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HAMP, Servicer Abuses, and Foreclosure Prevention Strategies

"We must address the foreclosure problem head-on with every tool available," Senior Policy Counsel Julia Gordon says as part of her testimony before the Congressional Oversight Panel. The testimony covered HAMP strengths and weaknesses, common loan servicing abuses, and specific policy recommendations for reining in continuing foreclosures.

Numbers Game: The True Cost of Credit Card Mail Offers

Credit card offers have grown increasingly complicated since 2000, when Congress required issuers to start disclosing pricing information on credit card offers. But instead of providing clarity to consumers about the true cost of their credit cards, issuers responded to this mandate by adding a confusing array of numbers to their offers, new CRL research finds. Specifically, CRL's research finds that numbers in credit card direct-mail offers increased 250% from 1999 to 2009, and at the peak in early 2009 the average credit card summary contained 33 figures. Much of the increased complexity in...

Summary of the Military Lending Act of 2007

As a provision of the National Defense Authorization Act for Fiscal Year 2006, the United States Senate asked the Department of Defense to conduct a study on the impact of predatory lending on their troops, and to report on their findings in 180 days. The Department of Defense (DoD) report, "Report on Predatory Lending Practices Directed at Members of the Armed Forces and Their Dependents," estimated that 17 percent of military personnel used payday loans, and states in a summary passage that: "Predatory lending undermines military readiness, harms the morale of troops and their families, and...

Foreclosure as a Last Resort

Read the full report >> States can stabilize the housing market by preventing unnecessary foreclosures. With the foreclosure crisis in the headlines for over two years now, it is easy to assume that it must be nearing the end. Unfortunately, this crisis is far from over. To date, 2.5 million homeowners have already lost their homes and another 5.7 million are at imminent risk of foreclosure. [1] Looking ahead, independent analysts have projected that between 10 and 13 million foreclosures will have occurred by the time the crisis abates. [2] The reality is that many of these foreclosures can...

Joint Letter Urging OCC to Curb Overdraft Abuse

The Center for Responsible Lender added its signature to a letter from national consumer organizations asking the Office of the Comptroller of the Currency (OCC) to adopt stricter overdraft guidelines. Practices that need to be addressed include enrolling customers in fee-based overdraft when they qualify for much lower-cost coverage, charging excessive fees in amount and frequency, re-ordering transactions to maximize fees and deceptive solicitations.

SB 1216 Extend Emergency Foreclosure Program

SB 1216 has two major components. First, it continues the State Home Foreclosure Prevention Project (SHFPP) through May 31, 2013 and expands the program to cover all NC home loans not just subprime loans. Second, it modifies the points & fees trigger for determining if a mortgage is high-cost. State Home Foreclosure Prevention Project Continued & Expanded This law continues and expands the State Home Foreclosure Prevention Project (SHFPP), which the NC Office of the Commissioner of Banks (NCCOB) and the NC Administrator of the Courts have administered since November 2008. This program provides...

SB 1015 Homeowner and Homebuyer Protection Act

SB 1015 protects NC homeowners from a range of predatory practices. The law addresses three main issues: foreclosure rescue scams, abusive lease-option contracts, and abusive contract for deed/land installment sales. Foreclosure Rescue Scams The law cracks down on foreclosure rescue scams where the scammer takes title to the property without taking any responsibility for the mortgage. The law requires that if the homeowner is in foreclosure, the title to the property is transferred to someone else, representations are made that the transaction will save the home from foreclosure, and the...

SB 1400 Foreclosure Process for Active Duty Military

SB 1400 requires that foreclosures must proceed through the judicial foreclosure process (rather than power of sale) when the homeowner is on active military duty and the mortgage was entered into prior to active duty service. The bill is meant to complement the Servicemembers Civil Relief Act (SCRA). SCRA already required that a hearing be held before a judge to decide whether a stay in foreclosure proceedings is warranted under SCRA. However, since the power of sale process takes place with the clerk of court and not a judge, there was some concern that the foreclosure process in North...

Joint Letter in Support of FDIC Overdraft Proposals September 2010

Download the joint letter >> CRL and a cross-section of civil rights, labor, consumer, housing, community, business, and sustainable and responsible investor groups sent a joint letter to the FDIC expressing support for bringing attention to abusive overdraft practices. The groups support the agency's common-sense recommendations for actions banks should take to treat their customers more fairly while offering recommendations for how the FDIC could further address its banks' deceptive practices. Specifically, the groups support the FDIC for recognizing that charging a customer more than six...

Comment Letter on FDIC's Proposed Overdraft Guidance

CRL and other consumer advocates filed a comment letter with the FDIC supporting most aspects of the agency's proposed guidance on overdraft. The groups also made recommendations on how the agency could go even further in protecting consumers from excessive overdraft fees. Here is the summary of key recommendations from CRL, Consumer Federation of America, National Consumer Law Center, Consumer Action, Consumers Union, National Association of Consumer Advocates and U.S. PIRG. KEY RECOMMENDATIONS: End excessive overdraft fees at FDIC-supervised banks: Require that any account holder who chooses...

