Released: February 02, 2014
Consumer Action INSIDER - February 2014
Table of Contents
- What people are saying
- Did you know?
- Spreading word of new money transfer rules
- National conference motivates, engages attendees
- Class Action Database: New design debuts
- Hotline Chronicles: When ‘stop payment’ doesn’t stop the payment
- MoneyWi$e: Then and now
- New year, new intern
- Coalition Update: Illegal debits, housing discrimination and arbitration fairness
- CFPB Watch: Mortgage rules and crackdown on deception
- About Consumer Action
What people are saying
I just received Consumer Action’s MoneyWi$e Training Materials CD. This is a wonderful tool! Your curriculum is a practical, real-world solution to my clients’ financial needs. Thank you for all the work you do to support CBOs and the people we serve. — Veronica Lopez, RISE Financial Pathways, Los Angeles, CA
Did you know?
It’s a myth that people receiving long-term unemployment benefits are less motivated to search for work. Not only are people who receive extended unemployment benefits required to search for work as a condition of those benefits, studies have shown that beneficiaries of extended unemployment insurance spend more time searching for work than those who were ineligible for the benefit. Read Dispelling the Myths of the Long-Term Unemployed at the U.S. Department of Labor website.
Spreading word of new money transfer rules
According to World Bank statistics, U.S. residents sent more than $50 billion to recipients in other countries in 2012. They also spent millions of dollars in fees to get the money to its destination. Consumer Action’s publications and outreach ensure that people who wire money to their relatives abroad understand their options, potential fees and consumer protections for “remittances.”
In response to changes to remittance rules that took effect last fall, Consumer Action has updated and expanded its popular publication “How to send money home: Tips for transferring money abroad.”
“Hard-working consumers living in the U.S. deserve transparency and essential consumer protections when sending money home,” said Ruth Susswein, Consumer Action’s deputy director of national priorities. “We’re pleased to be able to update one of our most popular resources with new rules, tools and options that will help consumers who transfer funds internationally understand their rights and save money.”
The new rules, issued by the Consumer Financial Protection Bureau (CFPB) and outlined in Consumer Action’s publication, direct how remittance services should treat consumers, including:
- Providing upfront disclosures about fees, the exchange rate and the amount to be received by the recipient;
- Following prescribed error resolution procedures; and
- Offering consumers certain refund and cancellation rights.
The updated How to send money home, available in print (English only), online and as a free download, also reflects changes in remittance methods—the greater availability of Internet-based transfer services, for example—and provides links to two tools that enable consumers to compare remittance costs among service providers. How to send money home is also available online in Spanish, Chinese, Vietnamese and Korean.
In time for Chinese New Year
Consumer Action’s community outreach manager Jamie Woo has been alerting Chinese-speaking communities on radio and in print to the new consumer protections for sending money overseas. She has conducted interviews about the new rules in Mandarin and Cantonese on several in-language stations. Late last year, Mandarin-speaking listeners of California station KAZN AM-1300 learned that they now have 30 minutes to cancel an international money transfer. This is one of several new rights under the CFPB remittance rules.
“With the Chinese New Year [on Jan. 31], the timing of the rules was good to let people know about their new rights,” says Woo. “So many people send money home to Mainland China in time to help their relatives celebrate the New Year.”
The CFPB is making information about the new rules available in Spanish, Tagalog, traditional Chinese, Haitian Creole, French, Korean and Vietnamese. (Consumer Action assisted the CFPB in validating the Tagalog and Chinese translations.) Printed copies can be ordered in bulk. The Bureau has said it will continue to develop and produce materials to educate consumers about the new remittance protections.
National conference motivates, engages attendees
Consumer Action’s fourth annual National Consumer Empowerment Conference brought together community leaders and exposed them to the latest techniques for motivating adults to improve their money management skills and function more effectively in the consumer marketplace. The Chicago-area conference shared concepts for motivating people to learn new skills, including “gamification,” which Consumer Action trainer Linda Williams defined as using “fun challenges” to engage adult learners.
