Policy & Legislation

During their evening news, Portland’s KBOO interviewed CRL Senior Policy Counsel Melissa Stegman on forced arbitration clauses. The Consumer Financial Protection Bureau recently issued a rule that prohibits financial contracts from forcing consumers into arbitration and blocking consumers from pursuing a class action suit against the company. Powerful Members of Congress are fast-tracking legislation to repeal the rule – which would let financial companies steal and deny Americans their day in court. Listen to the interview now.

On March 26, the Consumer Financial Protection Bureau offered a first look at proposals under consideration to curb the payday loan debt trap. The consumer agency released information outlining their deliberations at a field hearing in Richmond, VA – at which the agency also heard from a panel of consumer and civil rights advocates, as well as payday industry representatives. This is an important moment in the history of consumer protections and financial reforms. Payday lending has resulted in debt traps for consumers across the country. Marketed as quick and easy ways to ride borrowers until...

The proposed rule takes the right general approach by establishing an ability-to-repay principle – including consideration of income and expenses – at its core. This is extremely significant; while a long-standing tenet of responsible lending, it is one ignored by these abusive industries driven by unaffordable loans. It is a particularly important standard for high-cost loans where lenders have the right to seize a borrower’s bank account or car. At the same time, the proposal as drafted contains significant loopholes that abusive lenders can exploit to continue to prey on vulnerable people.

Debt buyers purchase old debts from creditors for pennies on the dollar and then hire debt collectors or attorneys to force consumers to pay up, often by suing them in court. Recent enforcement actions by state and federal regulators show widespread abuse and improper lawsuits brought to try to collect the old debt. Abuses include things like robo-signing affidavits in support of collection lawsuits and illegally suing residents for time-barred debt.

CRL responded to the House Financial Services Committee report on the CFPB and Indirect Auto Lending. We address this response in a letter to House Financial Services Chairman Hensarling and Ranking Member Waters dated and sent on 12/9/15. In the HFSC Report, several assertions are made about indirect auto lending, including arguments opposing CFPB data methodology and an argument that disparate impact is not cognizable under the Equal Credit Opportunity Act (ECOA). In our response we address the claims made by the HFSC report.

The 2014 mortgage data submitted by lenders under the Home Mortgage Disclosure Act (HMDA) reflects a slowly recovering mortgage market, but one that troublingly continues to under-serve important market segments. The implementation of federal mortgage underwriting standards (known as Ability-to-Repay or "ATR" and the Qualified Mortgage rule or "QM") in early 2014 did not cause a departure from mortgage lending trends in recent years. However, access to credit remains tight; people of color and low and moderate-income families continue to receive a far lower share of home purchase loans than...

This brief analyzes the payday and car title loan market in Ohio, where millions of dollars are drained out of low-income Ohioans' pockets and communities in the form of predatory loan fees. Key findings include: There are 836 storefronts in Ohio that make payday or car title loans, the majority of which (59%) offer both forms of high-cost loans. Payday and car title loans drain more than $502 million in predatory loan fees from Ohioans annually, twice as much as what payday loans drained in 2005. Larger, longer-term payday and car title loans with triple-digit interest rates further expose...

For the vast majority of car loan borrowers, car dealer interest rate mark ups make their loans unnecessarily more expensive than if a flat fee compensation system were in place. This is the finding of a review of recent industry data by the Center for Responsible Lending. In a recent study, Charles River Associates suggested that if the CFPB required lenders to pay dealers through a flat rate compensation system, the cost to borrowers would outweigh the benefits of eliminating discriminatory impact. However, a closer review of the data and the assumptions that Charles River Associates used to...

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...

What the CFPB Really Means for Washington and Americans Myth: The proposed agency would duplicate the work of existing agencies and increase regulatory burden on businesses. FACT: The CFPB would consolidate and streamline existing functions to reduce regulatory burden. The new Agency would consolidate consumer protection rulemaking and enforcement that is now scattered across several agencies, creating unnecessary conflicts and duplication of effort. Since entities in the current system would be streamlined into a single agency, the bureau would actually reduce regulatory burden and expense...