A National Tragedy: HMDA Data Highlight Homeownership Setbacks for African Americans and Latinos

Borrowers of color have a higher share of foreclosures and less access to credit. In many ways, this year's 2009 mortgage data submitted by lenders under the Home Mortgage Disclosure Act (HMDA) contained few surprises. As expected, the 2009 results reflect the general downturn in the housing market. And, because of the severe tightening of mortgage capital among the GSEs and private lenders, over half of the home loans made were supported by government agencies, such as the FHA and VA. However, the latest HMDA report reveals far-reaching and highly disturbing mortgage trends for people of...

Testimony on Regulatory Reforms to the Community Reinvestment Act

CRL Senior Policy Counsel Ellen Harnick testifies in a joint public hearing held in Atlanta, GA regarding regulatory reforms to the Community Reinvestment Act, and urges the following improvements to CRA: 1. Broaden CRA assessment areas to reflect the actual scope of bank activity. 2. Require that the activities of bank affiliates count toward the CRA rating of their parent institution. 3. Encourage fair and affordable savings and transactions services specifically targeted to meet the needs of low- and moderate-income individuals, including the unbanked and under-banked. 4. Strengthen...

Consumer Financial Protection Bureau--Overview of Key Provisions

Structure Independent bureau at the Federal Reserve. Director Appointed by President, Confirmed by Senate, 5-year term. Funding Certain percentage of Federal Reserve's budget; additional funding may be made available through Congressional appropriations, at the option of the CFPB Director. Three categories of regulatory duties Rulemaking Supervision (routine, on-going examination and monitoring for risks and new developments, as well as on-going compliance) Enforcement Rulemaking Two different sources of rulemaking authority: "organic" authority: to prohibit unfair, deceptive or abusive...

Consumer Financial Protection Bureau--Overview of Key Provisions

Structure Independent bureau at the Federal Reserve. Director Appointed by President, Confirmed by Senate, 5-year term. Funding Certain percentage of Federal Reserve's budget; additional funding may be made available through Congressional appropriations, at the option of the CFPB Director. Three categories of regulatory duties Rulemaking Supervision (routine, on-going examination and monitoring for risks and new developments, as well as on-going compliance) Enforcement Rulemaking Two different sources of rulemaking authority: "organic" authority: to prohibit unfair, deceptive or abusive...

Eliminating Systematic Charges on Home Loans: Fed Rules on Yield Spread Premiums

Download this brief (PDF) >> Fed Issues Final Rules on Yield Spread Premiums The Federal Reserve Board issued final rules that take a big step forward in reining in arbitrary overcharges on mortgages resulting from "yield spread premiums" – i.e., kickbacks to brokers or lenders for making loans more expensive when borrowers qualify for a better deal. Background On Monday, August 16, 2010, the Federal Reserve Board issued final rules on how mortgage originator compensation and anti-steering. YSPs have been a legal form of compensation, but they are essentially kickbacks brokers and lenders...

Dreams Deferred: Impacts and Characteristics of the California Foreclosure Crisis

Read the full report (PDF) >> Read the executive summary (PDF) >> California and the United States are in the midst of the worst foreclosure crisis since the Great Depression. Across the country, foreclosures have hit an all-time high, with nearly one in ten homes with a mortgage currently in some stage of foreclosure. In California, nearly one in eight—or approximately 702,000 homes—is currently in foreclosure, the economy is in ruins and unemployment remains at 12 percent. This report paints a picture of the foreclosure crisis in California, examines the who, the where and the why of...

Analysis of Federal Reserve Research on Behavioral Scoring

Read the full comment to the Federal Reserve CRL Comments On "Report to the Congress on Reductions of Consumer Credit Limits Based on Certain Information as to Experience or Transactions of the Consumer"[1] The Federal Reserve recently issued a report based on a survey of credit card issuers that asked whether they had taken adverse action on consumers' accounts based on cardholder patronage of merchants by geographic location, merchant type or transaction type. This practice is commonly known as "behavioral scoring." The media have highlighted examples of card issuers judging consumers to be...

High-Cost Payday Lending Traps Mississippi Borrowers

A CRL analysis finds that payday lenders charge up to 572 percent APR for two-week loans at over 900 payday lending outlets in Mississippi. The typical borrower in that state pays an estimated $691 fees for a $350 payday loan repeatedly renewed, and still owes the principal. Overall, payday lending drains $270 million from Mississippi families every year. An exemption allowing payday lenders to charge many times the 36 percent APR cap in Mississippi expires in 2012, but the payday lending industry has always fought hard to protect their exempt status. We expect a tough fight during the 2011...

Homeowner and Homebuyer Protection Act (SB 1015)

Full Session Law This legislation, effective October 1, 2010, provides basic protections for North Carolinians against foreclosure "rescue" scams, and abuses related to option-to-purchase and contract-for-deed contracts. Violations of this law constitute an unfair trade practice and the injured party may sue to recover damages, obtain declaratory or equitable relief, or rescind the transaction, in addition to any other remedy provided by law. This legislation, effective October 1, 2010, provides basic protections for North Carolinians against foreclosure "rescue" scams, and abuses related to...

Payday lenders pose as brokers to evade interest rate caps

In recent years, a growing number of states have enacted interest rate caps and other protections to eliminate abusive payday lending practices that trap consumers in long term debt. Payday lenders repeatedly evade these rules, finding new ways to maintain business as usual and continue to offer short-term loans with triple-digit interest rates. The latest form of subterfuge is one in which the payday lenders position themselves as brokers, seeking licensure under state-level laws designed to regulate credit repair organizations. Under this scheme, payday lenders charge the maximum interest...
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