Attendees were briefed on the growing reliance on Internet payday loans and payday installment loans by low-income consumers who lack the funds to pay basic monthly bills. More than two-thirds of payday loan borrowers end up taking out seven or more high-cost loans a year. Borrowers often find themselves unable to repay the loan by the next payday and so are trapped in a cycle of debt. With annualized interest rates of 400-500%, payday loans have been banned by some states. The Consumer Federation of America’s Tom Feltner suggested attendees join the fight for lower-interest small-dollar loans with adequate underwriting standards to ensure that the borrower can afford repayment.
The Consumer Financial Protection Bureau (CFPB) told attendees it is looking for new ways to inspire people with financial information. Camille Busette, the CFPB’s assistant director of financial education, explained that the CFPB is evaluating what motivates consumers’ financial decisions. The Bureau is seeking to create innovative ways to help people manage their finances and, ultimately, achieve a sense of “financial wellbeing.” Busette encouraged advocates to join a new LinkedIn page to learn about the results of CFPB financial literacy research, expected this spring.
New York promotes saving
Later, New York City Department of Consumer Affairs Commissioner Jonathan Mintz wowed the crowd with stories of his office’s success with “provable ways to help people save.” He explained that NYC has set—and met—service goals that require financial counselors to help consumers reduce debt by 10 percent or increase savings by 2 percent. He explained the department’s highly successful program, $aveNYC, that encourages low-income residents to put half their tax refunds into a savings account and receive matching funds of 50¢ on the dollar if the funds are still on deposit after a year. Three-quarters of those who took part received the matching funds. The program is now being replicated around the country as SaveUSA.
Used vehicle dangers
Attendees were appalled by horror stories of “rebuilt wrecks,” unsafe used cars that cost people’s lives. In some cases, moldy and rotted flood cars were sold as “certified” used cars by dealerships. Rosemary Shahan of the Center for Auto Reliability and Safety (CARS) has worked tirelessly to expose this problem. Before any used car purchase, attendees were advised to check vehicle identification numbers (VINs) at the National Motor Vehicle Title Information System (NMVTIS) and to have the vehicle inspected by a reputable mechanic.
Consumer Action’s Ruth Susswein provided CBOs with an update on the new federal mortgage rules. Now in effect, the rules require lenders to verify that borrowers can repay the mortgages they receive and prohibit foreclosed homes from being sold while a homeowner is being evaluated for a loan modification. (For more information, see Consumer Action’s alert.)
Chancela Al-Mansour of the Housing Rights Center told attendees about ROOT (Restoring Ownership Opportunities Together), a pilot program designed to buy homes at risk of foreclosure and re-sell them to the original owners at lower prices and with lower-rate mortgages. Charles Young of Waypoint Homes, an Oakland-based company that buys foreclosed properties in various regions of the country, told the gathering about how he repairs and rents the single-family homes to people with low credit scores (525 and above).
Privacy, healthcare and more
Dara Duguay of Credit Builders Alliance got everyone up for a brief unscheduled armchair aerobics session before revealing the dangers and damage caused by children’s identity theft. Joanne McNabb, a longtime privacy advocate, now with the California Department of Justice, joined Duguay on the panel.
Day two included a primer on the Affordable Care Act and its new health care exchanges by Cheryl Fish-Parcham of Families USA, and a panel about the transition from landlines to wireless broadband connections (“IP transition”) featuring Consumer Action Executive Director Ken McEldowney, Patrick Halley of the Federal Communications Commission and Hank Hulquist of AT&T.
Professor Richard Warner of IIT Chicago-Kent College of Law kicked off the online privacy session with a discussion of the “rise of the surveillance state.” Warner said that courts have ruled that the police do not need a warrant to use hidden cameras. Unlike many privacy advocates, he said he believed that facial recognition, a form of biometric identification, is an effective and non-intrusive ID tool.
Consumer Action’s Michelle De Mooy also presented on the topic of online privacy. “Imagine over 100 people secretly following you around as you shop at a mall, writing down what you do, what stores you visit, what you purchase, how long you linger in one place or another. Although it’s hard for people to believe because it's hard to see, this is the world we live in when we go online,” she said. De Mooy discussed how the personal nature of mobile phones and tablets makes it more difficult for people to understand that they are carrying small tracking devices that increasingly use personal data without permission, including drug prescription information and medical history.
