In a speech Tuesday at the National Association of Attorneys General spring meeting, Consumer Financial Protection Bureau head Richard Cordray touted federal and state cooperation in cracking down on scams targeting military personnel, payday loans, foreclosure scams, auto loans and debt collection.
“Quite bluntly, we need your experience, your perspectives, and your coordination in a strategic effort to root out fraud and unfairness in the financial marketplace,” Cordray said, speaking before a packed ballroom at the Fairmont Hotel in Washington. “We want to expand on what you already do so well – and we want you to take advantage of new resources we bring to the arena, including new analytical tools and insight into market trends.”
Cordray, who previously served as Ohio attorney general, said the CFPB and state AGs have formed a series of working groups that are “meeting regularly to discuss the challenges posed to our mutual constituents” by financial scams. Also, federal and state prosecutors are creating the Repeat Offenders Against Military (ROAM) database, which will track completed enforcement actions against companies and individuals who repeatedly cheat military personnel.
“By providing a national clearinghouse for such information, we will make it difficult – if not impossible – for predators against our military to roam from one base to another, shrouded in their relative anonymity as they cross state lines,” Cordray said, noting that the idea originated with New York State Attorney General Eric Schneiderman.
He called on state AGs to team up with the feds (including the Federal Trade Commission and Department of Justice) to create a “national strategic plan” dealing with debt collection. “Our goal is to help the honest debt collectors do their jobs responsibly and see that the rest are either rehabilitated or run out of business once and for all,” he said.
In response to a question from Iowa Attorney General Tom Miller, Cordray said that the CFPB was “concerned about” for-profit colleges, which may be recruiting students with misleading information about graduation rates and job placement – “one of the worst possible kinds” of false advertising, he said. The CFPB has direct jurisdiction over private student lending.
Colorado Attorney General John Suthers described a frustrating fight with online payday lenders that have thwarted state oversight by affiliating themselves with Indian tribes. Cordray said this was an area where the state “should look to us for help.”
Cordray also promised the CFPB will issue new rules related to mortgages. One rule will require mortgage services to provide consumers with better information in their billing statements, another will cover “force-placed insurance.” Cordray said the rule will “prevent servicers from charging for this product unless there is a reasonable basis to believe that borrowers have failed to maintain their own insurance.“
He also said the CFPB will issue new rules for hybrid, adjustable-rate mortgages. “Consumers will be notified months ahead of their first interest rate adjustment and they will receive a disclosure of their new monthly payment, along with any available options to head off the higher rate, such as refinancing and renegotiation of loan terms,” he said.