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Consumer Organizations and Attorneys Urge the Consumer Financial Protection Bureau to Issue a Final PACE Rule

The undersigned consumer organizations and attorneys write to urge the Consumer Financial Protection Bureau to issue a final PACE rule. Last year, we applauded the Bureau for proposing a strong rule that would ensure PACE borrowers receive critically important consumer protections under Regulation Z. But the proposed rule came five years after Congress amended the Truth in Lending Act (TILA)...

New Homes with Mortgages Backed by the Enterprises Should Meet Updated Building Energy Code Requirements

More than 120 affordable housing, consumer, health, energy efficiency, environmental, business, and other organizations at the national, state, and local levels joined this letter to urge the FHFA to direct the Government Sponsored Enterprises, Fannie Mae and Freddie Mac, to join the Department of Housing and Urban Development (HUD) and the Department of Agriculture (USDA) in requiring that all new...

Comment on Freddie Mac Proposed Purchase of Single-Family Closed-End Second Mortgages

From the comment's introduction: Many mortgage lenders are willing to offer cash-out refinances because the Government Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac, the Federal Housing Administration (FHA), or the Department of Veterans Affairs (VA) bear the credit risk. However, fewer lenders are willing to make home equity loans, especially to borrowers with lower credit scores, given the associated...

Education Department Should Expand Forgiveness of Capitalized Interest

CRL submitted a comment on the Proposed Rule by the U.S. Department of Education on Student Debt Relief for the William D. Ford Federal Direct Loan Program (Direct Loans), the Federal Family Education Loan (FFEL) Program, the Federal Perkins Loan (Perkins) Program, and the Health Education Assistance Loan (HEAL) Program. The Proposed Rule is critically important to Black, Latino and...

Earned Wage Advance: States Should Regulate As Credit, Protect Consumers

Earned or Early Wage Advance (EWA) products offer workers access to their wages before payday, usually for a fee. While low-wage workers can benefit from EWA programs that are properly designed and regulated, they can instead be harmed when products are allowed into the marketplace without guardrails keeping their use and cost within reasonable bounds. States should regulate all EWA...

Coalition Opposing Earned Wage Access Consumer Protection Act (HR 7428)

The 193 labor, civil rights, consumer, legal services and community groups and academics joined in this letter to express opposition to the draft Earned Wage Access Consumer Act. In the guise of offering protections, the bill obscures its true effect: to exempt fintech cash advances from the Truth in Lending Act, to endorse a form of loan that makes workers...

Earned Wage Advance

Among the hottest consumer finance topics in recent years is the proliferation of online lenders offering fintech cash advances, including the subset of those lenders who offer earned wage advances (EWA). These are very short-term loans of small dollar amounts that users can access through a smartphone app. Lenders that offer these products strenuously attempt to avoid being regulated like...

Comment on the CFPB’s Notice of Proposed Rulemaking on Overdraft Fees for Very Large Institutions

CRL submitted a comment on the CFPB’s Notice of Proposed Rulemaking on overdraft fees for very large institutions. We advocate for a $6 benchmark and safe harbor for courtesy overdraft fees. We argue the proposed rule is a required and important step towards better protecting consumers that would be greatly improved by eliminating the potential for financial institutions to evade...

Recommendations on How FHA Should Shape Its Post-COVID Loss Mitigation Waterfall

The National Consumer Law Center, on behalf of its low-income clients, and the Center for Responsible Lending write with recommendations on how FHA should shape its post-COVID loss mitigation waterfall. As the market turns from a response to COVID-19 to identifying permanent policies informed by lessons learned from the pandemic, FHA has an opportunity to strengthen the options it makes...

Coalition Opposing the Financial Services Innovation Act of 2023 (HR 7440)

This legislation purports to provide a safe harbor for financial innovation, but too often, “innovation” is synonymous with a lack of meaningful safeguards for consumer financial products. Creating these regulatory “sandboxes” for companies would force agencies to shirk their statutory duties to enforce the law and protect consumers and instead prioritize allowing risky and unproven products into the marketplace before...

