CRL in the News
The U.S. Senate Committee on Banking, Housing and Urban Affairs convened a hearing to assess the effects of Consumer Finance Regulation. Mike Calhoun, President of the Center for Responsible Lending (CRL) offered comments for the committee’s record and issued the following statement.
Although the former Corinthian Colleges, once one of the nation’s largest for-profit colleges, closed its doors last year, many of the problems incurred by its former students persist. The now-defunct college is the only questionable actor among for-profit colleges.
"While federal law already prohibits a wide range of unscrupulous debt-collection practices, some states have gone further, enacting laws and regulations to limit collectors' ability to pursue repayment. The collections industry claims these restrictions hinder consumers’ access to credit, a new report says that just isn’t the case."
The Consumer Financial Protection Bureau is about to release sweeping new rules that take aim at the payday lending industry, a controversial attempt to rein in loans that offer lifelines to lower-income borrowers but come with staggeringly high fees.
If payment assurance devices really reduced risk for subprime lenders, we should expect to see lower interest rates on those loans, counters Lisa Stifler, an attorney with the Center for Responsible Lending. "The reality is that subprime dealers continue to make loans at interest rates that are at the state maximum," she says. "They're accounting for risk with the interest rates and putting on these devices."
Analyses by Pew, the Center for Responsible Lending, and the CFPB document the risk consumers face falling into "debt traps," finding that large shares of payday loans come from repeat borrowers, who can end up paying more in fees and interest than the original loan value.
"Our analysis shows that the law has done nothing to stop the debt trap," said Brandon Coleman, co-author of the report and counsel for the Center for Responsible Lending. "With 83% of payday loans going to people stuck in 7 or more loans per year, it's easy to see how Florida's law is failing consumers."
One can never truly know the heart of another person.
But I can’t help but wonder whether Rod Aycox, owner of a national chain of car title loan stores, saw the tragic shooting of nine men and women at Emanuel African Methodist Episcopal Church last June as an opportunity to buy off his most effective critics.
How else can one explain the announcement, in the wake of the murders, that he was donating $1 million to organizations that promote and protect civil rights — after years of making a fortune ripping off low-income people of color?
“I am hopeful that many of the unfair practices that we saw in the marketplace, particularly during the recent foreclosure crisis, are no longer present,” Nikitra Bailey, executive vice president with the Center for Responsible Lending, tells NerdWallet. The passage of Dodd-Frank regulations sought to stem mortgage lending abuses such as balloon payments, teaser interest rates and high fees — called “fee packing.”
"As communities of color continue to suffer from financial stress, a new research report provides insights as to how the racial wealth divide is in large part created by policy trends that favor the well-to-do at the expense of the majority of the nation..."