Yesterday, Sen. Ron Wyden (D-Ore) questioned a Consumer Financial Protection Bureau representative, associate director David Silverman, about the agency’s authority to deal with installment loan lenders. Silverman indicated that the CFPB had no supervisory authority over such lenders but did have broad investigation powers.
Installment loans are yet another exploitative “small money market” product notorious for resulting in usurious interest rates, extra fees and additional charges from unnecessary insurance placements. Unlike payday loans which are usually due on a date certain, installment loans are paid in increments over time spanning from months to years. Reportedly, borrowers are encouraged to unwillingly renew these loans, as though they are credit cards, which could accrue as much as 200% annual rates.
The focus of Senator Wyden’s questions was a company called World Finance which was highlighted in a ProPublica story this spring because of their predatory tactics. World has more than $800,000 customers and a major share of what has become a $10 million industry.
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