Twelve times. That'show much higher the wealth of white families is compared to black families. Another startling stat – at the current rate of progress, it will takeuntil 2097 forLatinx families to reach wealth parity with white families.

Wealth is savings in the bank – money owned – home equity, a retirement account, a small business minus money owed – debts like student loans or a mortgage. But looking beyond the balance sheet, wealth represents stability and security. It allows families toweather an unexpected medical bill or lost job. Forthe majority of adults that can no longer depend on a pension, wealth makes it possible to retire comfortably.

Policies and practices have kept people of color from achieving economic well-being. Homeownership isthe largest item in families' wealth portfolio, yet de jure (by law) and de facto (by practice) segregation madebuilding home equity next to impossible for people of color. A college education can connect individuals to high-wage jobs with benefits like health care, pensions, and paid leave, but segregated K-12 schools serving students of color areless likely to offer AP and honors classes and more likely to suspend and expel students. And the tax code has contributed as well, conferring more tax benefits to higher earners (e.g.mortgage interest deduction,tax-deferred retirement accounts) and allowing them topass that wealth on to their children.

A conversation about the racial wealth gap will be a centerpiece of the 2017Midwest Asset Building Conference. We are aware of the problems; it is time to work toward solutions. Housing, education, credit access, employment, and tax policies all require our attention. With a unified voice, we can advocate for changes that will address racial injustice and move toward shared prosperity.

On Friday, March 23, Senator Lindsey Graham (R-SC) introduced a bill in the Senate that would nullify protections for payday loan borrowers by repealing the Consumer Financial Protection Bureau’s (CFPB) federal payday loan rule. 

Late last year, a bipartisan group of lawmakers introduced a joint resolution under the Congressional Review Act in the House to override the rule. Since its introduction, Rep. Hollingsworth [IN-09], Rep. Banks [IN-03], and Rep. Messer [IN-06] have co-sponsored the bill.

The rule, which was finalized last year and is set to go into effect in August of 2019, already appears to be in jeopardy in the hands of CFPB Acting Director Mulvaney, who announced that the Bureau would reconsider the protections. Congress has until early May to overturn this rule. 

The rule requires payday and car title lenders to either assess a borrower’s ability to repay before issuing a loan or issue a limited number of loans without assessing a borrower’s ability to repay. This is a common sense measure that is designed to protect people from being trapped in the high-cost loans that characterize the payday and car title industries. 

“Polling data shows that 78% of Hoosiers support an ability to repay requirement,” said Erin Macey, Policy Analyst at Indiana Institute for Working Families. "Our Senators are going to have to decide whether they stand with payday lenders or Hoosiers.”  

A coalition of over 750 civil rights, consumer, labor, faith, veterans, seniors and community organizations from all 50 states energized a years-long effort to push the Bureau to implement strong protections from predatory payday and car title lending. The business model relies on repeat borrowing of unaffordable loans—75% of all payday loan fees are generated from borrowers stuck in more than 10 loans a year.  

“In a recent poll, 75% of Hoosiers opposed a payday loan store opening in their community. That’s because they know the destabilizing impacts of this business model on consumers and neighborhoods,” said Kathleen Lara, Policy Director for Prosperity Indiana. “We hope Senators listen to their constituents’ concerns, instead of undermining sound policy updates.”  

Payday and car title lending leaves people without funds to pay bills, strips them of their bank accounts, and increases their likelihood of bankruptcy. Across the country, payday and car title lending costs families $8 billion per year. The practice costs Indiana families an estimated $70 million per year in fees for loans with interest rates that average 391% annual interest.

Earlier this year, at the request of advocates, Indiana’s General Assembly rejected a measure to expand payday lending in Indiana.

There are a number of ways you can support common sense payday lending reform, including: 

• Calling Senator Donnelly (202-224-4814) and Senator Young (202-224-5623) to remind them that 78% of Hoosiers support an ability to repay requirement and that Hoosiers can't afford high-cost debt traps;

• Joining the Network Tues., Apr 3 6:30-8:00 PM for a film screening and panel discussion; and

• Adding your name or organization to our Payday Rule Sign On Letter.

This State Policy Blueprint aims to support the leadership of state lawmakers and advocates interested in creating a more inclusive path to prosperity—a path that addresses the challenges and institutional barriers facing low-income communities and communities of color. Undoubtedly, this list is not comprehensive, but rather, is designed to serve as a starting point for states looking to do more to invest in all their residents. - Prosperity Now

Prosperity Now - A State Policy Blueprint for a More Inclusive Path to Prosperity

Dear Senator Donnelly and Senator Young,

As a statewide coalition working to build assets for low-wealth Hoosiers, the Indiana Assets & Opportunity Network (The Network), we have several urgent concerns to bring to your attention regarding S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act.

