Today, Portland played host to a group of speakers from the Consumer Financial Protection Bureau (CFPB), consumer rights advocates, debt collection industry professionals and more for a panel discussion of the CFPB’s new measures which aim to help inform people who are in debt of their rights when dealing with harassing calls from debt collection agencies. For so many Americans who have found themselves in debt, these third party debt collection agencies become a constant, unrelenting torment. The CFPB announced today that they now provide 5 “action letters” on their site that allow people to file complaints with and about these harassing phone calls from debt collectors and recover a degree of control over their loans and payments. As it stands, these debt collectors will often lie to people about the nature of their debt (the amount, the payment’s possible effect on credit score, etc.) with little or no actual recourse.
These action letters are intended to not only inform people of their rights when it comes to their debt, but also to inform consumer protection and oversight groups about underhanded, illegal and predatory actions taken by debt collection agencies. This action taken by the CFPB is an important step in protecting the rights of consumers, however it doesn't really get at the root of the problem. Often times, the problem is not simply with the coercive tactics used by debt collectors, but with the debt itself.
For instance, the practice of banks “redlining,” or refusing loans, in predominantly minority neighborhoods, allowed for predatory lenders to come in and provide loans with outrageously high interest rates which were likely to result in defaults and foreclosures. Click here for more information on these predatory loans, and a deeper explanation for why the subprime mortgage industry and the 2008 financial collapse disproportionately affected minority communities. The ACLU has done some work in the area of predatory loans aimed at people of color. See Adkins et al. vs. Morgan Stanley, an ongoing lawsuit which the ACLU brought on behalf of African American residents of Detroit, MI who have been harmed by Morgan Stanley’s practice of purchasing and financing predatory home mortgage loans to be included in mortgage-backed securities. The goal of this lawsuit is to hold Morgan Stanley accountable for its collaboration with the subprime lender New Century, which supplied Morgan Stanley with a steady stream of irresponsible, high-risk loans issued in communities of color that were particularly vulnerable to economic ruin.
Five years after the so-called “Great Recession” came crashing down on us, Wall Street is again making records. Yet average people are still shouldered with tons of bad debt, garnished wages, liens and harassing calls from debt collectors. It is important that these people are given avenues to deal with their debt, and these new action letters provided by the CFPB are certainly a good way of allowing people to talk to the debt holders on their own terms. Additionally it will help to prevent, to a certain degree, these types of predatory lending practices in the future.
However, when someone working two or three jobs already doesn’t make enough to put food on the table, much less pay off a loan with a 10% APR, it makes one wonder what amount of good can these types of policies really do for them?
July 10, 2013 - 4:24pm