Maximizing Impact: How a Simple Administrative Policy Shift Could Expand Access to Homeownership for Potential Buyers Repaying Student Loans Under the SAVE Program

The Department of Education’s newly launched income-driven repayment (IDR) program, “Saving on a Valuable Education (SAVE),” represents a significant step forward in improving the affordability of federal student loan repayments for millions of borrowers. SAVE accomplishes that goal by basing repayment on a realistic estimate of a borrower’s discretionary income considering the borrower’s family size and reducing the amount of...

Comment on Proposed Capital Rules and Their Impact on Mortgage Credit

The Center for Responsible Lending submitted a comment to the Board of Governors of the Federal Reserve System (Federal Reserve Board), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) regarding the large bank regulatory capital rule. While we commend the Agencies for seeking input on this important topic, we have significant concerns...

Support for the Close the Shadow Banking Loophole Act

The undersigned organizations, which together represent a broad cross-section of regulated banks, credit unions, and consumer protection organizations, wrote a letter in thanks for introducing the Close the Shadow Banking Loophole Act, and to express their support for this critical legislation which would close the industrial loan company (ILC) loophole in current law. Americans for Financial Reform Bank Policy Institute...

Joint Letter on the Veterans Assistance Servicing Purchase Program

The Center for Responsible Lending, Housing Policy Council, Mortgage Bankers Association, and National Consumer Law Center (on behalf of its low-income clients) wrote to the Department of Veteran Affairs (VA) to recommend that the VA pursue payment reduction targeting rather than interest rate targeting as part of their upcoming VA Servicing Purchase (VASP) loss mitigation option.

The Rent-A-Bank Scheme

In the 1990s payday lenders partnered with banks to create a practice known as Rent-a-Bank. This practice, which has now moved online, exploits a provision of federal law that allows banks to export their interest rates across the country, ignoring state laws meant to protect borrowers from abusive high-rate lending that can lead to a debt trap. Rent-a-Bank arrangements allow...

Stop High-Cost Lenders from Evading State Laws: An Overview of Rent-a-Bank Schemes & the Simple DIDMCA Opt-Out Solution

In the 1990s payday lenders partnered with banks to create a practice known as Rent-a-Bank. This practice exploits a provision of federal law that allows banks to export their interest rates across the country, ignoring state laws meant to protect borrowers from abusive high-rate lending that can lead to a debt trap. While predatory lenders originally used store-front payday locations...

Civil Rights Group Letter on Proposed CDFI Program–Certification Application and Annual Reporting

The Center for Responsible Lending, Leadership Conference on Civil and Human Rights, NAACP, National Association of Latino Community Asset Builders (NALCAB), National CAPACD, National Urban League, and UNIDOS US joined in a letter to support "that CDFI certification is truly reserved for mission-driven, community development organizations."

36% Cap on Annual Interest Rate Stops Payday Lending Debt Cycle

Payday loans, high-cost small loans averaging $350 that usually must be repaid in a single payment after two weeks, are designed to create a long-term debt trap for consumers. A 36% annual percentage rate (APR) cap on payday loans (including fees) is the best way to stop the cycle of debt. To date, 20 states and the District of Columbia...

Groups Urge DFPI to Prevent Consumer Harm in the Market for Income-Based Advances

The California Department of Financial Protection and Innovation (DFPI) should restore cost limits for earned wage advances and other fintech cash advances under proposed regulations rather than allow a temporary registration regime with no cost limits for up to four years, the Center for Responsible Lending, Consumer Federation of California, National Consumer Law Center, and Office of Kat Taylor said...

Issue Brief: Consumer Understanding of Buy Now, Pay Later in California

Buy Now, Pay Later (BNPL) or pay-in-four products allow consumers to purchase goods in four equal, often interest-free installments over a set time period (often 6 weeks). BNPL is often available directly at checkout on an e-commerce website (like Amazon or Apple) or through a third-party smartphone or web application. Examples of third-party BNPL providers include Affirm, AfterPay, Klarna, Splitit...

Advocates Warn Financial Services Innovation Act Would Cause "Sahara Desert" of Consumer Protections

In a letter to the House of Representatives' Financial Services Committee, consumer advocates warn that the Financial Services Innovation Act of 2023 would facilitate evasion of existing consumer protection laws and regulations. Citing the foreclosure crisis around 2008 and other examples, the letter states: "Blind endorsement of 'innovations' leads to consumer harms." The bill, currently a discussion draft, was considered...
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