Research & Policy

Julia Gordon, CRL Sr. Policy Counsel, testifies before the Financial Crisis Inquiry Commission on the causes and effects of the foreclosure crisis and why we need more and better responses. For questions about this testimony, contact Julia Gordon at julia.gordon@responsiblelending.org or (202) 349-1878.

H1058 significantly increases the amount of equity in their home that a homeowner can protect from creditors. This allows individuals with debt to keep their homes rather than having their home sold to satisfy a judgment. The law raises the NC homestead exemption from $18,500 to $35,000 per individual ($70,000 per married couple). If the homeowner is 65 or older, and previously owned the home with their deceased spouse, they can exempt $60,000.

Report Author: Josh Frank As of Jan 12, 2010, the Federal Reserve has effectively ended the "pick-a-rate" practice and the use of variable rate floors. These two abuses are featured in the 12/10/09 Dodging Reform report. Download the full report >> Download the executive summary >> Download table of abusive practices >> CRL's new report, Dodging Reform, finds: Issuers have adopted schemes to game interest rates, with the little known "pick-a-rate" practice gaining increasing momentum. Pick-a-rate costs American consumers $720 million per year and it may reach up to $2.5 billion annually as the...

Julia Gordon, CRL Senior Policy Counsel, testifies before the U.S. House of Representatives Financial Services Committee on why we need a stronger, multi-pronged approach to stopping the foreclosure epidemic. For questions about this testimony, contact Julia Gordon at julia.gordon@responsiblelending.org or (202) 349-1878.

Did you know that 6 out of 10 people who received subprime loans during the height of the lending boom could have qualified for a lower-cost mortgage--and it was completely legal? The vast majority of subprime loans made by mortgage brokers or loan officers came with a "yield-spread premium" – a kickback that brokers received from lenders in exchange for hiking the interest rates on loans or steering borrowers into more expensive, riskier loan products. The Federal Reserve Board is now deciding whether to fix the problem of price gouging on mortgages. They have heard from many mortgage brokers...

The latest mortgage data through second quarter 2010 show that while mortgage companies have stepped up their efforts outside the HAMP program, loan repairs are still dwarfed by the foreclosure epidemic. The chart below vividly illustrates that Federal efforts to stop foreclosures through the Home Affordable Modification Program (HAMP) simply aren't keeping pace with the foreclosure epidemic. Notes on chart CRL testifies before Congress on at least a dozen ways we can do more to stop foreclosures. Take a look at foreclosures in your area: State Fact Sheets. Lower payments make loan mods that...

Did you know that 6 out of 10 people who received subprime loans in 2006 could have qualified for a lower-cost mortgage, but didn't get the better deal because their mortgage broker earned a "kickback" for steering them to the higher-cost loan. And all this was completely legal. The Federal Reserve Board is now deciding whether to fix this by preventing lenders from paying loan officers and brokers higher compensation for putting borrowers in loans with higher interest rates or into riskier loan products. The Fed's final decision will have enormous implications for all home buyers--but...

Michael Calhoun, president of the Center for Responsible Lending, testified before the U.S. Senate Committee on Banking, Housing & Urban Affairs on Tuesday, November 17, 2009. Mr. Calhoun offered support for the FAIR Overdraft Protection Act, introduced by Senator Christopher Dodd, as urgent and necessary reform for abusive bank overdraft fees.

The most common type of large loan held by Americans is the loan that finances their car—yet a recent mark-up of the Consumer Financial Protection Agency (CFPA) bill would allow auto dealers to be exempt from basic oversight that could save American families billions. Many dealers are like loan brokers: they typically write the car loans, then sell the loan to a third party lender. Common financial abuses among auto dealers are analogous to those that wreaked havoc in the mortgage market: confusing loan terms, hidden costs, and inflated sales commissions. As with mortgages, the financial...

Read the full analysis (PDF) >> Download this summary (PDF) >> Reckless and abusive lending practices have left California victim to a foreclosure crisis with catastrophic consequences for families, communities and the state economy. Recent assessments and reports from policy analysts, industry insiders and the media suggest that the catastrophe is over: a bottoming of the housing and stock markets, the end of the recession, and the "green shoots" of recovery are all on the horizon. But the crisis is far from over in California. And if we are to get the economy on solid footing again...

H1057 prohibits deficiency judgments on predatory home loans in North Carolina. A deficiency judgment can be pursued by the lender if a foreclosed home sells at auction for less than the mortgage on the home. For the increasing number of homeowners who owe more on their loan than their home is worth (upside down in their mortgage), deficiency judgments add tremendously to the hardship of losing their home. This law prohibits deficiency judgments for first-lien subprime or non-traditional loans (like payment option adjustable rate mortgages) made on or after January 1st, 2005, unless the lender...

