May 14, 2020
EXCERPT: The Consumer Financial Protection Bureau (CFPB) has been receiving a record number of complaints from consumers regarding banks and lenders, prompting more effort to keep consumers informed about their rights and the programs available to them.
The coronavirus pandemic has forced millions of Americans out of work, leaving them unable to pay their loan bills and prompting them to seek financial relief from their banks and lenders.
The coronavirus pandemic's continued wrath on the US economy is leaving millions of Americans scrambling to handle disastrous financial fallouts. Businesses are shutting their doors, and workers are being laid off, forcing them to seek out financial support programs through their lenders and banks.
But with all these efforts to financially support struggling Americans come a pile of complaints about banks and lenders. According to the Consumer Financial Protection Bureau (CFPB), an unprecedented number of complaints about banks and lenders were made in April as the COVID-19 pandemic continues to take its toll on the economy.
CFPB Complaint Numbers Hit Record High
More specifically, the CFPB received 42,774 complaints in April, the highest number the bureau has seen since it started tracking them. The majority of complaints related to mortgage and credit card debt, as clients are unable to keep up with their bills, thanks to a drastic reduction in income.
Part of the problem may also stem from the lack of information surrounding federal relief programs. Some consumers may not be up-to-speed on their rights and what is available to them.
CFPB Director Kathy Kraninger promoted various outreach efforts being taken on by the bureau to ensure consumers are well informed about their rights under current legislation and federal aid programs. This includes the historic $2.2-trillion COVID-19 rescue package recently signed by President Trump aimed at combating the financial distress caused by the pandemic.
The CFPB is seeing stacks of complaints rolling in from consumers in regards to banks and lenders, with April marking the highest number of complaints the agency has received in a month.
The CFPB was developed to protect consumers from fraud, and this pandemic is certainly putting the agency to the test. It oversees the regulation of the consumer lending industry, and with a spike in the number of consumers looking to their banks for financial help, there is a much stronger dependence on the agency to protect consumers from abuse.
As per the director, the CFPB is dedicated to making sure that consumers are being filled in on their entitlements, as well as protecting them against unfair practices that some lenders may take part in to deceive consumers.
Loan Inquiries Drop Amid Coronavirus Pandemic
Not surprisingly, credit inquiries for various loan types dropped in March while the coronavirus continues to spread throughout the nation, causing widespread job losses. According to a recent CFPB report, car loan inquiries declined by 52 percent, mortgage inquiries decreased by 27 percent, and credit card inquiries dropped by 40 percent between March 1 and 31, compared to typical levels seen in the same month over previous years.
The drops in loan applications and credit inquiries could be triggered by a number of factors, including a decrease in consumer confidence, a pull-back on loan offerings among lenders, and a decline in the sale of homes and vehicles as physical distancing continues.
Lenders Encouraged to Communicate With Clients While Hedging Against Their Own Risk
Banks and lenders have a duty to keep their clients informed about the types of relief options that are available to them. But at the same time, lenders are urged to take steps to protect their own loan portfolios against risk, and that can be done by selling off risky assets and acquiring short-term assets that present less risk.
Garnet Capital facilitates these types of transactions to develop loan portfolios that are robust enough to withstand the downward pressures of economic turmoil.
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