Illinois-based First Mid Bank & Trust has agreed to operational improvements, including making small business loan subsidies and establishing branches in underserved areas, in response to criticism that threatened to derail its proposed merger with Jefferson Bank and Trust. Advocacy groups, including St. Louis Equal Housing and Community Reinvestment Alliance (SLEHCRA) and Woodstock Institute, last year complained to the Federal Reserve Bank of redlining and low levels of service to Black borrowers by First Mid.  The advocates asked the Fed to block the proposed bank merger and alleged the bank was failing to comply with fair lending laws and the Community Reinvestment Act. Those groups now have entered into a Community Benefits Agreement with the bank which they say will “clear the way” for the merger  with Jefferson Bank and Trust – known to many St. Louis residents as the focus of civil-rights era protests over discrimination in hiring.

READ MORE

Missouri has some of the laxest laws in the country regarding predatory lending. As the power of the Consumer Financial Protection Bureau is continually threatened, our state refuses every year to adopt modest regulations. Cities have no choice but to take matters into their own hands to protect citizens from spiraling and crushing debt.

Our executive director joins faith leaders in weighing in on municipal reforms this week in the Springfield News Leader.

Today the Missouri House Financial Institutions Committee passed a bill that purports to regulate payday lending in several ways – some of which appear to be beneficial to consumers. However, HB 2657 currently lacks the real regulatory changes the state of Missouri needs to protect its citizens. In fact, passage of this bill leaves Missouri far behind the regulation of all of our surrounding states.

First, and foremost the bill modestly reduces interest limits from 75% to 35%. While this appears to be beneficial, this rate is still 2.3 times higher than the rate cap of all surrounding states. Kansas, Iowa, Tennessee, Kentucky, Nebraska, Illinois, and Oklahoma all cap their rates at 15%. A 35% interest rate on a two –week loan translates into a whopping 910% APR, no nowhere near the generally accepted preferred APR cap of 36%.

Secondly, the bill reduces the number of renewals from six to two. While this gives the appearance of protecting consumers, there is no rationale for allowing them at all. All of our neighboring states do not allow renewals of any number.

To add insult to injury, HB 265 reduces the fee for payday lending licensing from $500 to $300. We fail to see a reason that could justify this reduction. The fee for licensing is relatively small compared to the income generated by these lenders and the fee helps pay for oversight of the industry and a state annual report that provides valuable insight into the impacts of payday lending on Missouri households.

Finally, we’d like to applaud changes to extended payment plans, but would like to point out that this will have very little impact on consumers. States with similar provisions report that less than 3% of eligible transactions actually utilize the extended payment plan.

Payday lending has a major impact on the state of Missouri. The most recent report on payday lending shows that 1.62 million payday loans were issued in 2016 which means on average 1 in 4 Missourians took out a payday loan. The average loan was $314.93 and carried an average interest rate of 462.87%. Assuming they are all paid off in two weeks, at least $90 million in interest and fees are leaving our state’s poorest household and being collected largely by out of state banks annually. This is tragic not only for Missouri families but terrible for our state’s economy.

While we are grateful that the Missouri House is hearing a bill on such an important topic, this bill will do very little to address the impacts it has. We are writing to encourage the Rules Committee to reject this bill in favor of additional dialog prior to the passage of any regulatory bill, include consumer advocates in the discussion and work on reform that will have meaningful impact on Missouri families.

CONSUMER FINANCIAL PROTECTION BUREAU TAKES ACTION AGAINST NATIONAL COLLEGIATE STUDENT LOAN TRUSTS, TRANSWORLD SYSTEMS FOR ILLEGAL STUDENT LOAN DEBT COLLECTION LAWSUITS

All 800,000 Loans Will Be Independently Audited, Companies Will Pay at Least $21.6 Million and Stop Suing for Invalid or Unverified Debts