De Mooy also explained “Do Not Track” (DNT) to conference participants. The as-yet-undefined way for individuals to signal that they do not wish to be tracked online is still being hashed out under the auspices of the World Wide Web Consortium (W3). The W3C expects to release an update to DNT guidelines later this year. The term DNT has proven to be popular with the public, partially because its easy-to-remember acronym is reminiscent of the Do Not Call Registry. But DNT has yet to be embraced by online retailers.
“For DNT to be effective, online retailers must honor a signal set by a user, and right now, most are not,” said De Mooy.
The conference wrapped up with participants making music on kazoos as part of a hands-on lesson about the power of music by Bill Protzmann of Music Care. Protzmann teaches how music can be a tool to help people relax and concentrate.
About the conference
One attendee called this “the best conference yet,” which leaves the Consumer Action staff with a challenge for next year.
Consumer Action’s National Consumer Empowerment Conference is by invitation only. We thank the sponsors that allow all attendees to travel and attend free of charge. Underwriters ($35,000) for the 2013 conference included Capital One, Google and Visa Inc. The Leadership Circle ($10,000) included AT&T, Bank of America, Citi, Microsoft and TracFone. Benefactors ($5,000) included MyWireless.org and RushCard. Click here to view the program booklet (PDF).
Class Action Database: New design debuts
Consumer Action maintains a database of consumer class actions we learn about so that interested consumers can join the action, make a claim or just learn more about a certain lawsuit. This month we unveil a new design—our Class Action Database—that makes the effort even more useful and accessible to consumers. The Database features a calendar of deadlines to join actions or submit claims when settlements are reached.
In a class action settlement, the court does not decide in favor of one side or the other. Instead, both sides agree to settle the case instead of going to trial. We feature many proposed settlements. Settlements do not necessarily mean that any law was broken or that the defendants did anything wrong. (The defendants typically deny all legal claims when a settlement is reached.)
Some of the notable class actions we’ve learned of include:
FitFlop footwear. Consumers who purchased eligible FitFlop footwear models between Jan. 1, 2007 and Jan. 8, 2014 may receive up to $100 cash. The company agreed to settle allegations that it falsely advertised its shoes as providing a variety of benefits ordinary footwear could not offer. Click here for details. The deadline for claims is June 27, 2014.
Emergen-C supplements. Consumers who bought certain Emergen-C products between June 1, 2006 and Feb. 27, 2012 may be eligible for up to $36 cash. Alacer, the parent company, agreed to settle allegations that it made false and deceptive immunity-related, energy-related and metabolism-related statements in marketing, advertising and packaging its Emergen-C products. Click here for details. The deadline for claims is March 27, 2014.
Heel, Inc. homeopathic products.> Consumers who between Dec. 21, 2008 and Feb. 5, 2014 bought Heel’s homeopathic drugs (such as Traumeel and Zeel) advertised to provide relief for symptoms of common ailments may be eligible for up to $150. The company reached a settlement over allegations of false or deceptive advertisements. Click here for details. The deadline for claims is June 5, 2014.
Live Nation ticket sales. Consumers who purchased tickets to specific New Jersey events from livenation.com or ticketmaster.com between June 23, 2003 and June 15, 2011 may be eligible for three free ticket vouchers and a $5 coupon code for a future ticket purchase. Live Nation reached a settlement over allegations of violations under the New Jersey Consumer Fraud Act and the New Jersey Truth in Consumer Contract, Warranty and Notice Act. Plaintiffs’ attorneys alleged that Live Nation violated these laws by adding certain fees (such as mandatory parking fees, ticket fees and charity fees) to the price of each ticket to events at the PNC Bank Arts Center in Holmdel, NJ. Click here for details. The deadline for claims is April 30, 2014.
Aetna claims for out-of-network provider health care. This lawsuit alleged that Aetna made inadequate reimbursements for out-of-network medical services and supplies. There is a preliminary settlement fund of $120 million for (1) Aetna plan members who received covered services or supplies from out-of-network medical providers between March 1, 2001 and Aug. 30, 2013 and (2) out-of-network medical providers whose covered services and supplies to Aetna plan members were partially reimbursed from June 3, 2003 to Aug. 30, 2013. The lawsuit claims that Aetna paid inadequate reimbursements for these services by using Ingenix databases and other methods to determine the amounts paid. Click here for details. The deadline for claims is March 18, 2014.
eBay ‘Featured Plus!’ listings. Consumers who paid Featured Plus! upgrade fees between Jan. 23, 2008 and Feb. 4, 2013 may be eligible for a share of the $4.75 million settlement fund. The company reached a settlement over allegations that it improperly described how the Featured Plus! listing upgrade worked. Click here for details. The deadline for claims is March 20, 2014.