 Home Mortgage Disclosure Act:

While the bill is aimed at providing regulatory relief for small banks and credit unions, the practical impact is that the legislation would exempt about 85 percent of the nation’s banks and credit unions from having to fully report on their mortgage lending under the Home Mortgage Disclosure Act (HMDA).  HMDA data is essential to fair lending oversight and investment in underserved communities. 

Recent redlining lawsuits, such as the Department of Justice vs. Eagle Bank and Trust, highlight the persistent problems related to inequitable lending practices. The Dodd-Frank Wall Street Reform and Consumer Protection Act’s expanded requirements for HMDA data collection are aimed at addressing those practices to ensure transparency in lending patterns and to monitor for violations of the Fair Housing Act and Equal Credit Opportunity Act (as well as state fair lending laws).  

The Government Accountability Office has already recognized the limitations of historical HMDA data requirements. The office stated the requirements “do not include information on the credit risks of mortgage borrowers, which may limit regulators’ and the public’s capacity to identify lenders most likely to be engaged in discriminatory practices without first conducting labor-intensive reviews. Another data limitation is that lenders are not required to report data on the race, ethnicity, and sex of non-mortgage loan borrowers—such as small businesses, which limits oversight of such lending.”

It is important to note that almost every piece of information required under the new HMDA rule is already being collected by the lender for either its own underwriting purposes or for compliance with other regulatory requirements.  We do not believe this is an overly burdensome requirement to report these details when balanced against the fact that this data is central to identifying and pursuing corrective action against lending discrimination, which is a relevant concern across Indiana.

Information already collected for underwriting:

• Street address of the collateral property (Also required for TILA-RESPA Integrated Disclosure (TRID))

• Credit score

• Total loan costs or total points and fees (Also required for TRID)

• Origination charges (Also required for TRID)

• Discount points (Also required for TRID)

• Lender credits (Also required for TRID)

• Interest rate (Also required for TRID)

• Prepayment penalty term (Also required for TRID)

• Income

• Debt-to-Income Ratio (Also required for Qualified Mortgage Rules)

• Cumulative Loan to Value Ratio

• Loan term (Also required for TRID)

• Non-amortizing features (Also required for TRID)

• Introductory Rate Period (Also required for TRID)

• Property value

• Application channel

• Nationwide Mortgage Licensing System and Registry Identifier (Also required for TRID)

• Automated Underwriting system used  

• Reverse mortgage indicator

• Open-end Line of credit indicator

• Business or commercial purpose

These categories may have been partially required or not explicitly required for compliance beforehand, but this information would likely be already collected for underwriting to some extent:

• Manufactured home secured property type

• Manufactured home land property interest

• Total units

• Multifamily affordable units

• Occupancy type

• Ethnicity, race and sex

New data:

• Borrower’s age. This is new, but we do not believe it is an undue burden.

S. 2155’s harmful provision to restrict HMDA data disclosure comes at a tumultuous time for fair lending enforcement more broadly, as the Consumer Financial Protection Bureau’s (CFPB) Acting Director, Mick Mulvaney, recently stripped the Bureau’s Office of Fair Lending and Equal Opportunity of its enforcement and supervisory powers. This Office has pursued actions resulting in a number of redlining and lending discrimination settlements with financial institutions. This is the wrong direction for Hoosier consumers and communities.

We recommend removing the HMDA reporting exemptions contained in Section 104.

Ability-to-Repay:

We also have concerns regarding this legislation’s weakening of the Ability-to-Repay standard for residential mortgage loans. By expanding the safe harbor exemption to include loans that are held in portfolio by institutions with up to $10 billion in assets, many more lenders will be protected in court against future claims of unaffordable mortgage origination. This high standard was put into place to require lenders to assess a borrower’s income and expenses before making a loan.  Provisions in Section 101, however, undermine the strength of that measure. If this is enacted, Hoosiers could again see increased rates of foreclosure due to unscrupulous lending practices, just a decade after the Great Recession hit our communities.

We believe preserving a strong Ability-to-Repay standard is sound financial policy and oppose efforts to weaken it in Section 101.

Manufactured Housing:

Lastly, we are also concerned that the bill will create problems in the manufactured housing market, which disproportionately affects low-income Hoosiers. Under provisions in S. 2155, when manufactured home sellers also offer financing, sellers can promote their own higher-cost loan products over a competitor’s more affordable one. While Section 107 does require a seller to disclose its relationships and offer at least one loan product from an unassociated lender, we still have concerns. With a requirement to offer only one alternative, there is little incentive to offer a product option that is more favorable to the buyer; as a result, the seller’s loan product will likely be presented as more appealing, thereby eliminating any consumer benefit implied by the requirement. Furthermore, Section 107 does not prevent indirect compensation between lenders and sellers, so lenders may reward retailers for marketing their loan products. All of this sets borrowers up to pay more for their loans.

We recommend that Section 107 be deleted and that Senators continue to work to find better solutions to address affordability and competition in the manufactured housing market.