Washington, D.C. – The Consumer Financial Protection Bureau today took action against the National Collegiate Student Loan Trusts and their debt collector, Transworld Systems, Inc., for illegal student loan debt collection lawsuits. Consumers were sued for private student loan debt that the companies couldn’t prove was owed or was too old to sue over. These lawsuits relied on the filing of false or misleading legal documents. The proposed judgment requires an independent audit of all 800,000 student loans in the National Collegiate Student Loan Trusts’ portfolio. It prohibits the National Collegiate Student Loan Trusts, and any company they hire, from attempting to collect, reporting negative credit information, or filing lawsuits on any loan the audit shows is unverified or invalid. In addition, it requires the National Collegiate Student Loan Trusts to pay at least $19.1 million, which includes initial redress to harmed consumers, relinquished funds to the Treasury, and a civil money penalty. Under a separate consent order, Transworld Systems, Inc. is ordered to pay a $2.5 million civil money penalty.

“The National Collegiate Student Loan Trusts and their debt collector sued consumers for student loans they couldn’t prove were owed and filed false and misleading affidavits in courts across the country,” said CFPB Director Richard Cordray. “We’re ordering them to pay at least $21.6 million, stopping them from filing illegal lawsuits, and requiring the trusts to thoroughly audit their loan portfolios to identify any other consumers who were harmed.”

The National Collegiate Student Loan Trusts are 15 Delaware statutory trusts that own more than 800,000 private student loans. Between 2001 and 2007, the trusts purchased and securitized the loans, and then sold notes secured by the loans to investors. The trusts have no employees but instead use service providers to interact with consumers about their loans. Transworld Systems, Inc. is a nationwide debt collector incorporated in California, with a principal place of business in Ft. Washington, Pennsylvania. Transworld Systems employees complete, sign, and notarize sworn legal documents for collections lawsuits brought on behalf of the trusts. Transworld Systems hires a national network of law firms to file and prosecute collections lawsuits on behalf of the trusts in courts across the country.

The complaint against the National Collegiate Student Loan Trusts and the Bureau’s consent order regarding Transworld Systems include allegations and findings that the companies violated the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act by filing false affidavits and for pursuing collections lawsuits they could not have won, if contested. Specifically, the companies:

• Sued consumers for debts the trusts could not prove were owed: In order to sue to collect debts, the person or company filing suit must be able to prove that the consumer owed the debt and that they own the loan that is being collected. The companies participated in illegal litigation practices when suing consumers without the necessary documentation required to sue. Over 2,000 collections lawsuits were filed on behalf of the trusts in violation of consumer financial protection laws that prevent consumers from having to pay debts they do not legally owe. In these lawsuits, the trusts do not have or cannot find the documentation necessary to prove either that they own the loans or that the consumer owed the debt. In some of these cases, the document the consumer signed promising to pay back the loan is missing. Nonetheless, the trusts filed suit against consumers to collect the debts.

• Filed false and misleading affidavits: In many of the collections lawsuits, false and misleading affidavits were filed. To be valid, these affidavits must be signed by a witness with personal knowledge of the consumers’ account records and the debt. In numerous instances, affiants claimed personal knowledge of the student loan debt they did not have.

The Bureau also alleged that the National Collegiate Student Loan Trusts filed at least 486 collections lawsuits after the applicable statute of limitations on the debt collection had expired. Additionally, the complaint alleged that, in numerous instances, many of the affidavits filed were improperly notarized because they were not sworn or signed in the presence of the notary.

Enforcement Action

Under the Dodd-Frank Act, the Bureau has the authority to take action against institutions or individuals engaging in unfair, deceptive, or abusive acts or practices or that otherwise violate federal consumer financial laws. Under the terms of the proposed final judgment and consent order, the Bureau is requiring the companies to:

• Conduct a thorough audit of the 800,000 student loans in its portfolio: The proposed final judgment requires the National Collegiate Student Loan Trusts to hire an independent auditor acceptable to the Bureau to audit their student loan accounts. If the audit identifies any additional student loans for which the trusts lack the documentation needed to prove the consumer owed the debt, the National Collegiate Student Loan Trusts will cease all collections on those loans.

