On January 7, 2020, the presidential campaign of Senator Elizabeth Warren released a plan to overhaul the consumer bankruptcy system in the United States. The plan would repeal means testing and other provisions of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act. It would also implement enhanced protections for consumer debtors who file for bankruptcy.

Perhaps most significantly, the plan would abolish the “undue hardship” standard for the discharge of student loans. Under current law, borrowers seeking to discharge student loans must file a separate adversary proceeding alongside their non-adversary bankruptcy case and make a significant showing of hardship. The plan would treat student loans identically to other types of consumer debt, allowing for their discharge without any special showing.
Continue Reading Warren Proposes Far-Reaching Consumer Bankruptcy Reforms

On June 22, 2017, the CFPB announced a series of actions based on consumer complaints it has received about the manner in which student loan servicers handle the Public Service Loan Forgiveness (“PSLF”) program.

PSLF is a federal student loan forgiveness program that provides borrowers in public service jobs, such as teachers, nurses, first responders,

On April 25, 2017, the Consumer Financial Protection Bureau (“CFPB”) released its monthly complaint report.  For the month of March 2017, the products and services generating the most consumer complaints were debt collection, credit reporting, and mortgages, collectively representing approximately 65% of all complaints received.  This continues the trend from February 2017, when the

On February 28, 2017, the Consumer Financial Protection Bureau (“CFPB”) released its monthly complaint report. For the month of January 2017, the products and services generating the most complaints were debt collection, student loans, and credit reporting, collectively representing about 60 percent of complaints.  This is  the first time since the CFPB started releasing

On February 8, 2017, the Consumer Financial Protection Bureau (“CFPB”) released its monthly complaint report. For the month of December 2016, the products and services generating the most complaints were debt collection, credit reporting, and mortgages, collectively representing about 65 percent of complaints.

In a year-to-year comparison covering the three-month time period between October and December in 2015 and 2016, student loans showed the greatest increase in complaints— an increase of 109 percent—of any product or service. The CFPB attributes part of this increase to a February 2016 update to its student loan intake form, which allowed it to accept complaints about Federal student loan servicing.  During the same period, complaints about prepaid products, payday loans, and mortgages declined by 59 percent, 23 percent, and 5 percent respectively. The decline in complaints about these products continues a trend reported in the CFPB’s last complaint report.

Continue Reading CFPB’s Monthly Complaint Report Focuses on Mortgages

On November 29, 2016, the Consumer Financial Protection Bureau (CFPB) released its monthly complaint report. For the month of October 2016, the products and services generating the most complaints were debt collection, credit reporting, and mortgages, collectively representing about 65 percent of complaints.

In a year-to-year comparison covering the three-month time period between August and October in 2015 and 2016, student loans showed a marked increase in complaints ‒ 108 percent ‒ the greatest percentage increase in complaints of any product or service. During the same period, complaints about prepaid products, payday loans, and mortgages declined by 51 percent, 22 percent, and six percent respectively. Interestingly, the three product categories showing the greatest percentage decline in complaints have been, and continue to be, the focus of CFPB rulemaking initiatives.

The report focused on complaints about debt settlement, credit repair, check cashing, refund anticipation checks, and money orders. The CFPB categorizes these types of complaints as “other financial service complaints.”

Continue Reading CFPB’s Monthly Complaint Report Focuses on Debt Settlement, Credit Repair, and Other Financial Services

The CFPB released yesterday its Supervisory Highlights for Fall 2016.  The Supervisory Highlights state that, taking into account non-public enforcement actions, “recent supervisory activities […] resulted in approximately $11.3 million in restitution to more than 225,000 consumers” during the May-August 2016 review period.

The Highlights reflect continued focus by the CFPB on many of the same issues and products it has targeted throughout the past several quarters, including automobile loan origination and servicing, debt collection, and mortgage origination, as discussed more fully below.

At the same time, the Supervisory Highlights flag a renewed focus on student loan servicing, including in connection with (i) denials of applications for income-driven repayment plans; (ii) failures to provide borrowers with “effective” choices on how to allocate their payments among various loans; and (iii) providing misleading billing statements about the allocation of payments to principal and interest when funds are “paid ahead” for future months.

Contemporaneous with the release of the Supervisory Highlights for Fall 2016, the CFPB also formally released:

In addition, the Supervisory Highlights contain a lengthy discussion of supervisory observations relating to fair lending, with a particular focus on the assessment of redlining risk and the provision of language services to non-English-proficient customers.

Continue Reading CFPB Releases Fall 2016 Supervisory Highlights Together With New Guidance on Student Loan Servicing, Fair Lending, Reverse Mortgage Servicing