In its role to check on financial institutions, the Consumer Financial Protection Bureau found that some violated federal law in the first half of 2021.
“Today’s report reveals that irresponsible or mismanaged firms harmed Americans during the COVID-19 pandemic," said CFPB Director Rohit Chopra. "We will continue to supervise firms to halt harmful practices before they become widespread."
The report, “Supervisory Highlights,” includes auto loans, consumer reporting, debt collection, deposits, fair lending, mortgages, private student loans, payday lending, and student loan servicing.
Findings include:
Mortgage servicers charged improper fees to borrowers enrolled in CARES Act forbearance. Forbearance is the temporary postponement or reduction of mortgage payments.
Examiners found fair lending violations. Mortgage lenders discriminated against African American and female borrowers in the granting of pricing exceptions, compared to non-Hispanic white and male borrowers. Pricing exceptions are when an originator, branch manager, or other executive is allowed a degree of “discretion” in the pricing to get a loan. Examiners also found for religious institutions applying for small business loans, some lenders improperly used a questionnaire that contained inquiries about an applicant’s religion.
Payday lenders improperly debited consumer bank accounts. When these mistakes were made, consumers didn’t have access to their funds or had the risk of nonsufficient fund fees or overdraft fees levied by their banks.
Remittance providers failed to investigate notice of errors in timely fashion. Remittances are funds sent to people in other countries,
The CFPB checks on large banks, thrifts, credit unions with assets over $10 billion, and some nonbanks, including mortgage companies, private student lenders, payday lenders, and others.
Payday lenders are the worst, the interest that they charge is so high that several states have banned them. 100% or more is the norm. I hate it when customers are faced with that decision.
Yes, the regulations should be tightened on payday lenders. They get low-income consumers in a circle of debt. They have to borrow more to pay off last week’s debts.
And, they all probably think they are being patriotic which is as far from the truth as it can get. Their loyalty is to greed. It’s sad.
Yes, greed is a big part of the payday loan business. Tougher regulation is needed at the state and federal level.
At one time Oregon dealt w/payday lenders by limiting the rate of interest they could charge–some of them closed shop/left the state. Agree that payday lenders prey on desperate people and often make their finanicial situation worse. Too bad there seems to be no other way for some people w/poor credit to get reasonable interest rate loans and that so many banks charge so many fees unless you have a fairly large balance.
FTP: “credit unions with assets over $10 billion,” so the CFPB doesn’t check on credit union practices if they have fewer/lower assets? Why is that? Aren’t they just as likely to make those kinds of “mistakes”?
The payday loan industry is very powerful. They lobby to keep effective national regulations from being passed in Congress. And they lobby heavily at the state level.
Federally chartered credit unions are regulated by the National Credit Union Administration, while state-chartered credit unions are regulated at the state level. The $10 billion threshold comes from Dodd-Frank with it’s concern about “too big to fail” regulations.