CFPB updates Congress on clearer lending progress

The head of the federal agency tasked with making sure consumers have sufficient protections when they enter into borrowing agreements of nearly all types recently went before Congress to update lawmakers on its progress.

Richard Cordray, the head of the Consumer Financial Protection Bureau, told lawmakers on the U.S. Senate Committee on Banking, Housing and Urban Affairs that in the more than a year since the agency gained regulatory power, it has made significant strides in helping Americans better understand their borrowing options, according to prepared testimony. In particular, Cordray testified as a means of discussing the progress outlined in the Semi-Annual Report of the Consumer Financial Protection Bureau, which was published in July and covers the period from January 1 to June 30, 2012.

Help where consumers need it most
One of the main concerns faced by consumers nationwide is the lack of protections in the home loan industry, which can lead to significant debts and severe credit trouble for those who do not fully understand the kind of agreements they might enter, Cordray told lawmakers. As such, the CFPB has been diligent in its efforts to bring as much clarity as possible to the mortgage industry, by writing documents that would simplify the disclosure forms potential owners receive when filling out lending applications, and beefing up the rules to make sure borrowers only receive loans they can afford.

Cordray further noted that other rules were also written as a means of bringing more transparency to the mortgage servicing process, and to clarify which party in the process is responsible for what aspects of the situation, the testimony said. The hope is that with greater clarity in mortgage lending, there will be greater accountability on all sides so that consumers are more capable of affording and understanding their home loans.

More oversight on other types of lending
However, the CFPB has also made other strides in extending protections to consumers on other types of lending products, the testimony showed. For instance, the agency's "Know Before You Owe" campaign involves a large number of different credit types, and is designed, once again, to better explain all aspects of a potential borrower's responsibilities when they take on a line of credit. This includes not only mortgages, but also credit cards and student loans.

To that end, the agency also developed its AskCFPB online database, which is designed to answer many of the frequently asked questions a would-be borrower might have about a particular credit product prior to taking it on, Cordray told lawmakers. Further, the agency also put into place a consumer complaint database so that consumers could log any issues they had with their borrowing and potentially have it addressed by the CFPB itself if necessary. This database began with credit card complaints, but will likely branch out into other types of lending in the future. It also takes complaints about all types of credit through its website, as well as mail, phone, fax, and from other agencies, but does not yet have a database for these issues.

Complaints on the uptick
It seems that as more consumers have become aware of the CFPB's ability to handle their issues with various lines of credit, they are also becoming more apt to lodge them, the testimony said. From the beginning of the year through September 3, the agency has recoded 72,297 complaints from consumers about their credit cards, mortgages and other myriad financial products and services. Further, the pace at which it has received those complaints has increased as the year has worn on.

Finally, Cordray noted that all the CFPB's efforts to bring more clarity, rulemaking, enforcement and engagement to credit and borrowers' relationship will likely give a clearer picture of the overall consumer lending industry, the testimony said. It's important to remember that the agency has only been active for slightly more than a year, and as such is still very much just beginning to get its legs under it as a government agency that wields significant regulatory power.

While the CFPB has made noteworthy strides, it's also important for consumers to take their own financial protection seriously. For this reason, it can be helpful for you to take the time to order a copy of your credit report as often as possible. This will allow you to check the document over closely, and potentially find any unfair markings that may inadvertently be taking a negative toll on your overall credit standing. Fortunately, working with a credit repair law firm may help to clear up this kind of issue, and put your credit score back to where it deserves to be.