Tag Archives: consumer

VIDEO: Retrenchment and Rollback in Consumer Protection and Housing

Posted on by
Reply

The video for the ABA Professor’s Corner webinar on Retrenchment and Rollback: Federal Consumer Protection and Housing has been posted. Rosa Newman (Elon) moderated and I spoke alongside Kathleen Engel (Suffolk) and Julie Patterson Forrester Rogers (SMU). The session explored “the federal government’s retrenchment on consumer and civil rights protections during the Trump Administration and the consequences for housing. The panel will connect shifts in federal consumer protection frameworks to the on-the-ground impacts for affordable housing development, tenant stability, and fair housing enforcement.”

Defend the Consumer Financial Protection Bureau

Posted on by

Lionel Barrymore as Mr. Potter in Capra's Its a Wonderful Life

I signed on to this important letter, along with hundreds of others:

349 Consumer, Civil Rights, Labor, Legal Services and Community Organizations

April 29, 2025

U.S. House of Representatives

Washington, DC

Re: Support the Consumer Financial Protection Bureau

Dear Representative,

The 349 undersigned consumer, civil rights, labor, legal services and community organizations and academics write to urge you to demand action to restore a strong and independent Consumer Financial Protection Bureau (CFPB). We further urge you to oppose changes to the CFPB’s funding, structure or other changes that would weaken its ability to stand up for consumers, competition and a fair financial marketplace.

The CFPB, created after the devastating 2008 financial crisis, has worked to protect consumers and responsible industry players alike. The CFPB has obtained over $21 billion in relief for over 200 million people, including $363 million for servicemembers and veterans, and its consumer protection mission continues to be overwhelmingly supported on a bipartisan basis. The CFPB has worked to support a healthy, sustainable housing market, improve credit reports, crack down on junk fees, reduce the burdens of medical and student debt, fight lending discrimination, and promote safe banking practices and banking competition. Now more than ever, we need a strong CFPB that will continue to keep our personal financial data safe, protect our privacy, and fight fraud.

Congress created the CFPB, and Congress must support ordinary people and fair competition by standing up for a strong and independent CFPB.

Yours very truly,

The full list of signatories can be found at the link here.

Protecting the CFPB’s Overdraft Fee Rule

Posted on by

Punch Cartoon

I am a signatory to a letter being sent to the House’s Committee on Financial Services, in opposition to H.J. Res. 59 (Hill), CRA Resolution to Overturn CFPB Rule on Overdraft Lending: Very Large Financial Institutions. The letter states,

The undersigned 278 consumer, civil rights, labor, legal services and community organizations and academics write to urge you to oppose H.J. Res. 59 (Hill) and any other effort to overturn the Consumer Financial Protection Bureau’s overdraft fee rule, which will reduce most overdraft fees from $35 to $5, stop manipulative practices by big banks, improve transparency, and put $5 billion back into the pockets of everyday people and their families. The public widely views current overdraft fee practices as unfair.

The overdraft fee rule closes a paper-check era loophole that has allowed big banks to trick people into paying excessive overdraft fees and earn billions in profits off of the most vulnerable families. The rule lowers most so-called “courtesy” overdraft fees from $35 to $5, saving households that pay overdraft fees an average of $225 a year. The rule gives big banks a variety of options to cover overdrafts, including safer, more transparent overdraft lines of credit with no price limit and the same disclosure requirements as credit cards. The rule only applies to very large institutions with over $10 billion in assets, many of which have already adopted similar protections. Smaller banks and credit unions are completely exempt.

We urge you to stand with everyday people over big banks. Banks should not profit off the struggles of working families through excessive, back-end overdraft junk fees. Please oppose H.J. Res. 59.

 

Understanding Private Mortgage Insurance (PMI)

Posted on by

photo by David Hilowitz

LendingTree quoted me in Guide to Understanding Private Mortgage Insurance (That’s PMI). It opens,

Part I: Basics of private mortgage insurance (PMI)

What is PMI?

If you’ve ever purchased a home without a large down payment, you may have faced the possibility of paying PMI, or private mortgage insurance. This financial product is a type of loan insurance typically bought by consumers when they purchase a house. However, the premiums paid toward PMI aren’t intended to protect the consumer. Rather, they provide protection for the lender, in case you stop making payments on your home loan.

As the Consumer Financial Protection Bureau (CFPB) notes, PMI is typically arranged by your lender during the home loan process and comes into play when you have a conventional loan and put down less than 20 percent of the property’s purchase price. However, private mortgage insurance is not just associated with home purchases; it can also be required when a consumer refinances his or her home and has less than 20 percent equity in it.

Generally speaking, PMI can be paid in three different ways — as a monthly premium, a one-time upfront premium or a mix of monthly premiums with an upfront fee.

There are also ways to avoid paying PMI altogether, which we’ll address later in this guide.

PMI versus MIP: What’s the difference?

While PMI is private mortgage insurance consumers buy to insure their conventional home loans, the similarly named MIP –  that’s mortgage insurance premium — is mortgage insurance you buy when you take out an FHA home loan.

MIP works kind of like PMI, in that it’s required for FHA (Federal Housing Administration) loans with a down payment of less than 20 percent of the purchase price. With MIP, you pay both an upfront assessment at the time of closing and an annual premium that is calculated every year and paid within your monthly mortgage premiums.

