Consumer Law & Policy Blog

Access to Justice Index

The National Center for Access to Justice has released the "Access to Justice Index," an online resource presenting data on the "performance of state-based justice systems in assuring access to justice." Going state by state, the index looks at four elements of state-based justice systems:

• the number of civil legal aid attorneys serving the poor;

• systems available to assist self represented litigants;

• systems available to assist people with limited English proficiency; and,

• systems available to assist people with disabilities.

 The Index shows Oklahoma.Louisiana, and Illinois at the bottom end, and Minnesota, Washington, DC, Washington (state), and Colorado, at the top.

The authors explain: “The Justice Index is a snapshot of the degree to which best practices for ensuring access to the civil and criminal justice systems have been adopted across the country.” And they offer this caveat: “While informal practices may be in place and effective on a regional basis, or may be developed across the state through local rules, the Justice Index focuses on statewide rules because they apply to everyone. It is also more difficult to collect data on a local level, although NCAJ is developing strategies for doing so. Because the Justice Index is selective, rather than comprehensive, it should always be thought of as the beginning, not the end, of an ongoing conversation about best practices and about which states are providing access to justice.”

Levitin & Ratcliffe Chapter on the Duty to Serve in Housing Finance

Adam J. Levitin of Georgetown and Janneke Ratcliffe the University of North Carolina at Chapel Hill's Center for Community Capital have written Rethinking Duties to Serve in Housing Finance, in Homeownership Built to Last:  Lessons from the Housing Crisis on Sustaining Homeownership for Low-Income and Minority Families (Brookings 2014).  Here is the abstract:

In this chapter, we consider the role of duties-to-serve in the housing finance market -- the patchwork of obligations on lending institutions to reach out to traditionally underserved communities and borrowers. We review the current regulatory framework and history of various duties-to-serve, including the Community Reinvestment Act, GSE Affordable Housing Goals, and FIRREA requirements for Federal Home Loan Banks, and identifies several problems within the framework. Going forward, we argue, a fair and inclusive housing finance market needs to involve a reconceptualized set of duties-to-serve that recognize the public purposes of financial services.  Accordingly, we recommend four changes to the duties-to-serve regulatory framework:  

(1) duties-to-serve should apply universally to the entire primary market, regardless of institution type; 

(2) duties-to-serve should apply equally to all secondary market entities; 

(3) duties-to-serve must be supported by a more robust set of evaluative tools, metrics, and incentives; and 

(4) duties-to-serve must have a credible enforcement mechanism. 

To effectuate these changes, we suggest the creation of an independent duty-to-serve commission that would advocate for greater financial inclusion and serve as a check on financial institutions' compliance with regulatory requirements outside of prudential bank regulators. An unconflicted institutional actor with a single duty of advocating for duties-to-serve would reduce the regulatory arbitrage incentives that plague the current duties-to-serve regime.

CRL Chapter on Car-Title Lending

Susanna  Montezemolo of the Center for Responsible Lending haas written Car-Title Lending.  Here is the abstract:

Provides an overview of car-title lending and its impact on U.S. households. Car-title lending — making expensive loans secured by the title of a vehicle a borrower owns outright — has become a multi-billion dollar industry in the U.S. over the last decade. CRL estimates that car-title lenders generate nearly $2 billion in loans annually, with borrowers paying more than $4 billion in fees — twice the amount loaned — in the process. While borrowers in most states are protected from these high-cost loans, 21 states permit these products that trap borrowers in debt and put one of their most significant assets on the line.

This chapter discusses key abuses in car-title lending, including a lack of underwriting, balloon payments, high APRs, loan churning and the threat of repossession. This chapter also updates recent estimates on the size of the car-title lending market and policy recommendations for state legislatures and federal regulators.

Peter Holland: Debt-Buyer Lawsuits and Inaccurate Data

Here, in the Boston Fed's quarterly newsletter.  Excerpt:

The problems inherent to the  business model are most starkly exposed in the context of lawsuits filed by  debt buyers. On the one hand, the debt buyer acknowledges in the forward-flow  agreement that the data it received from the bank is limited and potentially inaccurate,  with frequent specific disclaimers of warranty of title, validity, accuracy,  and documentation.

On the other hand, despite  explicit knowledge that the specific accounts are highly suspect, debt buyers  argue in court that the allegations about ownership, liability, and amount are  “inherently reliable” because the data came from a highly regulated national  bank, which has a duty to keep accurate records. All the while, the debt buyers  fail to disclose to the courts or to the defendants the terms of the  forward-flow agreements, and typically fight any efforts undertaken by  consumers to obtain them.