Duracell Ultra Advanced or Ultra Power batteries. Consumers who bought these Duracell batteries after June 2009 may be eligible for up to $12 cash. The company reached a settlement over allegations that it falsely advertised its batteries as longer-lasting than others on the market. Click here for details. The deadline for claims is April 10, 2014.
AvMed data breach. Current and former customers of AvMed, a Florida health insurance provider, who purchased coverage prior to December 2009 and whose personal information was contained on laptops stolen from company employees may be eligible for up to $30 cash. The company reached a settlement over allegations that it failed to adequately protect the sensitive personal information of its customers. Click here for details. The deadline for claims is March 31, 2014.
Hotline Chronicles: When ‘stop payment’ doesn’t stop the payment
Rita* from Queens, NY contacted our hotline because she had stopped a scheduled “auto debit” payment to her phone company and received a confirmation that the payment had been cancelled. However, the payment went through, which caused her checking account to be overdrawn. Rita wonders how this could have happened.
A “stop payment” is the term used when a bank account holder requests to cancel a check or other payment. A stop payment only can be honored if the payment has not cleared (been processed). However, a stop payment request isn’t a guarantee.
Things also are murky when you cancel a standing auto-debit authorization to a vendor or service provider. Many consumers find it convenient to allow companies they do business with (such as utilities, credit cards, newspapers, gyms, etc.) to withdraw money from their bank accounts in order to pay recurring bills.
Stop payment orders for personal checks that have not been cashed generally are good for six months. Oral stop payment orders are only good for 14 days unless you submit a written request within that two-week period. You may be able to stop payment online at the bank’s website if you are logged into your bank account.
If the check wasn’t returned to you, it could resurface after that time and be cashed. (A written stop payment order can be renewed for another six months.)
If you properly authorize a stop payment order and the bank cashes the check within the period the stop payment is active, the bank may be liable for the amount of the cashed check and would return the money to your account.
The bank won’t be liable if you fail to provide enough information to identify the check or you don’t give the bank enough time to stop the check. You need to provide your account number, the check number, the amount the check was written for and the payee's name.
A cashier’s check is drawn directly on the bank that issues the check, not on your account. Generally, a bank must honor a cashier's check when it is presented for payment.
However, a stop payment can usually be arranged in the event of a lost or fraudulent cashier's check.
Electronic payments and auto debits
Many companies now electronically present your paper checks by scanning your check and returning it to you. The transaction is processed as an ACH (automated clearing house) transaction. You can’t stop a check that already has been scanned and presented as an electronic payment. Dispute the payment directly with the merchant who converted the check.
Your bank’s bill pay service
When you use online bill pay, there are different ways that your bank can send a payment on your behalf. Payments may be sent electronically via ACH, or with a check created by your bank and sent to the person or company you wish to pay. The method of payment depends on what the recipient can accept (some payees are unable to accept electronic payments).
Most banks take the money out of your account on the date you want the payment “delivered.” You can stop a bill payment as long as you make the change before the delivery date. If the payment has already been delivered, you must deal with the recipient to get your money returned.
Recurring monthly payments (preauthorized withdrawals) can be stopped if you notify the bank at least three business days in advance of when the electronic funds transfer is scheduled.
You can notify the bank orally or in writing. However, if you notify the bank orally, you need to provide written confirmation within 14 days to ensure that the stop payment will be good for six months. If you fail to provide written notice by the deadline, your oral stop payment order will end in 14 days.
If the payee continues to withdraw money from your account despite the stop payment order, write to the company and ask that no further debits be taken from your checking account. Provide the bank with a copy of the letter and inform the bank that these charges are no longer authorized. Keep a copy of the letter for your records.
