Every year, more than 12 million Americans spend $17 billion on payday loans, despite the fact research has shown these costly lines of credit often leave borrowers worse off. Yet abusive lending practices are not relegated to borrowers in need of a couple hundred dollars to stay afloat until their next paycheck; there are mortgages, car loans, and other traditional lines of credit that can leave the borrower in a bind. Even if you never find yourself on the wrong end of a predatory loan, these products can still be a drain on your entire community. [More]
Today, the Consumer Financial Protection Bureau released the first details of long-awaited regulations governing payday loans and other small-dollar lines of credit known to thrust consumers into a devastating cycle of debt. While consumer advocates were quick to applaud the Bureau’s work, and those in the financial industry to voice displeasure with aspects of the potential rules, both groups agreed that the coming months will involve more time and effort to craft meaningful protections for both sides of the issue. [More]
Most regular readers of Consumerist know that we’re not exactly fans of payday loans, which charge upwards of 25 times the interest of a high-interest credit card and hundreds of times the interest on a standard loan. And yet, there are people — well-educated people at that — who stick with the argument that payday loans are a good thing. [More]
Hey, rest of the country that isn’t California! This is how you do it: California legislators went ahead and approved a sweeping bill on Monday that is basically a homeowner bill of rights, including ending abusive practices by mortgage lenders while at the same time helping homeowners evade the abyss of foreclosure. California ain’t kidding around. [More]
We see enough horror stories about private student loans that we know there must be quite a few of them out there. If you’d like to contribute to the public good by sharing your experience, the Consumer Financial Protection Bureau would like to hear what you have to say. And if you actually had a good experience the CFPB would like to hear about that, too. [More]
Lending money to a significant other, close friend or family member is an excellent way to hang a black cloud over your relationship, but sometimes it’s the only financial maneuver that makes sense. Be smart by treating the transaction just as formally as you would one with a financial institution. [More]
Where do you go when you have a legitimate business that can’t get credit from a bank? The mafia, says the Bank of Italy. [More]
Before the recession hit, roughly 15% of Americans had FICO credit scores below 600. But after the past couple of years of late payments, defaults, and foreclosures, that number has grown to 25%, or about 43 million people. At the same time, the number of people with excellent scores (800 to 850) has increased nearly 5% from pre-recession average, which the Associated Press says is partly a result of people cutting spending and working to pay off loans more quickly. [More]
Arizona is about to say goodbye to predatory payday lenders who issue loans with annual interests exceeding 460%. On Thursday a decade-old law will expire, capping interest rates at 36%. The predatory lenders begged to keep the law in force, but voters and the legislature just sat back and gave the industry a big, slow, deserved punch right in the face. [More]
President Obama signed the last piece of the health care legislation today — but it wasn’t actually health care legislation — it was, instead, an overhaul of the federal student lending operation. All students getting federal student aid will now borrow directly from the federal government instead of sometimes having to go through a subsidized private lender. [More]
Credit unions might be attractive alternatives to big commercial banks, but they’re not crisis-proof. OregonLive says about a fifth of the nation’s credit unions are having financial troubles right now. To get in better financial health, they’re introducing fees for services that have long been free, and even asking members to move their deposits to other institutions. [More]
If your home mortgage was serviced by the defunct Ameriquest or its affiliates, you could stand to receive payouts starting at $1,000. Just enter your loan number on the settlement website and it will tell you if you’re eligible. The $325 million settlement came after a multi-state investigation which found shady lending practices that failing to disclose that loans had adjustable rates, failing to disclose the terms of the loan, refinancing homeowners into inappropriate loans, inflating home appraisals, and charging excessive fees. [ameriquestmdlsettlement.com] [More]
The person-to-person loan website Prosper.com has been talked about in mostly positive ways since it launched a few years ago. Mark Gimein at Slate’s The Big Money says it’s a lot less awesome than you’ve been led to believe. In fact, he says it’s just a microcosm of what happened in the real financial world: “Loans to unqualified borrowers; reliance on mathematical models that turn out to be a lot less useful than they seemed; failed hopes that high interest rates could make subprime loans profitable; sky high default rates [of 39%]—Prosper has it all.” [More]
According to the Wall Street Journal, Senator Chris Dodd, a Democrat from Connecticut, has offered to abandon the Consumer Financial Protection Agency (CFPA) proposal in exchange for Republican support on other legislation. Nobody is saying anything official right now, but the WSJ reports that “the offer is conditional on the creation of a stronger consumer protection division within another federal agency.” [More]
The downside to responsible lending is that the lenders will need more information about you, says the WSJ. [More]
One of the big selling points about the Nook, the new ebook reader introduced this week by Barnes & Noble, is that unlike Amazon they’ll let you virtually “loan” your ebook to a friend for up to 14 days (if the publisher allows it). What they don’t tell you–some smart readers over at MobileRead sussed it out–is that you can only do this one time per book. You’d better lend wisely–and your friend had better finish that book within 14 days.
Earlier this week, a group of 70 law professors from universities across the country released a 16-page Statement of Support (pdf) detailing why they’re in favor of the proposed Consumer Financial Protection Act. You can read the statement yourself via the link above, but we’ve summarized them below.
For the third time in the last five months a new record for foreclosure filings has been reached says foreclosure tracking firm RealtyTrac. July saw an increase of 7% from June of this year and, even more telling, a 35% increase from last year.