Why do we need the Consumer Financial Protection Agency? First and foremost, we need accountability. The truth is, none of the responsible agencies took action to stop the reckless lending and bad risk management that triggered the economic crisis. When seven different agencies oversee financial institutions, it's easy to create loopholes and point fingers at someone else. The CFPA will make our financial system more streamlined, efficient, and focused on the interests of American families. What will the CFPA actually do? It consolidates responsibility for making and enforcing rules that apply...

Why do we need the Consumer Financial Protection Agency? First and foremost, we need accountability. The truth is, none of the responsible agencies took action to stop the reckless lending and bad risk management that triggered the economic crisis. When seven different agencies oversee financial institutions, it's easy to create loopholes and point fingers at someone else. The CFPA will make our financial system more streamlined, efficient, and focused on the interests of American families. What will the CFPA actually do? It consolidates responsibility for making and enforcing rules that apply...

U.S. House and Senate proposals promise significant reform Regulators have failed to stop our nation's financial institutions from moving from a policy of discouraging overdrafts to that of encouraging and maximizing overdrafts to drive up fees. The Overdraft Protection Act of 2009, H.R. 3409, introduced by Congresswoman Carolyn Maloney in October 2009, would make meaningful reform with measures similar to the FAIR Overdraft Coverage Act proposed in the U.S. Senate. H.R. 3409 would: require financial institutions to obtain explicit permission from all their customers before enrolling them in a...

Eric Halperin, director of CRL's DC office, submitted testimony to the Financial Services Committee of the U.S. House on H.R. 3904, the Overdraft Protection Act of 2009. He called the Act a crucial measure for protecting consumers from abusive bank overdraft fees, which have reached $23.7 billion per year. The Federal Reserve Board has failed to address the problem, and reform is urgently needed. http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr_102309.shtml

CRL shares stories of everyday people affected by financial abuse and emphasizes the need for the Consumer Financial Protection Agency to ensure that they and others are protected from such abuses in the future. The Dow closes at 10,000 points, putting it back to where it was a year ago when Lehman Brothers collapsed, and Wall Street rejoices. But the reality is the economic crisis that began in the destructive subprime mortgage market continues for American families. Key economic indicators show American families are still struggling: foreclosures at an all time high nationwide; the dollar at...

CRL shares stories of everyday people affected by financial abuse and emphasizes the need for the Consumer Financial Protection Agency to ensure that they and others are protected from such abuses in the future. The Dow closes at 10,000 points, putting it back to where it was a year ago when Lehman Brothers collapsed, and Wall Street rejoices. But the reality is the economic crisis that began in the destructive subprime mortgage market continues for American families. Key economic indicators show American families are still struggling: foreclosures at an all time high nationwide; the dollar at...

Banks and credit unions skim cash from accounts through unfair overdraft practices Rather than discouraging customers from overdrawing their accounts, the system most banks and credit unions now use creates additional overdrafts and maximizes the number of fees they can charge. CRL finds that bank fees for overdrafts increased 35 percent in two years, rising to nearly $24 billion per year in 2008. Customers are now typically automatically enrolled in overdraft systems that approve debit card transactions with no warning in the event of insufficient funds, so they frequently pay a $34 fee for...

October 20, 2009 Members, Financial Services Committee U.S. House of Representatives Washington, DC 20510 Dear Representative: As the Financial Services Committee prepares to continue its markup of H.R. 3126, we write to express our support for a strong, non-preemptive Consumer Financial Protection Agency (CFPA). In this regard, we call your attention to two issues that are expected to come up in today's markup. First, on maintaining the States' vital role, overly broad preemption in recent years contributed to the current financial crisis by removing state protections that deterred...

October 20, 2009 Members, Financial Services Committee U.S. House of Representatives Washington, DC 20510 Dear Representative: As the Financial Services Committee prepares to continue its markup of H.R. 3126, we write to express our support for a strong, non-preemptive Consumer Financial Protection Agency (CFPA). In this regard, we call your attention to two issues that are expected to come up in today's markup. First, on maintaining the States' vital role, overly broad preemption in recent years contributed to the current financial crisis by removing state protections that deterred...

A report by the Center for Community Capital at the University of North Carolina provides evidence that allowing national banks to ignore state lending laws encouraged these banks to increase subprime lending, and that states with stronger lending laws have had lower foreclosure rates. [1] The study analyzes lending patterns and loan performance before and after 2004, the year the U.S. Office of Comptroller of the Currency exempted national banks from state anti-predatory lending laws through "preemption." A brief summary of the research: States with strong anti-predatory lending laws fared...

The US House Financial Services Committee heard from 30 consumer groups including CRL via an October 6, 2009 sign-on letter about ongoing auto financing scams. The National Association of Car Dealers (NADA) is lobbying hard for exemption from the CFPA (HR 3126). CRL and its allies strongly urge Committee members to ensure that the proposed consumer protection agency has strong car dealer oversight in order to curb marketplace abuses.

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