Stopping a check is not always the right thing to do. If someone steals your checks and writes a fraudulent check on your account, report the theft to your bank and to the police. If you want to stop payment because of a dispute with a payee, tread carefully. When you write a check to a person or a company and you stop payment, you could open yourself to legal problems if the payee takes you to court.
If you stop payment on a check or other payment with enough time to spare, and your bank lets the payment clear and charges you an overdraft fee, ask the bank to remove the fee. If it won’t remove the fee, complain to your bank’s regulator. See Who regulates my bank?
*Not this consumer’s real name.
MoneyWi$e: Then and now
Since 2002, Consumer Action’s MoneyWi$e financial literacy project has trained 4,900 community partners at roundtables, regional meetings and webinars. These events have been co-hosted and/or sponsored by project partner Capital One.
Over the years, the Consumer Action outreach and training staff has incorporated a lot of the comments and requests from past training participants into our new training format rolled out in 2013. In the last quarter of 2013, Consumer Action and Capital One hosted two webinars for New York attendees, two daylong regional meetings in California and two all-day roundtables in Texas and Louisiana.
In 2009, Consumer Action began using a new evaluation system that surveyed participants before the training to gauge how many groups had a financial education program, which MoneyWi$e modules groups were using, the number of staff trained on MoneyWi$e, etc. The new evaluation system includes a post-training evaluation to learn, among other things, which modules groups hoped to use in the community, whether the groups needed technical assistance and what Consumer Action could do to improve future trainings.
In reviewing pre-training evaluations from 16 regional meetings, we learned that in all but five instances, 50 percent or more of our participants have financial education programs and in 10 instances more than half of that number are using MoneyWi$e in its entirety or making use of partial curricula (such as just brochures, PowerPoint slides or activities).
In the past four years, Consumer Action has found that the majority of registrants for MoneyWi$e regional meetings consistently ask to be trained on Track Your Money, Good Credit and Rebuilding Good Credit. Those also are the modules that MoneyWi$e regional meeting participants overwhelmingly indicate they plan to integrate into their individual training programs. Other top-listed MoneyWi$e modules include Banking Basics, Saving To Build Wealth and Identity Theft. Click here to find all MoneyWise modules.
Consumer Action consistently has received requests for technical assistance from more than 50 percent of participants during MoneyWi$e regional meetings. These requests are for updates on consumer laws, tips on teaching and engaging adults, best practices for reaching consumers, training tools, assistance in developing a financial education program, continuing education opportunities for staff, trainers for events, funding support and more information on helping clients to rebuild credit.
Based on feedback, Consumer Action continues to enhance the MoneyWi$e training experience. Some of the improvements adopted in 2013 are full-day trainings for roundtables (previously half-days); note-taking guides for various educational modules; training on content from all 12 modules and in-depth training on the top modules; updated slides for Why Adults Learn; demonstration of how to use games and activities to engage adult learners; and printed hand-outs of various resources discussed during trainings. Consumer Action staff update module information online routinely. Consumer Action has active Facebook (facebook.com/consumeraction) and Twitter (@consumeraction) accounts and we encourage interested groups and individuals to follow us.
- Organization or financial institution name
- Name of program
- Demographic served
- Name(s) of MoneyWi$e module(s) that you are using
- Other curricula you are using in addition to MoneyWi$e
- How the training, funding and/or technical assistance from Consumer Action and the MoneyWi$e program has enhanced your program
- Photo of staff using MoneyWi$e (optional)
- Suggestions on how we can obtain success stories about your use of Consumer Action training materials, tools and tips
New year, new intern
Consumer Action welcomes its latest intern, Dat Dang, from the Columbia University Virtual Internship Program. “Virtual interns” complete their assignments remotely and they don’t have to be in the same location as the employer. Dang will be working from New York City—just a “stone’s throw” away compared to our last two interns, who “commuted” via phone and Internet from London and Paris, where they were spending their “study abroad” semesters.
The 2014 internship project focuses on specialty consumer reports and the bureaus behind them, which many consumers know little about despite the influence that specialty reports have on our ability to get a bank account, an apartment or even a job. Recognizing the importance of access and accuracy in the consumer reporting industry, the Consumer Financial Protection Bureau (CFPB) recently launched its own review of dozens of specialty reporting agencies to assess their compliance with the federal Fair Credit Reporting Act (FCRA) requirement to allow consumers to access free reports on an annual basis.
