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Response to House Financial Services Committee Report on the CFPB and Indirect Auto Lending

CRL responded to the House Financial Services Committee report on the CFPB and Indirect Auto Lending. We address this response in a letter to House Financial Services Chairman Hensarling and Ranking Member Waters dated and sent on 12/9/15. In the HFSC Report, several assertions are made about indirect auto lending, including arguments opposing CFPB data methodology and an argument that disparate impact is not cognizable under the Equal Credit Opportunity Act (ECOA). In our response we address the claims made by the HFSC report.

Oppose Measures that would Reduce Access to Affordable Mortgage Loans

We write you to express our concern with pending Senate legislation and recent statements by administration officials in both the U.S. Treasury Department and the White House. Specifically, the Jumpstart GSE Reform Act of 2015, and statements by Secretary Jack Lew, Counselor to Secretary Antonio Weiss, and Mr. Michael Stegman of the National Economic Council opposing greater administrative reforms of Fannie Mae and Freddie Mac—despite the inability of Congress to address the issue—would further jeopardize the delicate position of the GSEs and reduce access to affordable mortgage loans for...

Oppose Appropriations Bills that Contain Inappropriate and Ideological Policy Riders

The organizations represented on this sign-on letter asked President Obama to oppose any appropriations bill that contains inappropriate and ideological policy riders. With the passage of the framework bill for funding the government, has turned to how to allot the monies and what may be attached. Appropriations bills have been used before to undermine essential safeguards through "policy riders" – provisions that address extraneous policy not funding issues, and are slipped into appropriations bills to win approval as part of must-pass funding legislation. These are measures that the public...

Oppose S. 2038 Jumpstart GSE Reform Act

This sign-on letter urges the rejection of any effort to include the "Jumpstart GSE Reform Act" in the omnibus FY 2016 appropriations agreement. While the name and the stated purpose of this bill may sound innocuous, it would effectively hinder rather than advance reform of Fannie Mae and Freddie Mac, increasing the risk of future taxpayer bailouts, and potentially jeopardizing the ability of the GSEs to expand affordable housing in the communities we represent.

Ending the Cycle of Evasion: Effective State and Federal Payday Lending Enforcement

Payday loans – whether made online, in stores or by banks – are designed to trap individuals in long-term debt. Data consistently show that the majority of payday loan revenue comes from repeatedly churning borrowers, and that borrowers are typically indebted for most of the year. Recognizing the damaging structure of payday loans and their devastating impact on families' financial well-being, the trend among policymakers has been to rein in this abusive debt trap using a variety of available tools. Today, 20 states and the District of Columbia either prohibit high-cost payday lending or have...

Oppose H.R. 1210 Portfolio Lending and Mortgage Access Act

The undersigned organizations write to urge you to oppose H.R. 1210 (the “Portfolio Lending and Mortgage Access Act”). This bill makes two harmful changes to the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and its implementing regulations: It takes a special exemption designed for more trustworthy small and rural banks and extends it to all banks, regardless of size or trustworthiness. It substantially weakens the Act’s ban on loan steering—a practice that supports predatory lending and racial discrimination.

Poll: Strong Support for New Mortgage Lending Rules that Require Verification of Ability to Repay

A recent Lake Research poll finds strong enthusiasm for new mortgage lending rules that require verification of ability to repay. Voters of all political parties express a strong desire to keep these rules in place. More than nine in ten voters (91%) support requiring mortgage lenders to verify a borrower’s ability to repay before making a loan. Nearly three quarters (74%) say they strongly support this policy. Support for this requirement is robust across party lines, and strongest among Republican voters.

Oppose H.R. 1737 Reforming CFPB Indirect Auto Financing Guidance Act

H.R. 1737 hides its intent behind a smokescreen of claims about process and regulatory jurisdiction. However, the bill is really about the unfair and discriminatory impact of car dealer interest rate markups. The bill seemingly targets guidance the CFPB released in March 2013 putting lenders on notice that it had evidence of discrimination in car loans held in lenders’ portfolios and gave assistance to lenders on how to avoid fair lending risk going forward. The bill is a misguided attack on the CFPB’s enforcement of anti-discrimination laws.

