Research & Policy

The Federal Reserve Board is considering implementing a new rule that would require financial institutions to get explicit permission before enrolling their account holders in an overdraft system that automatically approves debit card and ATM transactions, and assesses an average $34 fee if there is a negative balance in the account. A Center for Responsible Lending survey conducted by market...

The Administration's Making Home Affordable Program represents a significant step forward, one that is essential and long overdue. It includes concrete and pragmatic measures to counter the perverse incentives that severed the interests of servicers from those of the borrowers and investors, and led servicers to pursue foreclosure even where the homeowner could afford a loan modification that would produce...

Overdraft lending: the problem Our nation's major banks and credit unions are making unsolicited, high-cost loans to their checking account holders when their account balance dips below zero, generating enormous fees for the banks and frequently driving their customers deeper into the negative. Financial institutions never have to reveal that customers pay triple- and quadruple-digit interest rates. They make overdraft...

We suggest a broad, simple framework that addresses the entire mortgage market and that focuses on the underlying incentives in that market. The legislation should establish a bright-line ban on dangerous loan features such as prepayment penalties and "no-doc" loans as well as on market-distorting incentives such as yieldspread premiums. All mortgage origination should be subject to rules that discourage...

And guess what! That's a GOOD thing Good news! Bank of America has announced it will stop its costly, automatic approval of debit card and ATM overdrafts. Bank of America joins Citibank in covering debit card and ATM overdrafts only if their customers have signed up for more reasonably priced coverage, by linking their savings or line of credit to...

Fremont case touted as a model for other states State shows that business as usual in subprime lending amounted to unfair and deceptive practices. CRL is encouraged by the recent success of the Massachusetts Attorney General (AG), who used longstanding consumer protection laws to stop foreclosures on unfair subprime loans. CRL believes the AG's approach could serve as an effective...

Payday loans create a cycle of debt that diminishes the income of vulnerable households Marketed as short-term relief for a cash crunch, payday loans carry annual interest rates of 400 percent and are designed to catch working people – or those with a steady source of income such as Social Security or a disability check – in a long-term debt...

Read CRL CEO Martin Eakes' statement on the Housing Plan >> Hope for Stopping the Foreclosure Epidemic On February 18, 2009, the President announced a new, comprehensive plan for addressing the housing crisis. The plan, which called for more funding than anticipated, includes a range of incentives that will encourage lenders to modify loans. The plan recognizes that stopping foreclosures...

Committee: U.S. House of Representatives Committee on Financial Services

Our nation's current economic crisis was driven by, among other things, three significant shortcomings in the mortgage system: 1) loose or nonexistent underwriting standards; 2) misplaced financial incentives that created conflicts between industry profits and borrowers' interests; and 3) lack of accountability among industry players for loan quality or performance. Given this systemic failure, the State should step in to...

Former President George W. Bush's 2008 tax rebate was designed to stimulate the economy by putting dollars back into the hands of working people. In May of 2008, the IRS sent $600 checks to households making less than $75,000 per individual and $100,000 per couple, with an additional $300 for each qualified child. President Barack Obama has also proposed a...

Recent industry projections are that over eight million families will lose their homes to foreclosure over the next four years. That's one in every six homeowners with a mortgage. If the economy enters a deep recession, the number of homes lost could exceed 10 million. With the housing sector responsible for one in eight U.S. jobs, the flood of new...

Judicial modifications would save hundreds of thousands of families from foreclosure. "We [Credit Suisse] expect the bankruptcy plan will provide about a 20% reduction in foreclosures." (p. 1) "[T]he new plan adds an important new tool in the foreclosure avoidance arsenal…" (p.4) The ability to modify mortgages in bankruptcy will also increase voluntary loan modifications. "We [Credit Suisse] expect the...

Court-supervised loan modifications would preserve home values—without using public funds—while providing fair terms to lenders. Over the next several years, 8.1 million American families will lose their homes. Because of market declines, these struggling homeowners can neither refinance nor sell. Unless their mortgages are modified to align the loan amount with the value of the home, the foreclosure crisis will...

The foreclosure crisis is even worse than expected, and projected to worsen Recent industry projections are that over 8 million families will lose their home to foreclosure over the next four years. That's 1 in every 6 homeowners with a mortgage. If the economy enters deep recession, the number of homes lost could exceed 10 million. With the housing sector...

The Helping Families Save Their Homes in Bankruptcy Act of 2009 (S 61 and HR 200) The failure to stem the foreclosure crisis will cost the taxpayers hundreds of billions of dollars in lost tax revenues and economic decline. Recent industry projections are that over 8 million families will lose their home to foreclosure over the next four years. That's...

How OTS allowed reckless and unfair lending to fleece homeowners and cripple the nation's savings and loan industry. Although the Office of Thrift Supervision was created as a result of the first savings & loan crisis, history repeated itself as the OTS ignored bad lending practices and allowed thrifts to self-destruct. OTS permitted WaMu, IndyMac and other thrifts to engage...

Committee: U.S. House of Representatives Committee on Financial Services

In 2005, Alan Greenspan, then chairman of the Federal Reserve Bank, praised subprime mortgages as a positive innovation made possible by better risk assessment, and "representative of the market responses that have driven the financial services industry throughout the history of our country." Only two years later, there was growing concern that failing subprime loans, which had shot up to...

There are more than 2,400 payday lending stores in California in 2008, more than all Starbucks and McDonald's combined. California borrowers took out more than 10 million payday loans in 2006, totaling $2.5 billion. Payday fees strip $405 million from payday borrowers annually. Payday loans are small, short-term loans secured by the borrower's personal check. The typical two-week loan is...

The California Office of the Center for Responsible Lending prepared the following documents to help California's newest legislators navigate the predatory payday lending arena. SNAPSHOT: Payday Lending in California Predatory Profiling: The Role of Race and Ethnicity in the Location of Payday Lenders in California About Us CRL's California Office Visit the Self-Help Web site to learn about Self-Help's Impact...

After years of industry-blocked efforts to strengthen lending standards, the growth in reckless lending and abusive practices has left California facing a foreclosure crisis with catastrophic consequences for families, communities, and the California economy as a whole. California needs policy reforms to stem the tide of foreclosures, and to tighten lending standards to prevent a repeat of this foreclosure crisis...