Research & Policy

Today's overdraft practices are designed to drive up the fee revenue of banks and credit unions and not to discourage customers from overdrawing their accounts. Our report shows that fees are climbing very quickly and affecting millions of Americans every year. Over 50 million Americans overdrew their checking account at least once over a 12 month period, with 27 million accountholders incurring five or more overdraft or non-sufficient funds (NSF) fees. Banks and credit unions collected nearly $24 billion in overdraft fees in 2008. Overdraft fee income for banks and credit unions rose 35...

How has your state fared in the financial crisis? These state-by-state fact sheets show some of the major costs of bad lending in recent years. They include delinquencies and foreclosures, the cost of bank overdraft loans and, where applicable, the cost of payday lending. We also include data showing the share of high-rate (subprime) mortgages made by national banks that were allowed to ignore state lending laws. United States Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky...

Full Session Law This law, which went into effect October 1, 2009, strengthened consumer protections in the areas of foreclosure and debt buying activities. Foreclosure Protections Under this law, the clerk of the court may delay foreclosure hearings for owner-occupied residences by up to 60 days, if the clerk finds good cause to believe the additional time has a reasonable likelihood of allowing resolution of the delinquency without foreclosure. If the home is owner-occupied, the clerk is to inquire about the efforts made by the mortgagee or loan servicer to communicate with the homeowner and...

Full Session Law This law rewrote the NC Mortgage Lending Act to conform with new federal legislation. Though the bulk of the law remains the same, some new protections were added, including: An increase in the bond required for mortgage brokers, to between $75,000 to $250,000 depending on the broker's activity. Previously the bond requirement was a flat $50,000 An explicit statement of the broker's duty of loyalty to the borrower, prohibiting the broker from making loans that are in his or her best interest rather than the borrower's. The act also allows certain brokers to be licensed upon...

Full Session Law As in the past, a homeowners association may impose liens on properties if the owners have balances that are at least 30 days overdue to the association. However, this law, effective October 1, 2009, adds the requirement that they first notify the homeowner. The homeowners association must make reasonable and diligent efforts to ensure that its records include the homeowner's current mailing address, and provide advance notice. At least 15 days before filing a lien, the association must mail a statement to the homeowner at all the following addresses: the physical address of...

SB 974, SB 974, which had the strong support of Attorney General Roy Cooper, includes important new consumer protections in two distinct areas: Greater protections for homeowners during the foreclosure process; and greater protections for consumers against abusive debt buying activities. Foreclosure protections: This new law allows a clerk of court to continue (delay) a foreclosure hearing for up to 60 days for owner-occupied residential property if the clerk believes that additional time will increase the likelihood of resolving the delinquency without foreclosure. This delay gives homeowners...

Full Session Law This act, which became effective October 1, 2009, prohibits deficiency judgments on predatory home loans in North Carolina. A deficiency judgment is a lender's way of recovering the balance owed on a loan in the event that the proceeds of a foreclosure sale do not fully cover the amount owed. Under this law, deficiency judgments are restricted under the following conditions: The loan was secured by property that is or will be the borrower's principal dwelling The loan principal does not exceed the conforming loan size for a single-family dwelling, as established by Fannie Mae...

Full Session Law This bill clarified what constitutes a violation of reasonable accommodation requirements under the Fair Housing Act. While the required accommodations are not new, the modified structure of the bill clarifies that discriminatory intent is not required to establish unlawful housing discrimination. The amendment went into effect on October 1, 2009. The following are accommodations are required, under the old and new laws: Reasonable modifications to the existing premises that are to be occupied by a handicapped person must be allowed at his or her expense, if such modifications...

Full Session Law This act, which became effective October 1, 2009, increased the amount of home equity protected against creditors. This "homestead exemption" was raised from $18,500 to $35,000 per individual. Since the exempted amount is per individual, $70,000 is protected for a married couple. For homeowners aged 65 or older who previously owned the home with their deceased spouse, $60,000 is exempted.

Full Session Law This bill made technical and clarifying changes to anti-predatory lending laws for high-cost and rate-spread mortgages. The law became effective October 1, 2009. High-Cost Loans For high-cost loans, the bill clarified the definition of points and fees to include costs paid by the borrower "at or before closing". Rate-Spread Loans After the updates made through this bill, a rate-spread home loan is a loan that meets all of the following criteria: The annual percentage rate (APR) exceeds the "average prime offer rate" at the time the rate was set by at least 1.5% for first-lien...

CRL's views on the proposed Consumer Financial Protection Agency. CRL President Michael Calhoun testifed before the House Financial Services Committee on September 30, 2009, stressing the importance of an independent agency that also preserves the ability of states to take action to protect consumers.

By Debbie Gruenstein Bocian and Keith S. Ernst A working paper recently released by the Columbia Business School, "Liar's Loan? Effects of Origination Channel and Information Falsification on Mortgage Delinquency" [1] reported three main findings: (1) mortgages originated through brokers are more likely to become delinquent than similar mortgages made through retail channels; (2) mortgages with low levels of income documentation are more likely to become delinquent than those with standard levels; and (3) African-American and Latino borrowers were more likely than non-Latino, white borrowers...