Generally speaking, the upfront component of MIP is equal to 1.75 percent of the base loan amount. The annual MIP premiums, on the other hand, are based on the amount of money you owe each year.

The biggest difference between PMI and MIP is this: PMI can be canceled after a homeowner achieves at least 20 percent equity in his/her property, whereas homeowners paying MIP in conjunction with a FHA loan that originated after June 13, 2013, cannot cancel this coverage until their mortgage is paid in full. You can also get out from under MIP by refinancing your FHA loan into a new, conventional loan. However, you’ll need to leave at least 20 percent equity in your home to avoid having to pay private mortgage insurance on the refi.

Which types of home loans require PMI? MIP?

If you’re thinking of buying a home and wondering if you’ll be on the hook for PMI or MIP, it’s important to understand different scenarios in which these extra charges may apply.

Here are the two main loan situations where you’ll absolutely need to pay mortgage insurance:

  • FHA loans with less than 20 percent down – If you’re taking out a FHA loan to purchase a home, you may only be required to come up with a 3.5 percent down payment. You will, however, be required to pay both upfront and annual mortgage insurance premium (MIP).
  • Conventional loans with less than 20 percent down – If you’re taking out a conventional home loan and have less than 20 percent of the home’s purchase price to put down, you’ll need to pay PMI.

*     *     *

Part V: Frequently asked questions (FAQs)

Before you decide whether to pay PMI – or whether you should try to avoid it – it pays to learn all you can about this insurance product. Consider these frequently asked questions and their answers as you continue your path toward homeownership.

Q. Is PMI tax-deductible?

According to David Reiss, professor of law and academic program director for the Center for Urban Business Entrepreneurship at Brooklyn Law School, PMI may be tax-deductible but it all depends on your situation. “The deduction phases out at higher income levels,” he says.

According to IRS.gov, the deduction for PMI starts phasing out once your adjusted gross income exceeds $100,000 and phases out completely once it exceeds $109,000 (or $54,500 if married filing separately).

Safeguarding The CFPB’s Arbitration Rule

Posted on by

image by Nick Youngson https://nyphotographic.com/

 

I was one of the many signatories of this letter to Senators Crapo (R-ID) and Brown (D-OH) opposing H.R. Res. 111/S.J. Res. 47, “which would block the Consumer Financial Protection Bureau’s new forced arbitration rule.” the 423 signatories all agree “(1) it is important to protect financial consumers’ opportunity to participate in class proceedings; and (2) it is desirable for the CFPB to collect additional information regarding financial consumer arbitration.” The letter, reads, in part,

Class action lawsuits are an important means of protecting consumers harmed by violations of federal or state law. Class actions enable a court to see that a company’s violations are widespread and to order appropriate relief. The CFPB’s study shows that, over five years, 160 million class members were awarded $2.2 billion in relief – after deducting attorneys’ fees. Class actions are especially important for small dollar claims, because the time, expense and investigation needed for an individual claim typically make no sense either for the consumer or for an attorney. Additionally, class actions provide behavioral relief both for the plaintiffs and the public at large, incentivizing businesses to change their behavior or to refrain from similar practices.

Individual arbitrations are not a realistic substitute for class actions. Compared to the annual average of 32 million consumers receiving $440 million per year in class actions, the CFPB’s study found an average of only 16 consumers per year received relief from affirmative claims and another 23 received relief through counterclaims; in total, those consumers received an average of $180,770 per year. While the average per-person arbitration recovery may be higher than the average class action payment, the types of cases are completely different. The few arbitrations that people pursue tend to be individual disputes involving much larger dollar amounts than the smaller claims in class actions. Most consumers do not pursue individual claims in either court or arbitration for several reasons: they may not know their rights were violated; they may not know how to pursue a claim; the time and expense would outstrip any reward; or they cannot find an attorney willing to take an individual case. Thus, if a class action is not permitted, most consumers will have no chance at having their dispute vindicated at all. Class actions, on the other hand, are an efficient method of resolving claims impacting a large number of people.

The U.S. legal system depends on private enforcement of rights. Whereas some countries invest substantial resources in large government agencies to enforce their laws, the United States relies substantially on private enforcement. The CFPB’s study shows that, in those cases where there was overlap between private and public enforcement, private action preceded government enforcement 71% of the time. Moreover, consumer class actions provide monetary recoveries and reform of financial services and products to many consumers whose injuries are not the focus of public enforcers. American consumers can’t solely depend on government agencies to protect their rights.

Reporting on individual arbitrations will increase transparency, broaden understanding of arbitration, and improve the arbitration process. As scholars, we heartily endorse the information reporting requirements of the rule for individual arbitrations. This reporting will address many questions that have gone largely unanswered, due to the lack of transparency that currently exists in this area of law. For example, the public will now know the rate at which claimants prevail, whether it is important to be represented by an attorney, and whether repeat arbitrators tend to rule more favorably for one side than the other. The reporting will permit academic study, which will prompt a necessary debate on how to strengthen and improve the process.

In conclusion, we strongly support the CFPB rule as an important step in protecting consumers. We believe it is vital that Congress not deprive injured consumers of the right to group together to have their day in court or block important research into the arbitration process.