Research & Policy

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...

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...

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...

CRL and consumer coalition express concerns about credit card issuer potential violations of the the Credit CARD Act of 2009. Problems related to penalty rate disclosures, variable rates, payment allocation and pick-a-rate are cited.

SUMMARY We commend NCUA for its efforts to encourage federal credit unions (FCUs) to offer responsible small loan products. However, we encourage NCUA to think of this program in the context of two realities: 1) short-term loan products, whether they are called "payday loans" or are offered through a credit union, are likely to trap already vulnerable customers in costly debt; and 2) consumers with the ability to repay responsible loans can be served by existing affordable small loan products, and NCUA should actively encourage increased availability of these products.We recommend that NCUA...

The Comments of Michael Calhoun, President, of the Center for Responsible Lending to the Federal Trade Commission regarding the Notice of Proposed Rule-Making: Telemarketing Sales Rule Debt Relief Amendments Matter No. R4110011.

Debt settlement is a rapidly growing industry in which companies advertise that they can eliminate consumer debt by negotiating reduced debt payoffs with a consumer's creditors, usually for unsecured debt such as credit card debt and medical bills. What's the Problem? Flawed model: The debt settlement model is an inherently flawed one, in that it requires consumers who are deep in debt (typically $20,000-$30,000 worth, if not more) to save significant sums of money to settle each individual debt, but requires them to pay hefty up-front fees and monthly fees that leave the consumer with little...

CRL's, Consumer Federation of America and the National Consumer Law Center's comment letter to the OTS regarding the agency's Supplemental Guidance on Overdraft Protection Programs.

Read our report >> Our new research shows that the foreclosure crisis is not over, and runaway foreclosures continue to drain hundreds of billions of dollars in wealth from families, hitting communities of color the hardest. An estimated 2.5 million foreclosures were completed from 2007 – 2009, and an estimated 5.7 additional ones are imminent. An estimated 17% of Latino homeowners and 11% of African-American homeowners have already lost their home to foreclosure or are now at imminent risk. The great majority of homes lost were owner occupied, as are those at imminent risk of being lost. Read...

CRL and other consumer groups provide comment on the Office of Personnel Management's proposed rule regarding garnishment of federal benefits.

Louise Golden's backyard is a showplace. She planted everything with her own hands: crepe myrtle, pink peonies, azaleas, and roses of four colors. She and her husband, Stanley, bought the split-level house on Kepner Court in Lanham, Maryland, in 1980. She loved the place from the start, because of its roomy kitchen, and because of the possibilities she saw in the backyard. "This was the one," Golden, now 79, recalls thinking. The Goldens were like many African-American families who found homes in Prince George's County over the past few decades, helping to make the Washington, D.C. suburb one...

The auto dealer lobby successfully fought to receive a special exemption in the House from the rules of the Consumer Financial Protection Bureau (CFPB) in the financial reform bill even when the dealers act as creditors and brokers on car loans. But fair, honest and ethical competition requires a level playing field, as well as a fair and consistent system for accountability.

Reconciling H.R 4173 and S. 3217 During recent years, regulators stood by and allowed the most costly reckless lending in history, largely because they were heavily influenced by the very businesses they were supposed to oversee. Lax regulation has already cost trillions of dollars. For the final financial reform bill, these four issues will be vital in protecting taxpayers from another crisis in the future: To be successful, the new CFPB needs an independent source of funding and a fair and transparent rule-making process. CFPB must be able to write rules across industries. And new mortgage...

Today's financial troubles were triggered by a massive failure of home loans—a foreclosure epidemic that will continue to cost all homeowners billions of dollars each year. To avoid repeating this crisis, the final financial reform legislation must include three major elements: Better lending standards: Both the House and Senate bills (H.R. 4173 and S. 3217, respectively) include crucial minimum mortgage lending standards. Accountability for illegal lending: The provisions must contain adequate remedies to protect homeowners and deter violations. The Senate bill contains better remedies...

An Examination of Credit Card Late Fees Read the entire "A Just Fee or Just a Fee?" 13 page research report. Brief background on the report plus report findings: The CARD Act of 2009 brought strong credit card reform to the industry and benefits to cardholders, but the penalty late fee issue remains to be addressed. Congress assigned the Federal Reserve to interpret what "reasonable and proportional" penalty fees means according to the borrower's violation, a credit card late payment, for example. This timely CRL report informs the discussion of credit card issuers and penalty late fees...

The Consumer Financial Protection Agency should be headed by a strong, independent-minded director, rather than a five-member commission, to ensure that the Consumer Financial Protection Agency is free from industry influence and costly delays.

The Snowe-Pryor Senate financial reform bill proposal would create a layer of bureaucracy that is redundant and dangerous. This language would prioritize small businesses over families, taxpayers and other key stakeholders.

To ensure that the CFPA is independent of the industry it is trying to regulate, Congress must ensure that the funding source remains independent of political pressure.

To ensure that the CFPA is independent of the industry it is trying to regulate, Congress must ensure that the funding source remains independent of political pressure.

Summary of SB 1275 (As Amended 5-18-10) Section 2923.4: New Notice for Delinquent Borrowers on Foreclosure Process, Rights and Obligations Requires a state agency to create and translate a notice for delinquent borrowers that describes a borrower's rights and obligations, and outlines what to expect in the foreclosure process. (Specific text included in bill). Section 2923.5: Pre-NOD Determination for Loan Modification and Borrower Solicitation Requirements Pre-NoD Requirements. Provides that a servicer may not file a Notice of Default (initiating the foreclosure process) until all applicable...

Three servicers. Three California homeowners. Three avoidable foreclosures. Three Ways SB 1275 Would Help Stop the Foreclosures that can be Stopped Patricia and Manuel Mondoy, Hayward, Calif. Under SB 1275, GMAC would have been required to complete its evaluation of Patricia and Manuel M.'s loan modification before recording a Notice of Default. If GMAC had completed the evaluation process before initiating foreclosure, the borrowers would have received a modification without having to go through both a foreclosure and an eviction proceeding and over six months of uncertainty about whether or...

The Problem SB 1275 Addresses Foreclosures Continue at Record Pace: The foreclosure crisis continues to rage in California, with little sign of easing in the near future. Nearly 200,000 foreclosures were completed in California last year, and are on pace to exceed that number in 2010. At the same time, the main federal loan modification program (HAMP) has produced fewer than 48,000 permanent loan modifications in California. Borrowers Experience Alarming Level of Problems with Their Servicers: Borrowers, housing counselors and attorneys throughout the State report that they regularly face...

Four Tips to Rid Yourself of Credit Card Debt Sooner and Save Money The CARD Act of 2009 has provisions that enable borrowers to pay down their existing credit card debt sooner, save money in future interest, and improve their credit score. These key protections took effect on February 22, 2010, and have forced credit card issuers to reform the complex way card payments are credited to individual accounts. CRL advises Americans to: Pay above the minimum amount due. Paying more than the minimum can save you as much as $2 for every extra $1 you pay. For example, before the CARD Act, paying $100...

A brief by the National Consumer Law Center shows state-by-state markups on auto loan rates by race, revealing wide disparities between costs for African-American and white car buyers.

The current financial system has left America's families, its military, its community banks, and its responsible auto dealers unprotected from the minority of dealer-lenders who sell unfair auto loans with hidden fees. Such practices can tarnish the reputation of the entire industry. Exempting irresponsible dealers would help Wall Street at the expense of America's families and honest dealers and lenders. As President Obama said in a speech on financial reform on April 22, 2010, "unless your business model depends on bilking people, there is little to fear from these new rules." "You have an...