Research & Policy

For more than a decade, payday loans, car-title loans, and high-cost installment loans in South Dakota have carried charges exceeding 300% annual percentage rate (APR). In 2016, South Dakotans approved lowering the cost of payday loans, car-title loans, and installment loans to an annual interest rate cap of 36%, inclusive of all fees and charges. The vote in favor of the rate cap was overwhelming. In policy discussions about highcost small dollar lending, one of the most frequently asked questions is: what happens when a state enacts a rate cap? This paper seeks to add to this body of...

From the introduction of the brief: Since the founding of our nation, states have limited interest rates as the primary protection against predatory lending. Evasions of usury laws are as old as the laws, but courts consistently look beyond form to the substance of the transaction to prevent subterfuge. Ever since banks were provided with legislative exemptions from state usury laws, nonbank lenders have tried to use “rent-a-bank” arrangements to avoid state interest rate laws. But courts look beyond the nominal bank that funded and put its name on a loan, holding that state usury laws apply...

A few high-cost lenders are evading state consumer protections through rent-a-bank schemes. Through these sham arrangements, these companies are exploding right through the interest rate limits that most states have put in place for good reason, to protect people from high-cost debt traps that drain them of their hard-earned income. In the following states, payday lenders are using banks, which aren’t generally subject to state interest rate caps, to make usurious loans that exceed the state’s rate cap. The banks engaging in these schemes are abusing their charters and enabling predatory loans...

Yesterday, the FDIC and OCC released their notice of proposed rulemaking (NPRM) for changes to the Community Reinvestment Act (CRA). This proposal utterly fails to achieve what were supposed to be the primary objectives of rule changes: greater clarity for lenders and better results for low- and moderate- income communities and people of color. It ignores the recommendations of our groups for changes that would bring safe and affordable credit to lowand moderate-income neighborhoods, including communities of color, that are bombarded with abusive and toxic lending. The proposal fails to...

A coalition of 61 consumer, civil rights, and community groups sent letters to three federal bank regulators urging them not to allow their banks to help payday lenders evade state interest rate limits. The groups sent separate letters to the Federal Deposit Insurance Corp. (FDIC), which regulates the only banks currently involved in rent-a-bank schemes; the Office of the Comptroller of the Currency, which regulates a national bank that has been in talks with a payday lender; and the Board of Governors of the Federal Reserve System, whose banks so far do not appear to be engaged in rent-a-bank...

"As pastors and faith leaders, our sacred text teaches us to care for our neighbors and see the dignity of all of God’s people. Of all the issues confronting Americans, none is more basic than that of housing. Whether renting or owning a home, every family needs a place to come home to at the end of the day. It is where our children are raised, meals are prepared, and family milestone moments are celebrated. " Continue reading the comment letter. (PDF)

The proposed rule will have a toxic effect on the mortgage lending industry. The Fair Housing Act’s disparate impact doctrine has played a critical role in making fair housing available to all, while at the same time making the lending industry better at evaluating creditworthiness. A ban on unjustified disparate impact has encouraged the lending industry to systematically scrutinize its procedures and requirements to ensure that lenders more precisely measure creditworthiness and lending practices do not have unnecessary discriminatory impact. Thus, financial products are more widely...

Democratic primary voters in the states of Iowa, New Hampshire, Nevada, and South Carolina strongly support a tough approach to oversight of Wall Street, according to a new poll conducted by Lake Research Partners and Chesapeake Beach Consulting. Democrats and independents, and even many Republicans share the views of this crucial set of voters. Americans see the need for strong regulation of the financial services industry, tough enforcement of existing rules, and additional measures, even after hearing opposing arguments that stress a danger in the role of government. And they strongly...

From the brief’s introductory passage: Imbued with the spirit of the American dream, and in reliance on the DACA program, enrollees have made substantial investments in themselves, their families, and their communities. Contrary to the government’s assertion in its brief to this Court (e.g., Pet. Br. 46), the DACA enrollees are not engaged in “ongoing illegal activity” or “ongoing violation of federal law.” To the contrary, under DACA and with the government’s permission, enrollees are legally engaged in educational, tax-paying, teaching, and military activities. See, e.g., Case No. 18-589 Pet...

Strong majorities across political parties show concern about the level of student debt in the United States and oppose the Department of Education’s (ED) and the Consumer Financial Protection Bureau's (CFPB) recent actions to weaken protections for students, according to a new poll released by Americans for Financial Reform (AFR) and the Center for Responsible Lending (CRL). The poll was conducted by the bipartisan team of Lake Research Partners and Chesapeake Beach Consulting. Key polling concerns on student loan debt crisis: Across parties, a majority of voters agree that the amount of...

The undersigned consumer and civil rights organizations appreciate the opportunity to submit comments on the Consumer Financial Protection Bureau’s (CFPB or Bureau) proposed rule on debt collection. As organizations dedicated to eliminating abusive financial practices – particularly focused on communities of color and low- to moderate-income consumers – we are deeply concerned about the proposed rule’s content and impact. Without significant changes, we believe the rule will perpetuate abusive practices, harm already struggling families, and widen the racial wealth gap. We urge the Bureau to...