Road to Nowhere: Car Dealer Interest Rate Markups Lead to Higher Interest Rates, Not Discounts

For the vast majority of car loan borrowers, car dealer interest rate mark ups make their loans unnecessarily more expensive than if a flat fee compensation system were in place. This is the finding of a review of recent industry data by the Center for Responsible Lending. In a recent study, Charles River Associates suggested that if the CFPB required lenders to pay dealers through a flat rate compensation system, the cost to borrowers would outweigh the benefits of eliminating discriminatory impact. However, a closer review of the data and the assumptions that Charles River Associates used to...

The Buckeye Burden: An Analysis of Payday and Car Title Lending in Ohio

This brief analyzes the payday and car title loan market in Ohio, where millions of dollars are drained out of low-income Ohioans' pockets and communities in the form of predatory loan fees. Key findings include: There are 836 storefronts in Ohio that make payday or car title loans, the majority of which (59%) offer both forms of high-cost loans. Payday and car title loans drain more than $502 million in predatory loan fees from Ohioans annually, twice as much as what payday loans drained in 2005. Larger, longer-term payday and car title loans with triple-digit interest rates further expose...

FHA Lender Approval, Annual Renewal, Periodic Updates and Required Reports by FHA-Approved Lenders

FHA has proposed to shift the obligations for mortgagees to certify that they have upheld all legal requirements from the loan-level certification to the initial and annual lender level certification requirement. In principle, we are not opposed to shifting the placement of these requirements, so long as FHA vigorously enforces these requirements and upholds the need to provide timely annual updates to their certifications and timely review and processing if and when a lender falls out of compliance with the certification requirements.

Loan-level Certification Requirements for FHA Insured Mortgages Comment

The right loan-level certification requirements will make it possible for consumers to be protected from risky mortgage products, for FHA to operate a safe and sustainable mortgage insurance program, and for lenders to have the clarity and certainty they need about enforcement standards to expand access to FHA-insured mortgage credit.

Expanding Access to Credit Through Online Marketplace Lending

This comment was filed in response to the Department of the Treasury’s request for information on marketplace lending. Our history of advocacy for fair lending practices, and against unfair ones, is the lens through which we focus these comments, where we emphasize: Online marketplace loans must comply with applicable state law Underwriting for ability-to-repay, based on income and expenses, should be required for every loan Small business loan protections, including prohibition of broker steering, are critical Mandatory arbitration clauses should be prohibited

Report Shows Payday, Car Title Lenders Moving Into Unsafe Installment Loans

A new policy brief released today by the Center for Responsible Lending provides a state-by-state snapshot showing predatory payday and car title lenders increasingly moving into installment loans. The lenders are continuing to offer unsafe loans with excessive interest rates, which are carefully designed to trap borrowers in a cycle of debt they cannot escape, and actively seeking to expand into new states. The report highlights that just because lenders are making an installment loan, it is no guarantee that it is a safe loan. The report makes recommendations to regulators and policymakers...

North Carolina Legislative Update October 1, 2015

The 2015 NC General Assembly adjourned yesterday, months after we first expected them to wrap-up their session. They will reconvene for the short session on April 25, 2016. Because of your calls and letters, three very dangerous bills did not pass: Senate Bill 681, which would have legalized 80 to 125% loans, never even got a committee hearing, House Bill 541 and Senate Bill 511, which would have rolled back protections against common debt buyer abuses, did not get a vote on the floor of either Chamber, and Senate Bill 491 would have eliminated protections against common abuses by manufactured...

