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No Need for Higher MI Fees with QM

Consumers with lower credit scores often also have low down payments when purchasing a home. As a result, fees for mortgage insurance are added to payments. In these comments, CRL argues for these consumers, citing how higher fees would be another barrier to successful homeownership. Additionally, with the enactment of new mortgage rules, notably QM (Qualified Mortgages), determining an ability- to- repay mortgages is now a threshold standard. QM remains a key remedy to the risk of poor underwriting and toxic loans that created the nation's housing crisis.

Comment on the Hearing on Financial Products for Students: Issues and Challenges

CRL provided a comment for the record on some of the issues covered in the Senate Banking Committee's hearing, "Financial Products for Students: Issues and Challenges" held on July 31, 2014. Students must make important choices related to how much they borrow and from what source, as well as how to conduct every day financial transactions and receive financial aid funds. In addition, standards should be enacted to ensure borrowers' loans are serviced in a fair and appropriate manner, and to safeguard a borrower's ability to seek redress when wronged. We detail our concerns related to these...

Issues and Outcomes Report: January to December 2013

View our infographic summary of consumer protections in 2013 Responsible financial products and services play an important role in the lives of Americans: helping families pay for goods and services, manage risk, borrow to build assets and save and invest for the future. However, predatory features of financial products and services can have devastating consequences. They can trap consumers in a debt cycle that they can't escape, fool consumers into paying for what they don't want or surprise consumers with hidden fees and costs. Consumer advocates work to reform financial products and...

The State of Lending: Debt Settlement

Debt settlement companies offer the promise of settling a consumer's debt for a fraction of what they owe. The idea is simple: debt settlement companies offer to negotiate down the outstanding debt (usually from credit cards) owed to a more manageable amount so that a consumer can become debt free. Unfortunately debt settlement carries significant risks that may result in consumers becoming even worse off. Debt settlement is inherently a risky venture: in order to enroll into debt settlement programs, consumers are required to default on their debt which often results in fees, increased...

Letter of Support for Higher Education Act

This letter is written to the Chairman of the HELP Committee, Senator Tom Harkin (D – IA), as he seeks to reauthorize the Higher Education Act. The reauthorization aims to make substantive reforms to protect students and address critical student lending issues, including student loan servicing, private student loans, for-profit colleges, and school-bank partnerships.

CRL Supports Proposed CFPB Amendments to Qualified Mortgage Rule (QM)

In these comments, CRL expresses general support for the Consumer Financial Protection Bureau's proposals to amend the 2013 Mortgage Rules under the Truth in Lending Act (Regulation Z). Additionally, CRL calls for more clarity to help prevent potential abuses to legitimate nonprofit organizations and to the right to cure provisions addressing errors.

Gainful Employment Regulations Needed to Protect Students

On May 27, 2014, the Center for Responsible Lending submitted a comment to the Department of Education in response to their proposed gainful employment rule. In the comment, senior policy counsel Maura Dundon highlights: how for-profit colleges may fail to provide students the skills or education necessary to seek gainful employment, yet still be the beneficiaries of federal financial aid how the resulting indebtedness disproportionately impacts servicemembers and students of color The 14-page comment also includes detailed recommendations on how best to improve the gainful employment rule...

Coalition Comment Letter on Proposed Gainful Employment Regulation

CRL added its support to a broad coalition calling for the Department of Education to ensure that its final gainful employment rulemaking must be strengthened to protect both students and taxpayers. This comment letter identifies four specific initiatives to ensure that taxpayers dollars do not support waste, fraud or abuse.

Car Title Lenders Ignore Ability to Repay

Car title loans, like payday loans, are marketed as a quick financial fix, but lead to long-term debt and carry 300% annual interest rates. A typical borrower pays twice as much in interest and fees than she receives in credit extended. Nationally, car title lending drains $4.3 billion annually in excessive fees. Car title lenders systematically disregard a borrower's ability to repay as demonstrated through (1) lenders' advertising and marketing; (2) industry data and statements; and (3) negative consumer outcomes—namely, repeat loan refinancings and vehicle repossession.

Letter to OCC: Improving Documentation When Banks Sell Debt

CRL and several other consumer and civil rights organizations commend the Office of the Comptroller of the Currency for issuing best practices on banks' sales of charged-off consumer debt. They urge the OCC to strengthen debt management practices further by adopting strict guidance to reduce harm to American families.

Comments to CFPB: Eliminate Harmful Practices in Debt Buying and Debt Collection

Responding to an Advance Notice of Proposed Rulemaking, CRL addresses harmful practices that have become common in the debt buying and third-party debt collection industries. Debt buyers typically acquire charged-off debt without any supporting documentation. Too often account information is inaccurate, outdated or missing, and third-party collectors may use abusive tactics to pursue debt that may or may not be accurate. The letter concludes with recommendations to remedy these problems and to generally improve debt collection practices.

