Research & Policy

The Center for Responsible Lending strongly supports allowing former ITT students access to the Guaranty Fund. Over the past few years, CRL has been engaged in research and policy regarding for-profit institutions of higher education. During the 2016 legislative session, the Center for Responsible Lending submitted written testimony in support of SB 427, An Act Concerning Higher Education – Institutions of Postsecondary Education – Consumer Protect Provisions. Effective in a few short days, this bill provides critical front-end protections to Maryland students by ensuring that state students...

The undersigned Center for Responsible Lending (CRL) and National Consumer Law Center, on behalf of its low income clients (NCLC), write to comment on the update to the Uniform Interagency Consumer Compliance Rating System (CC Rating System) by highlighting three areas of particular concern: Overdraft practices Loans with a total cost of credit exceeding 36% annual percentage rate (APR) Bank partnerships with non-bank lenders whereby non-banks make loans they could not independently make under state law – i.e., rent-a-bank schemes The CC Rating System is right to emphasize harm to consumers...

The undersigned consumer protection, civil rights, and legal services groups write to express our significant concerns with the outline of proposed regulations on debt collection issued by the Consumer Financial Protection Bureau on July 28, 2016. The proposal represents a missed opportunity to fundamentally improve protections for consumers victimized by predatory debt collection practices. Some of the proposed changes will address certain debt collector conduct that hurts consumers. For example, we support the CFPB’s proposal to: Require the transfer of information from prior attempts to...

Download the written testimony of Whitney Barkley-Denney submitted in advance of the September 14 hearing on interstate reciprocity agreements in higher education.

The Financial CHOICE Act attacks the CFPB's structure and authority and would frustrate the CFPB's ability to fulfill its mission. Title III of the bill is aimed at obstructing the CFPB's ability to protect consumers from predatory financial products and practices. This title severely weakens the CFPB’s structure and authority in the following ways: Changes the structure of the CFPB from its current, effective single-director structure to a less effective five-member commission; Eliminates independent funding of the CFPB, putting it at the mercy of an annual appropriations process and...

We are encouraged that the Department's proposal would generally require all providers of distance education to obtain state authorization in each state where they intend to enroll students. However, we have concerns that distance education students could still be subject to weaker protections under the proposed rule, for the following reasons: The proposal would permit state authorization through the use of interstate reciprocity agreements that could restrict a state's authority to protect its own students and students' ability to protect themselves The proposal would permit providers to...

CRL strongly supports the CFPB’s proposed rule to limit pre-dispute mandatory (forced) arbitration clauses in consumer finance contracts. Forced arbitration is a widespread issue affecting a plethora of financial products and services; it impacts the consumers CRL advocates for and implicates CRL’s mission to eliminate abusive financial practices. CRL applauds the CFPB for its efforts to restore consumers’ ability to band together to protect their rights in class actions as well as increase transparency in the use of forced arbitration in individual cases. Although the proposed rule is strong...

This letter, on behalf of the National Consumer Law Center’s low-income clients, along with a coalition of national, state and local civil legal aid, civil rights, and public interest groups and advocates, calls for the need for data to ensure that the federal student loan program is a tool that helps students of color access a meaningful education and achieve greater economic mobility, rather than holding them back.

CRL Response to “Reframing the Debate about Payday Lending by Liberty Street Economics” Research Comment On: "Do Defaults on Payday Loans Matter?" by Robert Mann Research Comment On: "Payday Loan Rollovers and Consumer Welfare" CRL Critique of “Payday Holiday: How Households Fare After Payday Credit Bans” by Donald P. Morgan and Michael R. Strain CRL Review of "Defining and Detecting Predatory Lending" by Donald P. Morgan, Federal Reserve Bank of NY, January 2007

This letter suggests improvements to the rule that would amend the Borrower Defense to Repayment provision of the Higher Education Act (HEA) in order to ensure that students and taxpayers will not have to bear the economic burdens that arise when higher learning institutions make misrepresentations and fail to provide an adequate education to students. CRL applauds the Department for proposing a rule that requires schools to provide financial restitution for their actions and omissions, provides a process for loan discharge without individual claim submission, and addresses mandatory pre...

This paper analyzes California mortgage originations in the post-crisis period, from 2012–2014, using data collected under the Home Mortgage Disclosure Act (HMDA). Similar national analysis provides context for the state-wide observations. Analysis in four large California counties shows the variety of experiences across this large state. The main findings include: National and state-wide analysis reveal a reduction in mortgage credit for the loans that most clearly support homeownership overall. More loans that directly supported homeownership were made in 2000 than in 2014. Some borrowers...

Read Graciela Aponte-Diaz's remarks before the July 2016 CFPB Field Hearing on Debt Collection. The unfair and abusive practices of debt collection in the market can take advantage of financially-distressed consumers or unfairly strip families of wealth. The Great Recession made this financial distress inevitable for many U.S. households. Each year, tens of millions of Americans are pursued by creditors, debt collectors, debt buyers, or attorneys for an overdue bill. And while debt collection plays a role in our economy, it may also expose U.S. households to unnecessary abuses. Debt collection...

