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The House Financial Services Committee will hold a hearing tomorrow at 10 a.m. EDT titled "Examining Legislation to Protect Consumers and Small Business Owners from Abusive Debt Collection Practices." Prof. Dalié Jiménez of the University of California, Irvine School of Law, and member of ABI's Consumer Bankruptcy Commission is among the witnesses scheduled to testify. Other witnesses include:

• Rev. Dr. Cassandra Gould, Pastor, Quinn Chapel A.M.E. Church (Jefferson City, MO) and Executive Director, Missouri Faith Voices 
• Bhairavi Desai, Executive Director, New York Taxi Workers Alliance 
• April Kuehnhoff, Staff Attorney, National Consumer Law Center
• Sarah Auchterlonie, Shareholder, Brownstein Hyatt Farber Schreck

Click here for more information, including the Committee Memorandum, legislation to be considered and a link to access the live webcast of the hearing tomorrow. 

The House Financial Services Committee will hold a hearing on Thursday at 10 a.m. EDT titled "Examining Legislation to Protect Consumers and Small Business Owners from Abusive Debt Collection Practices." Witness list and additional will be posted here once made available by the committee.

The head of the Consumer Financial Protection Bureau now believes that the financial regulator she leads is unconstitutionally structured, CNBC.com reported. CFPB Director Kathleen Kraninger notified senior lawmakers yesterday that the bureau had determined that the law that established the agency in the wake of the financial crisis gave her too much independence. That brings her position in line with the one adopted by the Department of Justice in March 2017. “Mindful of the Bureau’s role as an Executive agency within the Executive Branch [...] I have decided that the Bureau should adopt the Department of Justice’s view,” Kraninger wrote in letters to House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Mitch McConnell (R-Ky.). She noted that the Department of Justice, on behalf of the bureau, had formally filed a brief with the Supreme Court including her new position. The case the brief was filed in connection with is Seila Law v. CFPB. Seila Law, a California law firm, is challenging the single-director structure of the bureau. Unlike the heads of some other agencies, the director of the CFPB can be removed by the president only for cause. In its brief with the Supreme Court, the Justice Department urged the justices to take up the case and find the structure of the agency unconstitutional. But, it said, it would be possible to limit the power of the agency’s director without scrapping it altogether.

Bankrupt mortgage servicer Ditech Holding Corp. cleared the way for the $1.8 billion sales of its businesses by agreeing on Tuesday to preserve some homeowner claims like the right to fix mistakes on their loans, Bloomberg News reported. The accord ends a dispute over the sales, allowing Ditech to pay creditors and exit bankruptcy. A group of consumer creditors as well as attorneys general from about a dozen states objected to a previous plan to offload the assets in “free and clear” transactions. Those arrangements would have stripped homeowners of rights, including those that could help them save their homes from wrongful foreclosures, the New York attorney general’s office wrote in its objection to the sales. Late last month the federal judge overseeing the case sided with consumers and state authorities and rejected the sales. The bankruptcy court still needs to approve the new deal as part of Ditech’s bankruptcy plan. A hearing is slated for Sept. 25. After negotiations this month, Ditech and the consumer creditor group reached an agreement that creates a $10 million fund for claims holders and requires the appointment of a special master to hear consumer claims, Ditech lawyer Ray Schrock said in court. The sale doesn’t ratify mistakes in mortgage accounts and both Ditech and the new buyers have committed to investigate account misstatements and correct them.

Some banks want to get back into the business of offering short-term, small-dollar loans to cash-strapped customers. Regulators, too, are eager for banks to provide more emergency consumer credit, the Wall Street Journal reported. Loans of up to a few thousand dollars can help consumers cover bills, car repairs or other emergency expenses. They also would keep some bank customers from going to payday or other alternative lenders. The problem is that banks fear that without an explicit blessing for such lending, they could be subject to future regulatory action. So, for now, many are hanging back despite recent encouragement from Trump-appointed regulators. Critics contend that such products are akin to payday loans, which are often seen as predatory due to high interest rates. And regulators have previously taken a dim view of the business. In 2013, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. imposed tough restrictions that virtually eradicated the product at most banks. Last year, the OCC modified its policy, encouraging banks to offer loans, typically in the $300-to-$5,000 range, to be repaid over two to 12 months. The FDIC is spearheading a joint agency effort to offer similar guidelines to all banks and has shared written drafts with the Federal Reserve and OCC, said FDIC Chairman Jelena McWilliams.

An Education Week analysis found dozens of posts on Facebook and Twitter targeting parents who might need a "back to school" loan. Some of these loans — which are personal loans and can be used for anything, not just school supplies — are considered predatory, experts say, with sky-high rates and hidden fees. "Any time there are expenses that are coming up in a family's life, whether it's back-to-school or Christmas, we tend to see a push from lenders to try to get people to come in and use their products," said Whitney Barkley-Denney, the senior policy counsel for the Center for Responsible Lending. "These loans are built on the premise of you taking out one loan after another after another, to keep people in that debt cycle." Families of K-12 students plan to spend, on average, a record $696 this back-to-school season, according to the National Retail Federation, with the most money going toward clothing and accessories, followed by electronics like computers and calculators, shoes, and school supplies ranging from pencils to backpacks. "Back to school expenses have you stressing?" one Facebook ad for the Tennessee-based company Advance Financial 24/7 read. "We can help." Clicking on the link in the ad brings people to an application page for flex loans, an open line of credit that allows borrowers to withdraw as much cash as they need up to their credit limit, and repay the loan at their own pace. But it's an expensive line of credit — Advance Financial charges an annual percentage rate of 279.5 percent.

The Consumer Financial Protection Bureau (CFPB) announced yesterday a settlement with Asset Recovery Associates, Inc. (ARA), a debt-collection company headquartered in Illinois. ARA, also known as Financial Credit Service, Inc., collects debts from consumers throughout the U.S., according to a press release. According to the consent order, the Bureau found that ARA violated the Fair Debt Collection Practices Act by threatening to sue or arrest consumers even though it did not intend to take such action, falsely representing to consumers that company employees were attorneys, threatening to garnish consumers’ wages or place liens on their homes even though it did not intend to so do, and representing that consumers’ credit reports would be negatively affected if they did not pay, even though ARA does not report consumer debts to credit-reporting agencies. The CFPB found that these false statements were also deceptive, in violation of the Consumer Financial Protection Act of 2010. Under the terms of the consent order, ARA will pay at least $36,800 in restitution to affected consumers and a $200,000 civil money penalty to the CFPB. The consent order also prohibits ARA from continuing to engage in this conduct and requires ARA to record calls with consumers to help ensure collectors do not make false statements in the future.

More than 4,000 homeowners have complained to federal agencies in the past year about Ditech Financial LLC, including allegations that the bankrupt mortgage servicer failed to properly credit payments and wrongly foreclosed on their homes, Bloomberg News reported. A federal judge today is slated to decide whether Ditech can sell its mortgage servicing business “free and clear” of these consumer claims as part of $1 billion deal in its bankruptcy plan. Consumer advocates say if Bankruptcy Judge <b>James L. Garrity Jr.</b> approves the deal, it would be difficult or impossible for homeowners to correct what they say are errors related to their loans. People would even be permanently stripped of claims or defenses that would help them save their homes from wrongful foreclosures, the New York Attorney General’s office wrote in its objection to the sales. The New York AG contends that some homeowners are facing foreclosure because of potential errors by Ditech, in which the firm misapplied or refused to record payments that they made, misrepresented the amounts they owed or failed to acknowledge tax payment plans that would bring their accounts up to date.