a Higher...

The Center for Responsible Lending (CRL) appreciates the opportunity to provide ideas on how to address racial disparities in student debt and the broader challenges faced by students of color in college and career training. We appreciate your commitment to addressing racial disparities in student debt and the broader challenges faced by students of color in college and career training...