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The Consumer Financial Protection Bureau (CFPB) yesterday imposed tough new restrictions on so-called payday lending, dealing a potentially crushing blow to an industry that churns out billions of dollars a year in high-interest loans to working-class and poor Americans, the New York Times reported. The rules announced by the CFPB are likely to sharply curtail the use of payday loans, which critics say prey on the vulnerable through their huge fees. Currently, a cash-strapped customer might borrow $400 from a payday lender. The loan would be due two weeks later — plus $60 in interest and fees. That is the equivalent of an annual interest rate of more than 300 percent, far higher than what banks and credit cards charge for loans.

A bankruptcy judge who rebuked Bank of America Corp. over its “heartless” foreclosure on a California couple is not happy that the homeowners want him to erase his ruling, Bloomberg News reported yesterday. The couple reached a private settlement with the bank that calls for rescinding both the $45 million penalty that Bankruptcy Judge Christopher Klein imposed on the lender and the scathing ruling he issued in March. “So you want me to take the injunction and tear it up and throw it out,” Judge Klein asked during a hearing yesterday in Sacramento. He then explained that if the opinion is vacated, it will be expunged from the annals of law and can’t be cited as a precedent in other foreclosure abuse cases. As one of the couple’s lawyers explained to the judge that they were very grateful for what he’d done in the case and said that approving the settlement wouldn’t take away from the message in his ruling, the wife sat in the courtroom next to her husband and cried silently. Judge Klein sent attorneys for the couple and the bank to meet privately with another judge to discuss further revising the settlement. After they spent four hours behind closed doors, the judge announced there were some unresolved issues and that they’d try to wrap it up on Oct. 18.

Payday lenders and consumer advocates are engaged in a letter writing campaign to try to sway the Consumer Financial Protection Bureau, which is expected in the coming days to introduce federal oversight of the $38.5 billion industry, the Wall Street Journal reported today. Payday loans are used by an estimated 10 million to 12 million Americans every year, many of whom live paycheck to paycheck. The loans are typically a few hundred dollars and due in two weeks, or on the borrower’s next payday. Their annualized interest rates, which can rise to nearly 400 percent, have long troubled regulators. The CFPB rule would supplement a mishmash of state rules. It would likely require lenders to assess borrowers’ ability to repay and make it harder to roll over loans, a lucrative part of the business. The practice, where customers take out new loans to repay old ones, often leads to snowballing fees. Lenders say such requirements would wipe out the market for short-term payday loans. The CFPB received 1.41 million comments on the payday rule during the comment period between July and October 2016—by far a record for the six-year-old bureau.

A California couple who were dragged through a Bank of America Corp. foreclosure called “brazen” and “heartless” by a bankruptcy judge have joined the lender’s request to be spared from a $45 million punishment, Bloomberg News reported. Bankruptcy Judge Christopher Klein in Sacramento must now decide whether to approve a settlement that would rescind both the penalty and the scathing 107-page decision that accompanied it in March. While Judge Klein said that the size of the punitive damages award against Bank of America was meant to “not be laughed off in the boardroom,” the couple who endured what the judge described as a “Kafkaesque nightmare” say the deal they’ve struck will leave them better off and avoid years more litigation and appeals.

A government agency is targeting lenders who aggressively push military veterans to refinance their home loans, leading the borrowers in some cases to rack up thousands of dollars in unnecessary fees, the Wall Street Journal reported today. Ginnie Mae, the government-owned corporation that guarantees certain mortgage securities, said that it is planning to discuss with at least half a dozen lenders their refinance practices. It is also contemplating civil legal action against some lenders, and recently has formed a “Lender Abuse Task Force” with the Department of Veterans Affairs. Michael Bright, Ginnie Mae’s acting president, said in an interview that the consequences of refinance “churning” — where loans are refinanced more often than normal, usually at no benefit to the borrower — have rippled across the mortgage ecosystem. This creates uncertainty for investors and higher prices for many borrowers, he added. Ginnie Mae this year instituted new rules to curb rapid refinancing, including telling lenders that in some cases they would have to wait until a loan was at least six months old before refinancing it. But Bright said in a recent letter to Sen. Elizabeth Warren (D-Ma.) that some lenders are intentionally trying to evade efforts meant to curb churning. “When people say the mortgage industry has learned its lesson, this seems to suggest that that may not be the case,” Bright said, referring to the financial crisis.

Student loan debt has been an obstacle for many potential home buyers, and Lennar Corp. is trying to do something about it, the Wall Street Journal reported today. A subsidiary called Eagle Home Mortgage plans today to introduce a program under which it will pay off a significant chunk of the student loan of a borrower who purchases a home from Miami-based Lennar. Housing experts said other builders are likely to look to mimic the program, which could help lure more of the critical first-time-buyer segment into home purchases. Eagle will make a payment to a buyer’s student loans of as much as 3 percent of the purchase price, up to $13,000. The contribution doesn’t directly increase the purchase price of the home or add to the balance of the loan. Such programs come with the risk, however, that the incentive drives up the price of new homes.

Credit card lenders are seeing delinquencies creep up again after a brief respite in the spring, the Wall Street Journal reported. Capital One Financial, Synchrony Financial and Alliance Data Systems have all seen delinquencies rise as a percentage of total loans over the past several months, after they declined slightly earlier this year. All three focus on lending to less-creditworthy borrowers, with Synchrony and Alliance Data specializing in store-branded, private-label cards. At Capital One, loans over 30 days delinquent in its domestic credit card portfolio ticked up to 4 percent of total loans in August from 3.5 percent in April, monthly data from the company shows. Over the same period, this ratio rose to 4.5 percent from 4.1 percent at Synchrony, and to 5.3 percent from 4.7 percent at Alliance Data.

A consumer regulator calculated it could have pursued a $10 billion penalty against Wells Fargo & Co. over its sales practices scandal before settling on a much smaller fine, according to government documents released yesterday by House Republicans, the Wall Street Journal reported. A July 2016 memo written by Consumer Financial Protection Bureau lawyers also said the bank had fired or disciplined around 10,000 employees related to its sales practices scandal, far higher than previously disclosed. The internal CFPB memo was written two months before regulators took action against Wells Fargo. In it, CFPB enforcement lawyers alleged that the bank had made “more than 2 million violations” of the consumer financial protection law related to opening of unauthorized customer accounts. Those violations, they said, opened the door to a huge fine based on the lowest penalties included in the law. The lawyers went on to recommend a $100 million penalty to “help resolve this case,” stating that the smaller amount would “sufficiently deter similar violations” and correct the bank’s behavior.