Consumer Action plans to publish a consumer resource that will help individuals understand what information is collected about them in specialty reports, how to obtain copies of these reports and how to dispute inaccurate information. With the help of our new intern, we will investigate where the data for these reports comes from and what—if any—steps consumers can take to limit access to their personal information. The resource will supplement the information we already have on our website about specialty credit reports, including the workshop exercise “Sally Walker.”
“We've been very fortunate to repeatedly get top-quality students involved in research projects that help empower consumers while simultaneously training students about the value of consumer protection,” said Ruth Susswein, Consumer Action’s deputy director of national priorities. “Specialty reports are a hidden determinant in so many decisions that affect consumers. We expect this new project will offer some important insights for all of us.”
Dang’s internship will run from the end of January through the middle of April. He is on track to graduate in May with a bachelor’s degree in economics and philosophy.
Coalition Update: Illegal debits, housing discrimination and arbitration fairness
Consumer Action has joined other advocacy groups on these recent issues:
- Stop illegal payments from being taken out of consumers’ bank accounts. Last October, Consumer Action signed on to a letter spearheaded by the National Consumer Law Center urging federal regulators to stop banks and payment processors from helping internet and tribal payday lenders collect illegal payments by debiting consumer accounts. The letter, signed by many leading fair lending advocacy and civil rights groups, was sent to federal bank regulators, the U.S. Department of Justice and the Federal Trade Commission. Read the letter.
- HUD should extend current discrimination complaint process. Last month, Consumer Action joined the Greenlining Institute and other housing advocates in public comments to the Department of Housing and Urban Development (HUD) urging the agency to continue to collect discrimination complaints via its form. The form, which captures key information about discrimination and is offered in different languages, allows consumers who have been injured by a discriminatory housing practice to file a complaint within a year after the discrimination. The groups urged HUD to continue to collect data and suggested that it allow consumers to “racially self-identify” in order to tailor its anti-discrimination strategies to protect underserved communities from housing discrimination. Read the letter.
- Support for the Arbitration Fairness Act of 2013. In December, Consumer Action joined the Alliance for Justice and dozens of advocacy and legal rights organizations in a letter to the U.S. Senate Committee on the Judiciary in support of S. 878, introduced in the Senate by Senator Al Franken (D-MN). This important legislation would end the growing predatory practice of forcing non-union employees, consumers and small businesses to sign away their Constitutional rights to legal protections and access to federal and state courts. Read the letter.
CFPB Watch: Mortgage rules and crackdown on deception
Consumer Action and its allies fought long and hard for the creation of the Consumer Financial Protection Bureau (CFPB) and we’re delighted with the scope and effectiveness of its work to date. Because the Bureau’s work is so important to consumer protection, we closely monitor what’s going on at the CFPB. Our new feature “CFPB Watch” will provide regular updates of the Bureau’s key initiatives and enforcement actions.
January was a month for mortgage holders and future homebuyers to celebrate, as the Bureau unveiled a nationwide ban on deceptive mortgage lending and new protections for those fighting foreclosure. It also brought key enforcement actions against bad actors in the mortgage industry.
The CFPB’s new mortgage rules require lenders to:
- Reasonably determine a borrower’s ability to pay the mortgage
- Base loan affordability on the full (not teaser) interest rate (during the first five years of the mortgage)
- Credit payments the day they arrive and correct errors quickly
Mortgage servicers may not:
- File for foreclosure unless a borrower is more than 120 days (four months) past due
- Start a foreclosure if a borrower has submitted a complete loan modification application
- Sell the home until the borrower has been considered for a modification, if the foreclosure process has already begun
In early January, CFPB Director Richard Cordray introduced the Bureau’s new mortgage rules at a Phoenix, AZ training for housing counselors, legal aid attorneys and other advocates. “It’s time to put the “service” back into mortgage servicing,” Cordray said. “Our rules require mortgage servicers to let consumers know about available options to save a home or to work out a problem in making payments.”
