On Nov. 12, Richard Cordray, director of the Consumer Financial Protection Bureau delivered his mandatory semi-annual report to Congress. For consumers, the good news is that over $750 million has been returned to consumers who were victims to various violations of consumer protection laws. Additionally, CFPB assessed more than $40 million in related penalties.
His presentation connected how plain language rules, web-based services and timely actions on consumer complaints together provide benefits to everyone from consumers to industry and regulators.
“Every day we work to accomplish the goals of renewing consumers’ trust in the marketplace and ensuring that markets for consumer financial products and services are fair, transparent, and competitive”, Cordray told the U.S. Senate Banking, Housing and Urban Affairs Committee. “These goals not only support consumers as they climb the economic ladder of opportunity, but also help responsible businesses compete on an evenhanded basis, reinforcing the stability of our economy as a whole.”
Cordray also spoke to what is perhaps the Bureau’s largest long-term achievement to date: the Qualified Mortgage rule that takes effect January 2014.
The rule requires lenders to make a good faith, reasonable determination that mortgage borrowers can afford to pay their loans. Similarly, CFPB’s mortgage servicing rule will require lenders to clean up sloppy practices and ensure fair and more effective methods to assist troubled borrowers facing the loss of their homes.
In fact, mortgages alone represented half of the more than 230,000 consumer complaints were received by CFPB for the reporting period spanning July 1, 2012 through June 30, 2013.
Although CFPB investigates a range of lending areas including credit reporting, debt collection, money transfers, vehicle and other consumer loans, only three lending areas account for 80 percent of all complaints filed: mortgages, credit cards and bank accounts/services.
Loan modifications, collections and foreclosures represented 64 percent of CFPB’s 61,500 mortgage complaints. Over 22 percent of other mortgage complaints concerned loan servicing, payments and escrow accounts.
By comparison, credit card complaints spanned a wider variety of concerns with billing disputes topping the list of 17,700 complaints. Other credit card complaints named interest rates, credit reporting, identity theft, fraud or embezzlement as other related issues.
Account management and deposits or withdrawals accounted for more than two-thirds or 68 percent of complaints in the consumers’ bank accounts and service category. Consumers identified problems with confusing marketing, denials, fee disclosure and interest statements – to name a few. Availability of deposits, withdrawal problems and penalties, lost or missing funds and transaction holds were among the specific problems reported on the category of deposits and withdrawals.
Of the 3,900 student loan complaints, 96 percent were in two areas: repaying loans and problems when consumers were unable to pay. On repayment, fees, billing, alleged fraud and credit reporting all came to CFPB’s attention. Default, debt collection and bankruptcy were often cited in complaints related to an inability to repay.
Every complaint filed with CFPB affords consumers the option to review and dispute all company closure reports. Even if a complaint is closed, consumers retain the option to dispute the finding for 30 days.
Additionally, CFPB’s Office of Minority and Women Inclusion has a two-fold purpose: to promote diversity in the workplace and among its contractors. As of the third quarter of FY2013, CFPB awarded 26 percent of its procurement ($13 million) to small businesses categorized as either disadvantaged or woman-owned.
“It is clear from the report that consumers now have a responsive place to turn when financial products and services fail to meet fair and reasonable standards”, observed Gary Kalman, the Center for Responsible Lending’s executive vice president. “The main takeaway is that the Bureau has delivered for consumers. And as a result, we expect to see more fair and affordable credit options emerge -- especially for those who suffered most from the deceptive lending practices all too prevalent in communities across the country.”
Whether you are a minority business seeking contract opportunities, or a consumer seeking redress in personal finance issues, CFPB has a lot to offer. For more information on these and other consumer lending concerns, click here.
Charlene Crowell is a communications manager with the Center for Responsible Lending.