Research & Policy

Committe: House Subcommittee on Rural Enterprise, Agriculture and Technology, Kansas City, MO

While the payday lending industry frequently describes its typical customer in detail, discussion of race is noticeably absent. This report corrects that omission. Our analysis of North Carolina neighborhoods reveals a powerful relationship between the proportion of African-Americans in a neighborhood and the prevalence of payday lending stores. African-American neighborhoods have historically been disadvantaged by unfair lending practices. This study...

Payday Lenders Set Up Shop in African-American Neighborhoods Neighborhoods with many African-American families house more than their share of predatory payday loan shops. View maps that show where payday shops are located relative to minorities in your part of the state. While the payday lending industry frequently describes its typical customer in detail, discussion of race is noticeably absent. This...

On March 1, 2005, the FDIC announced revisions to its guidelines to banks engaged in payday lending. The guidelines seek to "ensure that this high-cost, short-term credit product is not provided repeatedly to customers with longer-term credit needs." Thus, the FDIC has taken the important step of recognizing that payday lending can lead to a debt-trap. The guidelines call on...

While we are heartened that the OCC has recognized many of the issues raised by state anti-predatory lending efforts in recent years, the OCC's guidance for national banks is no substitute for meaningful and effective legislative efforts at the state and federal level. Further, we are disappointed that the OCC does not identify some practices as clearly predatory and take...

Prepayment Penalties Impact Minority Neighborhoods Click here to visit our tutorial, which walks you through a Truth in Lending disclosure form, and educate yourself. For years, subprime lenders have defended prepayment penalties by claiming that borrowers with penalties get a lower interest rate. Now, groundbreaking research by CRL shows that borrowers get no rate benefits with subprime prepayment penalties --...

Prepayment Penalties Impact Minority Neighborhoods Click here to visit our tutorial, which walks you through a Truth in Lending disclosure form, and educate yourself. For years, subprime lenders have defended prepayment penalties by claiming that borrowers with penalties get a lower interest rate. Now, groundbreaking research by CRL shows that borrowers get no rate benefits with subprime prepayment penalties --...

PAYDAY LENDERS OFFER DEFECTIVE PRODUCT, CLAIMING IT FILLS NEED FOR ACCESS TO CREDIT Predatory payday loans: trap borrowers in high-cost debt drain income and damage credit could be offered on HBCU campuses under new agreements Defenders of the payday lending industry use the term "access to credit" to make the argument that payday loans provide communities of color with financial...

In August, 2004, a group of people representing free tax preparation programs, national organizations and consumer advocacy groups met in Baltimore to discuss Refund Anticipation Loans (RALs). The meeting was hosted by the Annie E. Casey Foundation, a major funder of Earned Income Tax Credit (EITC) outreach and free tax preparation for low-income working families. While the group represented a...

Refund Anticipation Loans, or RALs, are an extremely popular means for taxpayers to access their refunds more quickly than waiting for a paper check or even direct deposit. The negative effects of these loans—including their cost and lack of consumer protections—are well documented. Many consumer advocates and community development professionals are rightfully concerned about the popularity of these products, but...

This brochure was developed and published by the South Carolina Appleseed Legal Justice Center. What is an Auto Title Loan? An Auto Title Loan is a short-term loan, usually no longer than 30 days. Your car title is used to secure the loan. This means if the loan is not repaid, the lender may take the car and sell it...

Prepared Testimony of Michael D. Calhoun, General Counsel, Center for Responsible Lending before Subcommittee on Financial Institutions and Consumer Credit Subcommittee on Housing and Community Opportunity Joint Hearing.

EACH YEAR, PREPAYMENT PENALTIES IN SUBPRIME LOANS CAUSE 850,000 FAMILIES TO LOSE $2.3 BILLION IN HOME EQUITY WEALTH. The Penalty for Improved Credit Consider this typical scenario: An African-American family gets a subprime mortgage loan for $150,000 with a 12% interest rate. After making timely payments for three years, they realize they can qualify for a better loan. However, when...

Overdraft loan programs (also called "bounced-check protection" or "courtesy overdraft protection") allow customers to incur debt when their checking account goes into a negative balance. Borrowers are charged a flat-fee per check or non-check overdraft and must bring their account to a positive balance within a short time period. The institutions that operate the programs do not disclose an annual...

Testimony of Martin Eakes, Chief Executive Officer of the Center for Responsible Lending before the Senate Committee on Banking, Housing and Urban Affairs hearing On the Office of the Comptroller of the Currency's Rules on National Bank Preemption and Visitorial Powers

Wall Street analysts praise Wells Fargo's revenue and sales growth, diversification, distribution/marketing prowess, and standout risk management. Despite Wells Fargo's success, there appear to be serious trouble spots in its subprime mortgage lending, particularly the predatory practices of Wells Fargo Financial (WFF) that victimize low-wealth consumers. While these practices have been criticized by community groups since the mid-1990s, they apparently...

Prepared Testimony of Eric Stein, Senior Vice President, Center for Responsible Lending before Subcommittee on Financial Institutions and Consumer Credit and Subcommittee on Housing and Community Opportunity Joint Hearing.

Prepared Testimony of George Brown, Senior Vice President, Self-Help and Spokesperson, Coalition for Responsible Lending before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit and the Subcommittee on Housing and Community Opportunity.

This report argues that North Carolina payday lenders make their profit on two key principles: 1) circumvent the North Carolina law by using federal law, and 2) utilize a business model that depends on borrowers paying more in fees than borrowing in principal.

Testimony of Martin Eakes,Self-Help CEO and Coalition for Responsible Lending Spokesperson Before the Senate Committee on Banking, Housing and Urban Affairs.

In 2001, the Coalition for Responsible Lending estimated that several common predatory mortgage practices cost U.S. borrowers $9.1 billion each year. For the most part, these practices were entirely legal under the law at that time. The report concludes that the solution is reforms to state and federal lending laws.

Summary of the North Carolina Mortgage Broker Licensing Law (pdf) Full Text of Mortgage Broker Licensing Law (pdf) Session Law FAQs about the NC Broker Law In August 2001, NC Governor Mike Easley signed into law the NC Mortgage Lending Act, Senate Bill 904. This law passed both houses with strong support and was endorsed by all major financial trade...

With huge profits at stake, the payday lending industry is fighting reform efforts by positioning itself as "consumer friendly," misrepresenting the facts, and circumventing state laws. Claim 1: Payday loans provide needed emergency credit. Claim 2: Payday lenders serve the working middle class. Claim 3: Customers understand the cost of this service. Claim 4: Payday loans are cheaper than other...