An essential component of the Obama Administration's proposal for improving oversight of our financial system would correct the current lack of adequate consumer protection standards that has plagued our financial system, and imperiled our economy. A new Consumer Financial Products Agency ("CFPA") would implement sensible protections and make sure that companies follow them. In addition to mortgages, the CFPA would protect consumers from out-of-bounds practices by mortgage lenders, credit cards, overdraft programs, and other credit and banking services. It will ensure that banking is safe for...

An essential component of the Obama Administration's proposal for improving oversight of our financial system would correct the current lack of adequate consumer protection standards that has plagued our financial system, and imperiled our economy. A new Consumer Financial Products Agency ("CFPA") would implement sensible protections and make sure that companies follow them. In addition to mortgages, the CFPA would protect consumers from out-of-bounds practices by mortgage lenders, credit cards, overdraft programs, and other credit and banking services. It will ensure that banking is safe for...

Full Session Law This legislation makes it unlawful for a local government to discriminate against affordable housing in its land use or permitting decisions, whether through action or inaction. Either the intent or effect of discriminating against housing developments with units for those with less than 80% of the area median income is a violation of the law. However, it is not a violation if the decision was based on considerations related to limiting high concentrations of affordable housing. This act became effective on August 28, 2009.

This latest report by the West Virginia Center on Budget and Policy found that in 2007 nearly $13 million were lost by working West Virginians through refund anticipation loans. Out of the nearly 77,000 West Virginians that used a RAL in 2007, nearly 60 percent of them were recipients of the Earned Income Tax Credit, a federal program designed to help low-to-moderate income working families with their tax burden. Despite the state's strong laws protecting consumers from other forms of predatory lending, the report also found that nearly 5 percent of the federal EITC funds coming into the state...

Solutions exist. Here's a quick reference to CRL's top four policies for stopping the foreclosure epidemic: 1. Establish an independent agency dedicated to protecting consumers against bad lending practices 2. Make voluntary foreclosure prevention programs more effective and reach all those who qualify 3. Allow qualified homeowners to restructure mortgages under court supervision 4. Prevent predatory and reckless lending in the future 1. Establish an independent agency dedicated to protecting consumers against bad lending practices. In brief: Today’s foreclosure crisis shows the need for an...

A geographically broad and bipartisan letter sent August 17 letter to key committee chairs in the U.S. House and U.S.Senate, signals strong state support for the proposed Consumer Finance Protection Agency (CFPA). Representing states and regions throughout the nation, 24 state attorneys general said in part, "We believe an independent federal agency combined with joint enforcement by state officials is the best option for meaningful consumer protection in this area."

Myth: The CFPA would duplicate the work of existing agencies, and increase regulatory burden on businesses. Reality: The new Agency would consolidate the consumer protection rule-making and enforcement that is currently scattered across several agencies. The functions would not be duplicated; rather, they would be stream-lined into a single agency, thereby reducing regulatory burden and expense. Myth: Giving the CFPA supervisory authority over consumer protection matters will create duplication and confusion. With the "safety and soundness" regulators examining institutions for "prudential"...

Myth: The CFPA would duplicate the work of existing agencies, and increase regulatory burden on businesses. Reality: The new Agency would consolidate the consumer protection rule-making and enforcement that is currently scattered across several agencies. The functions would not be duplicated; rather, they would be stream-lined into a single agency, thereby reducing regulatory burden and expense. Myth: Giving the CFPA supervisory authority over consumer protection matters will create duplication and confusion. With the "safety and soundness" regulators examining institutions for "prudential"...

HB 1523, with the strong support of the NC Commissioner of Banks, rewrote the current NC Mortgage Lending Act (MLA) to conform to standards required under new Federal legislation. Though the bulk of the Act stays the same, some new protections were added, including: Increases the bond required for mortgage brokers from $50,000 for all brokers to a sliding scale of $75,000 to $250,000, depending on the broker's lending activity, and Explicitly states that the broker owes a duty of loyalty to the borrower and cannot make loans that are in the broker's best interest rather than the borrower's...

Definitions and Notes Video of Sonia Press Release In a hearing on " Current Trends in Foreclosure and What More Can Be Done to Prevent Them," CRL urged Congress to take several actions to address the flood of foreclosures and fix the broken mortgage market: Create the Consumer Financial Protection Agency; pass or encourage sensible lending rules in the future; ensure that current prevention efforts are as effective as possible; and lift the ban that now prohibits home loan modifications through the courts. Resources for Consumers Definitions and Notes (Back to Top) - This chart focuses...

Testimony of Keith S. Ernst, Center for Responsible Lending Before the Joint Economic Committee of the U.S. Congress In testimony before the Joint Economic Committee, Director of Research Keith Ernst testified that foreclosures continue to soar and the mortgage market continues to suffer. He also presented testimony showing that risky loans, not risky borrowers, lie at the heart of the mortgage meltdown. He recommended several key actions to mitigate the continued flood of foreclosures and avert similar crises in the future: Create a Consumer Financial Protection Agency as outlined in H.R...

Indiana prohibits car title loans to its residents with an annual interest rate above 36%. In 2006, the car title lending industry lost a fight in the Indiana legislature to have that interest cap removed. But now the industry's lawyers believe they have found a loophole in the restriction by drawing Indiana residents across the border into car title lender's Illinois offices to complete the loan paperwork. These loans violate Indiana law by charging more than a 300% interest rate. But while the lenders advertise to Indiana residents through Indiana media outlets, have the Indiana Bureau of...