Subprime Lending News 7/24/17:
Lawmakers want to stop you from being able to sue your bank, PA borough sues Wells Fargo, and the state announces new anti-scam task force.
By Caroline Thompson
Happy Monday! Will we ever have a day without news of a new Wells Fargo lawsuit? Because today is definitely not that day. Read all about the bank’s latest legal woes—and much more—in today’s subprime news roundup.
Republican lawmakers move to kill new rule that makes it easier to sue big banks.
We reported last week on a new rule recently rolled out by the Consumer Financial Protection Bureau, which bans banks and credit card companies from burying arbitration clauses (which work to prevent class action lawsuits) in the fine print of their contracts. The rule will make it much easier for customers wronged by big banks and credit card companies to file class-action lawsuits, but Republican lawmakers are pushing back, saying that the new rule is more beneficial for trial lawyers than it is for consumers. CFPB director Richard Corday disagrees, stating that the new rule will “stop companies from sidestepping the courts and ensure that people who are harmed together can take action together.” The rule can be repealed through what’s known as the Congressional Review Act, which allows Congress to overturn any rule written by a federal agency with a majority vote.
Pennsylvania borough sues banks for predatory lending.
The borough of Sharon Hill is suing Wells Fargo and Nationstar Mortgage for discriminatory lending practices that have allegedly had a detrimental affect on poor minority communities in Delaware County. The suit claims the banks used race as a determining factor, offering minority borrowers higher interest rates and more expensive terms than white borrowers with the same creditworthiness, and preventing them from accessing the same refinancing options offered to white borrowers. According to representatives for Sharon Hill, these practices have led to an increasingly high number of foreclosures and a drastic decrease in property values in economically distressed, minority communities in Sharon Hill.
Man crashes car into California payday loan store.
Officers arrested a a man who crashed his vehicle into a payday loan store in Montebello, California just before midnight last Wednesday night. Officers had been pursuing the man before the crash, after a routine run of his plates indicated his vehicle was wanted in connection to a crime. When they attempted to pull him over, he fled, which led to a quick, one-minute chase that culminated with a crash into the storefront of the payday lender. No one was injured in the crash, and police recovered a gun and illegal drugs from the vehicle.
Pennsylvania Attorney General announces statewide Consumer Financial Protection Unit.
In an attempt to better protect consumers from financial scams, Pennsylvania attorney general Josh Shapiro is creating a Consumer Financial Protection Unit. The unit will be headed by former Consumer Financial Protection Bureau Enforcement Council Nick Smyth, who has years of experience exposing fraudsters in the financial industry. The team will be especially focused on lenders who target seniors, families with students and military service members for high-interest title loans, payday loans and cash advances, and will include a deep dive into mortgage scams, for-profit colleges and student loan servicers. In a news release, Shapiro said: “Protecting the public from financial scams is a key priority of mine, and Nick Smyth will help us expand our capacity to bring complex cases against financial companies that try to rip off Pennsylvanians.”