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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.

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.

The Consumer Financial Protection Bureau yesterday fined real estate settlement services provider Meridian Title Corp. over violations of the Real Estate Settlement Procedures Act, ordering the company to pay up to $1.25 million to harmed consumers, HousingWire.com reported. The CFPB stated that the South Bend, Indiana-based company routinely steered consumers to Arsenal Insurance Corporation, a title insurer company owned in part by three of Meridian’s own executives. As a title insurance agent, Meridian receives orders for title insurance policies from lenders and real estate agents, and in some cases directly from consumers, and assigns those orders to title insurance underwriters, the CFPB explained. By steering consumers to Arsenal Insurance and not disclosing its relationship with the title insurer, Meridian Title illegally benefitted from the referrals for title insurance, the CFPB claims. Meridian was able to keep extra money beyond the commission it would normally have been entitled to collect, based on an understanding that Meridian would select Arsenal as underwriter, according to the CFPB.

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.

The U.S. is investigating lenders for allegedly pressuring veterans and members of the military into unneeded mortgage refinances — unsavory conduct that not only leads to higher consumer costs but has consequences for one of the world’s largest bond markets, Bloomberg News reported today. The probe is being conducted by Ginnie Mae, a government-owned corporation whose purpose is to make mortgages more affordable. It does so by guaranteeing repayment on $2 trillion of mortgage bonds even if borrowers default on the underlying loans. Ginnie-backed securities support several federal housing initiatives, including programs in which loans are made through the Department of Veterans Affairs. The concern is that some lenders are improperly pushing veterans and servicemembers to refinance loans that have been wrapped into Ginnie securities. Lenders are hounding consumers to refinance loans over and over again in a short period of time, according to Ginnie Acting President Michael Bright. The practice, known as churning, generates high fees for lenders but can leave servicemembers with larger loan balances.

The Consumer Financial Protection Bureau (CFPB) yesterday took action against an online lead aggregator for steering consumers toward lenders who offered illegal or unlicensed loans that were void in the consumer’s state, according to a press release. Zero Parallel, LLC sold consumers’ payday and installment loan applications to lenders it knew were likely to make void loans that the lenders had no legal right to collect. The CFPB also submitted a proposed order in a separate case that would resolve a pending lawsuit against Zero Parallel’s owner, Davit Gasparyan, for engaging in similarly illegal conduct at his prior company, T3Leads. The CFPB ordered Zero Parallel to end its illegal conduct and pay a $100,000 penalty. The proposed order against Gasparyan would prohibit him from engaging in the same abusive practice and require him to pay a $250,000 penalty.

The Consumer Financial Protection Bureau (CFPB) on Wednesday filed a proposed final judgment in federal court that would resolve a lawsuit against Prime Marketing Holdings, LLC for illegal credit repair practices, according to a press release. The lawsuit alleged that the company charged illegal advance fees and misled consumers about the cost and effectiveness of its services and the nature of its money-back guarantee. The proposed order would permanently ban the company from doing business within the credit repair industry and require a $150,000 civil money penalty. Prime Marketing Holdings is a credit repair company incorporated in Delaware with an office in Van Nuys, Calif. Prime Marketing Holdings has operated under various names including Park View Credit, National Credit Advisors, and Credit Experts. Between Oct. 1, 2014 and at least June 30, 2017, the company charged over 50,000 consumers more than $20 million for credit repair services.

A top congressional critic of the Consumer Financial Protection Bureau said this week that any decision by Director Richard Cordray to run for governor of Ohio could further endanger the agency’s pending rule on limits for payday lenders if his political ambitions are influencing the rule-making process, MorningConsult.com reported yesterday. In a letter to Cordray on Monday, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) wrote that speeding up the finalization of the payday lending rule in coordination with Cordray’s possible entry into the Ohio governor’s race would open up the regulation to legal challenges. The proposed rule, which Hensarling opposes, would among other things require payday lenders to vet in advance if borrowers can pay back their loans.

Some companies selling high-interest personal loans could get a break from new oversight by the federal government when it completes a long-anticipated rule on payday lending in September, the Wall Street Journal reported on Friday. The Consumer Financial Protection Bureau is expected to scale back its new rule on small-dollar lending as it rushes to complete the regulation before a Trump appointee takes over its leadership, industry lobbyists and consumer groups say. Facing pressure to wrap up the rule, the bureau has reduced its scope from a proposed version released in 2016, people familiar with the matter said. The rule is now expected to focus on short-term payday loans that are typically due in two weeks, or the borrower’s next payday, with annual interest rates of as much as 390 percent. To be excluded are high-cost installment loans lasting 45 days or longer.

Companies have the choice of taking legal action when they feel they have been wronged, but consumers are frequently blocked from exercising the same legal right when they believe that companies have wronged them, according to an op-ed by Consumer Financial Protection Bureau (CFPB) Director Richard Cordray in today’s New York Times. That’s because many contracts for products like credit cards and bank accounts have mandatory arbitration clauses that prevent consumers from joining group lawsuits, forcing them to go it alone, according to Cordray. For example, a group lawsuit against Wells Fargo for secretly opening phony bank accounts was blocked by arbitration clauses that pushed individual consumers into closed-door proceedings. In 2010, Cordray said that the CFPB was authorized to study mandatory arbitration and write rules consistent with the study. After five years of work, we recently finalized a rule to stop companies from denying groups of consumers the option of going to court when they are treated unfairly. The rule does not ban individual arbitration, as our opponents falsely claim, according to Cordray. It simply ensures that consumers have the option of joining together to sue companies. Companies and consumers can still use arbitration to resolve their differences, but companies cannot unilaterally block group lawsuits, Cordray writes.