• Pay at least $3.5 million in restitution: Under the proposed final judgment, the National Collegiate Student Loan Trusts is ordered to pay at least $3.5 million in restitution to more than 2,000 harmed consumers who made payments after being sued by the trusts on a loan where documentation was missing or the statute of limitations had expired. Furthermore, under the proposed final judgment, the National Collegiate Student Loan Trusts is required to provide restitution to additional consumers identified through the independent audit. Consumers who believe they were harmed do not need to take any action at this time. If they are eligible for restitution, the company will contact them directly. Consumers who are unsatisfied with the response or have other complaints about these practices can submit a complaint with the Bureau.

• Stop filing collections lawsuits on debt that can no longer legally be sued over: Statutes of limitation limit the amount of time an individual or company can go after someone in court for a debt that is allegedly owed. Under the terms of the proposed final judgment and the consent order, the companies are prohibited from tying consumers up in litigation after the expiration of the applicable statute of limitations.

• Stop attempting to collect, reporting negative credit information, and suing consumers for debt without proper documentation: Under the terms of the proposed final judgment and the consent order, the companies are prohibited not only from suing without documentation, but also from collecting and reporting negative credit information without documentation.

• Stop filing false or improperly notarized legal documents: Under the terms of the proposed final judgment and the consent order, the companies are prohibited from filing false or misleading legal documents and are required to ensure all documents that require notarization are properly notarized.

• Pay $7.8 million in disgorgement: Under the terms of the proposed final judgment, the National Collegiate Student Loan Trusts must relinquish $7.8 million to the U.S. Treasury.

• Pay a $7.8 million civil money penalty: : Under the terms of the proposed final judgment, the National Collegiate Student Loan Trusts must pay $7.8 million to the Bureau’s Civil Penalty Fund.

• Pay a $2.5 million civil money penalty: Transworld Systems must pay $2.5 million to the Bureau’s Civil Penalty Fund under the consent order.

The proposed judgment against the National Collegiate Student Loan Trusts has been filed with the U.S. District Court for the District of Delaware, and it is effective only if approved by the presiding judge. The consent order is effective immediately.

A copy of the complaint filed in federal district court against the National Collegiate Student Loan Trusts is available at: http://files.consumerfinance.gov/f/documents/201709_cfpb_national-collegiate-student-loan-trusts_complaint.pdf

A copy of the proposed final judgment filed in federal district court against the National Collegiate Student Loan Trusts is available at:http://files.consumerfinance.gov/f/documents/201709_cfpb_national-collegiate-student-loan-trusts_proposed-consent-judgment.pdf

A copy of the consent order entered today against Transworld Systems, Inc. is available at:http://files.consumerfinance.gov/f/documents/201709_cfpb_transworld-systems_consent-order.pdf

Prop S seeks more regulation of payday loans in St. Louis; supporters say state is failing.

http://news.stlpublicradio.org/post/prop-s-seeks-more-regulation-payday-loans-st-louis-supporters-say-state-failing#stream/0

Under consideration in the MO Senate: An Attack on MO Consumer Protection Law.

Join advocates Consumers Council of Missouri in calling / emailing your legislator today!

http://www.stlamerican.com/news/columnists/guest_columnists/missouri-consumer-protection-law-is-under-attack/article_07f56fd0-e725-11e6-99a8-ef49a18df41c.html?utm_medium=social

If you don’t think consumer protections are important, think again! Millions of consumers who were duped into paying fees will soon receive more than $17.6 million, thanks to the Consumer Financial Protection Bureau.

http://www.stlamerican.com/business/business_opinion/consumers-to-receive-over-m-thanks-to-cfpb/article_53981f78-e31f-11e6-ac8b-3f3a4ee28d10.html

Jay Ashcroft, Missouri’s new secretary of state, has named a former executive of a company under investigation by the state to lead the agency that protects consumers from securities fraud.

“The fox is guarding the henhouse,” said Rep. Tracy McCreery, a St. Louis County Democrat who sits on the board of the Consumers Council of Missouri. “And that should be alarming.”

CCM joins national consumers and civil rights organizations to make final push for a strong CFPB rule strengthening payday and car title lending rule

http://consumerfed.org/press_release/national-consumer-civil-rights-organizations-make-final-push-urging-cfpb-strengthen-payday-car-title-lending-rule-close-harmful-loopholes/