The 232 undersigned consumer, civil and human rights, labor, community and legal services organizations from all 50 states and the District of Columbia submit the following comments on the Consumer Financial Protection Bureau’s (CFPB or Bureau) proposed debt collection rules. The rule as proposed does far more to protect abusive debt collectors than consumers. The proposal opens consumers up to harassment, abuse and violations of their privacy by telephone, email, text and other means; obscures information about consumers’ rights; and protects debt collectors and collection attorneys who...

Download this factsheet for more information on the top three principles against rent-a-bank arrangements: Long Precedent Against Rent-A-Bank Schemes Has Served Banks and Consumers Well. More Recent Rent-a-Bank Arrangements (with FDIC-supervised banks) Include Grossly Irresponsible Loans. Change in Course Would Invite Risk, Backlash, and Erosion of Confidence in Banking System.

The Center for Responsible Lending (CRL), The Leadership Conference on Civil and Human Rights, NAACP, National Urban League, and UnidosUS appreciate the opportunity to respond to the Consumer Financial Protection Bureau’s (CFPB or Bureau) Advance Notice of Proposed Rulemaking (ANPR) on the Qualified Mortgage (QM) definition under the Truth in Lending Act (TILA) and Ability to Repay / Qualified Mortgage regulation (ATR/QM). Our comment refers to a paper published by CRL entitled A Smarter Qualified Mortgage Can Benefit Borrowers, Taxpayers, and the Economy (July 2019). Rather than repeat...

Earlier this year, the Consumer Financial Protection Bureau proposed new rules for debt collectors. The proposal authorizes, for the first time, a specific number of communication attempts to collect past-due debts. The rules also authorizes new means of communicating with people to collect debts, such as email and direct messaging, and expands the ability to collect time-barred debt. Download the polling memo. (PDF) Take Action: Urge the CFPB to protect consumers, not abusive debt collectors

The growth of outstanding student loan debt over the last decade has been staggering. Today, more than 44 million people carry over $1.5 trillion of outstanding student loan debt, an amount that exceeds all other types of non-mortgage loan debt. Two out of three graduates in the class of 2017 borrowed federal student loan debt to finance their education.2 This phenomenon is especially concerning for communities of color, as the existing wealth gap makes the burden of student loan debt particularly heavy for African American and Latino communities. Download the complete testimony submitted to...

From the letter to the director of the National Economic Council, Lawrence Kudlow: As you consider proposals to restructure our nation’s housing finance system as required by the March 2019 Presidential Memorandum,1 the undersigned civil rights organizations write to express our collective view that any effort to comprehensively reform Government Sponsored Entities (GSEs)—Fannie Mae and Freddie Mac—must recognize the importance of preserving and strengthening access to stable, affordable, and equitable homeownership opportunities for all American families. We view failure to maintain these...

Currently in the United States, approximately 43 million people owe over $1.4 trillion on their federal student loans. Americans owe more in student loan debt than for auto loans, credit cards, or any other non-mortgage debt.2 Student loan servicers play a critical role in these borrowers’ financial lives, from receiving and applying payments to interacting with struggling borrowers to facilitate repayment and prevent default. A competent servicer can assist financially distressed borrowers in accessing income-driven repayment (“IDR”). Unfortunately, servicer misrepresentations can increase...

While pursuing higher education is still a pathway to higher incomes over a person’s lifetime, student loan debt threatens to undermine this promise in North Carolina and nationwide. Outstanding student loan amounts have risen at an alarming rate over the past decade, and North Carolina has not been immune from this trend. Today, students and their families face a difficult decision: take on substantial debt to fill the gap between ballooning college costs and reduced grant support or forgo a college education in the face of a labor market that increasingly demands credentials and degrees. The...

Consumer watchdog groups urged the U.S. Consumer Financial Protection Bureau (CFPB) to take action immediately to implement the payment provisions in its payday lending rule, whose compliance date is August 19, 2019. These provisions restrict payday and vehicle-title lenders from attempting to withdraw money from borrowers’ bank accounts after two attempts have failed, a practice that significantly harms struggling consumers. The safeguards will help consumers avoid fees for unsuccessful debit attempts that can also put their bank accounts in jeopardy. The CFPB is refusing to take steps to...

Higher education has long been considered a pathway for advancement in our country. However, the playing field has not been level for low- and moderate-income families and people of color in their pursuit of a postsecondary education. Sadly, the resulting disparities in educational outcomes contribute to the persistent and growing racial wealth and income gaps. Nationwide, trends in the higher education landscape such as state disinvestment, rising college costs, the increasing necessity of college degrees in the labor market, and the loss of savings and other forms of wealth from the Great...

"Regarding State Authorization of Distance Education providers enrolling students across multiple states, we voice here our support for those provisions of the NPRM that preserve the State Authorization rules finalized in 2016 and currently in effect. The 2016 rules provide core protections to consumers and protect states’ rights to enforce their own laws in two key areas. First, the rules set requirements for reciprocity agreements that would require compacts like NC-SARA to raise their minimum uniform standards and clarify that states must retain their rights to enforce postsecondary...

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 make the loans lower risk. The product protections for a loan to be considered a QM are outlined in the Act, and the credit characteristics are left to the Consumer Financial Protection Bureau (CFPB) to determine. In setting the...

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 rule would be unwarranted, and, rather, protections against overdraft abuses must be strengthened. Moreover, consideration of these factors make clear that the opt-in rule should not be weakened for...

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 fee practices undermine trust in this nation’s banking system, permitting banks to thrive by shattering the financial lives of their most vulnerable customers. Financial...