The CFPB is counting on advocates, housing counselors and attorneys to play a big role in helping educate the public. The Bureau has reached out to many organizations and stakeholders, including Consumer Action, for help communicating the basics of the new mortgage rules. With guidance from advocates, the CFPB created brief, easy-to-read information highlighting key protections in “plain” English. These and a host of other excellent resources can be found on the Bureau’s mortgage page. CFPB mortgage materials are available in Spanish, Tagalog, traditional Chinese, Haitian Creole, French, Korean, and Vietnamese. Many can be ordered in bulk for free—click here.
The Bureau also accepts mortgage complaints by phone (855-411-2372) and online at the CFPB website.
In December, the Bureau (and authorities in 49 states and the District of Columbia) ordered Ocwen Financial Corporation, the largest U.S. nonbank mortgage loan servicer, to pay for years of mortgage servicing misconduct. Borrowers who lost their homes to foreclosure because of mortgage servicing errors will now share $125 million in refunds from Ocwen. Another $2 billion will be provided to reduce the principal loan amount and create long-term loan modifications for underwater homeowners.
Among other charges, the CFPB said that Ocwen pushed borrowers into foreclosure by improperly denying loan modifications, failing to process loan modification requests and misleading consumers about their foreclosure status. Read the CFPB’s Explainer to learn more.
Last month, the Bureau ordered Missouri mortgage lender, Fidelity Mortgage Corporation, and its former owner and current president to pay $81,076 for funneling illegal kickbacks to a bank in exchange for real estate referrals. “Kickbacks harm consumers by hampering fair market competition and by unnecessarily increasing the costs of getting a mortgage,” said Cordray.
At the end of January, the Bureau initiated a proceeding against New Jersey-based PHH Corporation and affiliates alleging they harmed consumers with a mortgage insurance kickback scheme. A CFPB investigation showed that as early as 1995, when PHH originated mortgages it referred consumers to private mortgage insurance (PMI) companies that returned the favor by purchasing reinsurance from PHH’s subsidiaries. Because of PHH’s scheme, the CFPB alleges that consumers ended up paying more in mortgage insurance premiums than they would have done without the deal. The CFPB is seeking a civil fine, a permanent injunction to prevent future violations and victim restitution.
The Bureau is seeking applications for positions on its advisory groups—the Consumer Advisory Board (CAB), the Credit Union Advisory Council (CUAC) and the Community Bank Advisory Council (CBAC)—which provide the agency with community feedback and on-the-ground perspectives. Applications will be accepted until Feb. 28. Learn more.
About Consumer Action
Consumer Action is a non-profit 501(c)(3) organization that has championed the rights of underrepresented consumers nationwide since 1971. Throughout its history, the organization has dedicated its resources to promoting financial and consumer literacy and advocating for consumer rights in both the media and before lawmakers to promote economic justice for all. With the resources and infrastructure to reach millions of consumers, Consumer Action is one of the most recognized, effective and trusted consumer organizations in the nation.
Consumer education. To empower consumers to assert their rights in the marketplace, Consumer Action provides a range of educational resources. The organization’s extensive library of free publications offers in-depth information on many topics related to personal money management, housing, insurance and privacy, while its hotline provides non-legal advice and referrals. At Consumer-Action.org, visitors have instant access to important consumer news, downloadable materials, an online “help desk,” the Take Action advocacy database and nine topic-specific subsites. Consumer Action also publishes unbiased surveys of financial and consumer services that expose excessive prices and anti-consumer practices to help consumers make informed buying choices and elicit change from big business.
Community outreach. With a special focus on serving low- and moderate-income and limited-English-speaking consumers, Consumer Action maintains strong ties to a national network of nearly 7,500 community-based organizations. Outreach services include training and free mailings of financial and consumer education materials in many languages, including English, Spanish, Chinese, Korean and Vietnamese. Consumer Action’s network is the largest and most diverse of its kind.
Advocacy. Consumer Action is deeply committed to ensuring that underrepresented consumers are represented in the national media and in front of lawmakers. The organization promotes pro-consumer policy, regulation and legislation by taking positions on dozens of bills at the state and national levels and submitting comments and testimony on a host of consumer protection issues. Additionally, its diverse staff provides the media with expert commentary on key consumer issues supported by solid data and victim testimony.
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