Policy & Legislation

Next to owning a home, business equity is the largest source of wealth in the United States. Small businesses are the backbone of the American economy, providing almost half of all jobs in the U.S. and creating nearly two-thirds of all new jobs. Yet barriers to credit access prevent Americans from starting businesses and building generational wealth, further widening the racial wealth gap. Congress and federal agencies are charged with enforcing fair lending laws and ensuring equitable access to capital, but don’t have the data they need to answer basic questions about small business lending...

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Two vital elements of social and economic mobility are to increase the homeownership rate by enabling more non-homeowners to become first-time homebuyers and reduce the racial disparities in homeownership rates caused in large part by deliberate discriminatory policies and practices. The Government Sponsored Enterprises (GSEs) have the ability to improve both through their affordable housing goals and lending programs. The National Fair Housing Alliance (NFHA) and Center for Responsible Lending (CRL) believe that the Federal Housing Finance Agency (FHFA) should expand the eligibility of the...

Many FHA borrowers took advantage of record-low interest rates during the COVI9-19 pandemic and refinanced their mortgage. However, as of November 2021, there were over 4 million FHA borrowers who could realize a substantial reduction in their monthly payments by refinancing but had not done so. The average borrower in this cohort would save $229 per month ($2,750 per year) by refinancing their mortgage. Low-to-moderate income (LMI), Black, and Hispanic households had slower refinancing rates compared to higher income, White, and Asian households during the pandemic-induced refinancing wave...

The exploding market of Buy Now Pay Later (BNPL) credit demands the same level of oversight that we give to credit cards. BNPL can help some borrowers spread out their payments, but entails real risks and costs, which is not clear in advertisements highlighting interest-free payments and “no impact” on credit scores. Regulation is necessary to protect consumers from hidden harms and costs to promote true financial inclusion. Online and in-store retailers now commonly offer BNPL plans, which allow consumers to make purchases in installments, typically four payments over six weeks. Lenders...

“Income-share agreements,” or ISAs, fund a portion of educational costs in exchange for a percentage of a student’s earnings over time. Many ISA providers continue to argue that their products are not loans even though they lend money and subsequently require repayment, employing an old and predatory tactic that loan providers use to evade consumer protection guardrails. In fact, ISAs are simply high-cost loans that currently lack even the protections afforded to private student loans, which themselves are a worse option than federal student loans for most borrowers. The high cost of ISAs...

Oportun is a California-based financial services provider that is rapidly expanding its reach. In some states, Oportun has announced its loans will be originated by MetaBank, indicating it is employing the “rent-a-bank” scheme, wherein lenders pay a bank with a national charter that is willing to pose as the lender so they can avoid having to comply with state consumer protections. Oportun had applied for a national charter of its own, but withdrew the application amid public scrutiny of its practices. Oportun has secured endorsements from influential Latino organizations in states where it...

Payday lenders often describe the cost of their loans in terms of fees or simple interest rates. Responsible lenders readily disclose the APR on their loans, aligned with the Truth in Lending Act (TILA). They are not afraid to let their customers compare the costs of their loans to other loans in the market. Tellingly, payday lenders often object to having to disclose the APR of their loans. Why APR Matters Payday lenders do not like disclosing APR for two reasons. One, it allows a true comparison of the cost with other forms of credit, even those that are short-term like a credit card advance...

The “90/10 Rule” is meant to ensure that for-profit schools are, in fact, competitive in the marketplace and are not relying only on taxpayers to survive. In other words, the rule is based on the principle that a viable educational program should be funded in part by students or employers who are willing to pay cash to invest in career training for themselves or their employees, respectively. Although a small percentage of proprietary schools have failed the 90/10 test in recent years, between 11 and 20 percent of schools derive over 85 percent of their revenues from Title IV sources. Because...

In a precedent-setting ruling, the California Court of Appeals at the end of 2021 handed down a decision affirming a broad preliminary injunction against a bail bond company called Bad Boys Bail Bonds. The court prohibited the company from collecting on $38 million in debt from cosigners who borrowed money to gain pre-trial release for their loved ones. The order, which stemmed from a historic class action lawsuit filed in 2019 by the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area and Keker, Van Nest and Peters LLP on behalf of cosigners, says bail companies must follow...