The State of Lending: Debt Collection and Debt Buying

The debt collection industry is a rapidly expanding business, with revenue increasing up to 600 percent between 2003 and 2012. Private companies buy billions of dollars of charged-off debt from banks each year. The most common type of debt purchased comes from credit cards, but debt buyers also buy student loans, medical debt and more. As the industry has grown, abuses and illegal — predatory — practices have proliferated. Companies are using abusive and unlawful methods to collect on debt — too often on debt that the targeted consumers do not even owe. This chapter covers how the industry...

For-­Profit Colleges Saddle African-­American and Latino Students with Crushing Debt, Poor Employment Prospects

Enrolling in a for-profit college usually means higher costs of attendance and higher default rates on student loans. This research brief explores why students of color – African-American and Latino - enroll more frequently in these schools than do white students. CRL also reviews how the Department of Education's proposed Gainful Employment rule could improve student outcomes.

Letter to CFPB: Payday Rule Should Cover Longer-Term, Multi-Payment Loans

American consumers need strong protections from unfair, deceptive or abusive practices in the payday and small-dollar lending markets. CRL joined Americans for Financial Reform and more than 100 other organizations to urge Richard Cordray, Director of the Consumer Financial Protection Bureau, to pass a broad rule, warning that an overly narrow rule could result in an even deeper debt trap.

Department of Education Rulemaking to Define ‘Gainful Employment’

With America's student debt now more than $1 trillion and still growing, many borrowers face the likelihood of delaying their ability to begin their own households, buy a home or a vehicle. Further, in a tight job market, many new graduates are financially challenged to begin repayment even with their newly-acquired marketable skills. For consumers enrolled in predatory career education programs – offered by for-profit colleges – onerous debt can be incurred without accompanying skills or license to begin a new career. Consumers may also be subject to a range of deceptive and high-pressure...

Comment Letter to Senate Banking Committee on Housing Finance Reform Bill

A 13-member coalition of civil rights, housing and legal advocates called upon the U.S. Senate Banking Committee to preserve equal access to mortgage credit for all qualified borrowers. Together the groups stated that a robust housing market must be fair with equal credit terms and effective regulation. They also noted that the nation's demographic shifts will translate into seven out of every 10 new households formed over the next decade being households of color.

Negotiating on Car Loans Doesn’t Help African Americans and Latinos

Negotiating on Car Loans Doesn't Help African Americans and Latinos Trying to negotiate a better interest rate on your car loan should generally result in a better deal, right? Not so for buyers of color who get loans from dealers. Our survey finds that African Americans and Latinos attempt to negotiate loan pricing with car dealers more often than white consumers: 39% of Latinos and 32% of African Americans reported negotiating their interest rate, compared to only 22% of white respondents. Yet white car buyers reported receiving lower interest rates—even those who didn't try to negotiate at...

Comment on Proposed Regulations for For-Profit and Occupational Schools

CRL recently expressed support for the Massachusetts' Attorney General proposed regulations for occupational and for-profit schools. In its comments, CRL cited that although only 13 percent of students are enrolled at these schools, they account for 46 percent of federal student loan defaults – often in addition to high-cost private loans.

2014 Brings New Rules to Mortgage Lending

In 2014, new mortgage lending reforms go into effect. Finalized by the Consumer Financial Protection Bureau, the reforms respond to the abusive lending practices that triggered the nation's financial crisis. The new rules also protect and preserve access to credit. Lenders must now consider whether a borrower has the ability to repay a mortgage. This change means an end to "no-doc" loans. Lenders also have incentives to originate a new category of loans called Qualified Mortgages. These "QM loans" restrict risky product features like excessive fees and teaser rates. Other reforms include new...

Comment on Forced Arbitration Agreements in College Federal Aid Applications

In reply to the Department of Education's request for comments on the form used by colleges to apply to be eligible for federal student loan funds, CRL called for attention to the arbitration agreements between schools and their students and employees. CRL said that forced arbitration undermines the transparency and accuracy of information reported by the schools, and could threaten the integrity of federal financial aid.

A Roll of the Dice: Debt Settlement Still a Risky Strategy for Debt-Burdened Households

Debt settlement[ 1] programs too often are not the solution they are marketed to be, according to this new CRL research. Debt settlement companies promote their programs as a way for debt-strapped consumers to become debt-free while paying a fraction of what they owe their creditors. However, our research shows that debt settlement program participants may be left in a worse financial position than where they started and, furthermore, have no way to assess their likelihood of success before enrolling in a debt settlement program. Our analysis found that a client must settle at least two-thirds...
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