North Carolina Legislative Update September 2015

The 2015 NC General Assembly adjourned yesterday, months after we first expected them to wrap-up their session. They will reconvene for the short session on April 25, 2016. Because of your calls and letters, three very dangerous bills did not pass: Senate Bill 681, which would have legalized 80 to 125% loans, never even got a committee hearing, House Bill 541 and Senate Bill 511, which would have rolled back protections against common debt buyer abuses, did not get a vote on the floor of either Chamber, and Senate Bill 491 would have eliminated protections against common abuses by manufactured...

2014 HMDA Data Show That Federal Rules Did Not Have A Chilling Effect On Lending, Despite Lender Predictions

The 2014 mortgage data submitted by lenders under the Home Mortgage Disclosure Act (HMDA) reflects a slowly recovering mortgage market, but one that troublingly continues to under-serve important market segments. The implementation of federal mortgage underwriting standards (known as Ability-to-Repay or "ATR" and the Qualified Mortgage rule or "QM") in early 2014 did not cause a departure from mortgage lending trends in recent years. However, access to credit remains tight; people of color and low and moderate-income families continue to receive a far lower share of home purchase loans than...

North Carolina Legislative Update August 12, 2015

See details below about 2015 NC General Assembly bills: Senate budget bill would repeal State Fair Housing Act Bill to legalize 80 to 125% loans still stalled Bill to roll back debt collection protections also stalled Ratified bill reduces protections against harassing calls Wage garnishment put into study committee bill Bills to reduce protections against mortgage broker abuses have not passed Because of your quick action, bills to invite high-cost lenders into our state and eliminate protections against debt collection abuses are stalled. But the Senate budget bill proposes to repeal our...

Coalition Letter to NCUA July 2015

On July 30, 2015, the Center for Responsible Lending joined Higher Ed Not Debt, Consumers Union, Consumer Action, Generation Progress, National Consumer Law Center, Student Debt Crisis, United States Student Association, Veterans for Education Success, and the Woodstock Institute in sending this letter to Debbie Matz, Chairman of the National Credit Union Administration. The letter concerns private student loans to students at for-profit colleges made by federally chartered credit unions, federally insured state chartered credit unions, and Credit Union Service Organizations.

Oppose HR 1737 Reforming CFPB Indirect Auto Financing Guidance Act

H.R. 1737 would frustrate efforts to crack down on discriminatory auto lending practices. The bill places unnecessary restrictions on CFPB oversight of auto lending, including interest rate markups that cost consumers tens of billions of dollars and have been found to violate fair lending practices through a differential impact on minority purchasers of automobiles. The restrictions in this bill do not exist for any other financial practice. Download the comment letter above and download a supplemental factsheet on discrimination in auto lending. Homepage photo credit

Oppose HR 1210 Portfolio Lending and Mortgage Access Act

H.R. 1210 would weaken the CFPB's Ability-to-Repay standards for mortgage loans. These standards are designed to protect consumers against the kind of toxic and exploitative mortgage loans which helped cause the financial crisis and led to massive consumer losses, and should not be weakened. The bill would allow depository institutions that hold a loan in portfolio to receive a legal safe harbor, even if the loans present safety and soundness concerns and contain terms and features that are abusive and harmful to consumers.

Proposed Changes to Federal Housing Administration Loan Certifications

Certification plays an important role in protecting the health of the Federal Housing Administration's (FHA) mutual mortgage insurance fund so that millions of Americans—many of whom are first-time buyers, come from low and moderate-income backgrounds, or purchase homes in communities of color—can continue to become successful homeowners. Certification also serves another equally important purpose by requiring lenders to certify that the loans meet FHA underwriting requirements and will yield safe and sustainable mortgage products for all consumers.

Comments on Proposed Changes to Federal Housing Administration Loan Certifications

HUD/FHA is proposing to amend language on their certification forms where lenders certify that a loan is eligible for FHA financing (insurance). We believe the proposed language is a step in the right direction, but we offer additional suggestions. The components of our recommended framework to FHA include providing a certification that includes provisions for all of the following: The requirement that a lender exercise due diligence and good faith in underwriting a FHA-insured mortgage loan A strong quality control obligation on the part of all FHA insurance lenders An automatic obligation to...
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