A recent poll conducted by Lake Research Partners and Chesapeake Beach Consulting finds overwhelming bipartisan support for strong regulation of financial services and products in order to hold financial services companies accountable and protect consumers against unfair practices. By wide margins, Americans call for tough oversight and regulation of Wall Street banks, mortgage companies and credit card servicers, as well as specialized companies such as debt collectors, and they will vote these issues. Nearly six in ten voters express support for the work of the Consumer Financial Protection...

The Consumer Financial Protection Bureau (CFPB) has proposed a new national rule that addresses payday and car title lending. The proposal, as written, has some useful elements, but it is seriously undermined by several major loopholes. If the loopholes aren’t closed in the final version, the rule could essentially permit payday predators to conduct business as usual. What We Can Do There is still time to make the rule stronger. Call for a stronger rule by sending comments to the CFPB through October 7, 2016. We must continue to fight for rate caps in states, as rate caps are the single most...

A recent blog post by Liberty Street Economics, Reframing the Debate about Payday Lending, mischaracterizes the debate around payday lending and downplays the harms done to vulnerable consumers. Payday lenders and their allies have referenced the blog to justify their ongoing efforts to delay and weaken much needed regulation at both the state and federal level. The Center for Responsible Lending has taken a look at "Reframing" and issued a formal response. The primary issue with payday lending, and the one from which most of its other harms flow, is the intentional structuring of the payday...

The proposed rule takes the right general approach by establishing an ability-to-repay principle – including consideration of income and expenses – at its core. This is extremely significant; while a long-standing tenet of responsible lending, it is one ignored by these abusive industries driven by unaffordable loans. It is a particularly important standard for high-cost loans where lenders have the right to seize a borrower’s bank account or car. At the same time, the proposal as drafted contains significant loopholes that abusive lenders can exploit to continue to prey on vulnerable people.

A better enforced and strengthened CRA would be a critical tool in ensuring that underserved communities across the country are provided with the credit opportunities needed to better recover from the 2008 financial crisis. While more affluent neighborhoods have bounced back or have begun to bounce back following the crisis, many low- and moderate-income neighborhoods continue to struggle eight years later with fewer mortgages and small business lending opportunities.

The following blog post by Mike Calhoun and Sarah Wolff originally appeared on the Urban Institute’s Housing Policy Center: http://urbn.is/29rYamw Any housing finance system’s ability to provide broad access and affordability is predicated on two factors: how prices are set and, equally importantly, how costs are distributed. Price is important to focus on for many reasons; chief among them is because price is a barrier to accessing mortgage credit. One way to see this operating is to look at the difference between what kinds of loans the government-sponsored enterprises say they will purchase...

An analysis of recently available data confirms that financial institutions continue to engage in abusive overdraft practices and that reform is urgently needed. This issue brief highlights five key concerns: Overdraft fees remain an enormous drain on checking account customers. Using newly available call report data as the starting point, we estimate that consumers pay nearly $14 billion annually in overdraft fees Research has consistently found that overdraft fees are disproportionately borne by a relatively small portion of account holders. Further, as an example from our data set of...

The Consumer Financial Protection Bureau (CFPB) is widely expected to soon propose a new national rule that addresses payday and car title lending. If strong enough, the rule has the potential to rein in the worst abuses of these kinds of high-cost loans, which carry triple-digit interest rates. Payday lenders are pushing for loopholes in the rule that would make it look like they were making changes but in fact would allow them to continue business as usual. What Products Will The Rule Cover? The CFPB’s 2015 preliminary outline offered a glimpse into what to expect from the proposed rule. The...

The topic of student loan debt is increasingly gaining public attention. Too often, assumptions about debt are made that hide the real contours of the problem. For example, simply citing aggregated student loan debt loads at a state or national level suggests that every student loan borrower is the same– with identical financial backgrounds, borrowing to attend similar institutions, and facing the same issues with repayment. Even a preliminary examination of the issue indicates that this is not the case. For example, middle class graduate students, gaining degrees in a STEM field, are facing...

This memo summarizes the findings from a statewide poll of 501 likely 2016 general election voters in Colorado. Only those registered voters who had participated in a past general election were invited to participate, as well as any new registrants since the November 2012 election. View the polling questions and topline results. (PDF)

This letter signed by CRL along with 163 other organizations urges the CFPB to use its Congressional authority to restrict forced arbitration. Lenders and other financial services companies use forced arbitration to push consumers out of court and into a private arbitration system that they tilt to favor large financial interests. The CFPB’s empirical findings in its comprehensive and evidence-based report on the use of arbitration clauses unequivocally demonstrate that forced arbitration imposes conditions that restrict consumers’ rights and block their access to courts, giving lenders an...

This letter commends Representative Wasserman Schultz for cosponsoring the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act of 2016 and urges her to withdraw support from H.R. 4018. That bill would export the problematic "Florida model" of payday lending laws to the rest of the country. Florida's payday laws are riddled with loopholes: the average borrower is saddled with nine 300%+ interest loans each year and nearly one-in-three are burdened with a dozen or more.

This letter urges the Bureau to establish a strong rule addressing payday, car title, and similar loans. It focuses on the migration of payday and car title lenders to long-term loans that keep borrowers trapped in prolonged unaffordable debt. This migration is already well underway in the states where long-term, high-rate loans are permitted, and lenders are already aggressively seeking authorization of these loans in states where it is not. A rule that does not prevent unaffordable lending in the long-term space will only fuel the migration and will permit ongoing, and in some cases even...