We appreciate attempts to expand access to credit, but believe legislators must guard against abuses that could take advantage of consumers.

Sincerely,

Indiana’s Assets & Opportunity Network Partners

For more information please contact Erin Macey, Policy Analyst at Indiana Institute for Working Families at emacey@incap.org, or Kathleen Lara, Policy Director at Prosperity Indiana at klara@prosperityindiana.org.

FOR IMMEDIATE RELEASE: MARCH 9, 2018

Contact: Indiana Assets & Opportunity Network: Dr. Erin Macey (emacey@incap.org) or (317) 638-4232; National Consumer Law Center: Carolyn Carter (ccarter@nclc.org) or Stephen Rouzer (srouzer@nclc.org) or (202) 595-7847

Download the full report, a state-by-state chart comparison, 14 comparative maps, capsule summaries of each state and the District of Columbia laws, and summaries of each jurisdiction’s statutes at: http://bit.ly/2DJKbGp

How Well Does Indiana Protect Consumers from Unfair and Deceptive Business Practices?

National Consumer Law Center Survey Finds Weaknesses in Indiana’s UDAP Law

INDIANAPOLIS– State Unfair and Deceptive Acts and Practices (UDAP) laws prohibit deceptive practices in consumer transactions, such as sales of cars and other goods, loans, home improvements, utility contracts, and mortgage transactions. A new report from the National Consumer Law Center (NCLC) finds that while a strength of Indiana’s UDAP statute is that it has broad prohibitions of deceptive and unconscionable acts, the statute has a number of weaknesses:

• It provides a blanket exemption for insurance transactions;

• It denies consumers the right to enforce the statute in real estate transactions;

• It is one of the few states that explicitly requires consumers to prove that they specifically relied on the deception;

• It requires the consumer to send a special pre-suit notice that is not required in other types of cases; and

• It does not give a state agency authority to adopt rules prohibiting emerging scams.

“It’s clear that we have some work to do to ensure that consumers in Indiana have strong protections against unfair and deceptive practices,” said Erin Macey, a policy analyst with Indiana Institute for Working Families and member of the Indiana Assets & Opportunity Network steering committee.

"Reducing barriers for consumers taking action against deceptive practices and ensuring that our state can respond to emerging consumer scams in a timely manner are among key policy changes we must examine to try and strengthen asset and community development efforts statewide," said Kathleen Lara, Policy Director for Prosperity Indiana and a member of the Indiana Assets & Opportunity Network steering committee.

“Unfair and Deceptive Acts and Practices laws should be the backbone of consumer protection in every state, but significant gaps or weaknesses in almost all states undermine the promise of these vital protections so the deck is stacked against consumers,” said Carolyn Carter, National Consumer Law Center Deputy Director and author ofConsumer Protection in the States: A 50-State Evaluation of Unfair and Deceptive Practices Laws.  

Recommendations

Among National Consumer Law Center’s recommendations for states that want to strengthen UDAP laws are:

• Eliminating exemptions for lenders, other creditors, insurers, and utility companies;

• Making it clear that the statute applies to real estate transactions and to post-transaction matters such as abusive collection of consumer debts;

• Deleting any requirement that knowledge or intent be proven as an element of a UDAP violation;

• Providing adequate funding for the consumer protection activities of the state agency;

• Removing any gaps in consumers’ ability to enforce the statute;

• Deleting any special barriers imposed on consumers before they can invoke a statute’s remedies, such as a special advance notice requirement, a requirement that a consumer who has been cheated prove that the business cheats consumers as a general rule, or a rule that denies consumers who have suffered an invasion of privacy or some other non-monetary injury the ability to enforce the statute; and

• Amending the statute to make it clear that courts can presume that consumers relied on material misrepresentations, without requiring individual proof.

A full list of recommendations is available at http://bit.ly/2DJKbGp.

The Indiana Assets & Opportunity Network recognizes that consumer protection is an essential ingredient in asset building and strengthening local economies. As it develops next year’s policy agenda, the Network will consider these recommendations and look to strengthen Indiana’s laws.

For more on NCLC’s body of work on unfair and deceptive practices, please visit: https://www.nclc.org/issues/unfair-a-deceptive-acts-a-practices.html. Subscription information for NCLC’s Unfair and Deceptive Acts and Practices, and free access to Chapter One of all of the legal treatises in NCLC’s Consumer Credit and Sales Legal Practices Series, is available at http://www.nclc.org/library.

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The Indiana Assets & Opportunity Network was created to increase asset acquisition for low-wealth Hoosiers and strengthen local economies through policy advocacy and capacity building in partnership with organizations and coalitions. The Network is co-led by Prosperity Indiana and the Indiana Institute for Working Families.

Since 1969, the nonprofitNational Consumer Law Center® (NCLC®) has worked for consumer justice and economic security for low-income and other disadvantaged people, including older adults, in the U.S. through its expertise in policy analysis and advocacy, publications, litigation, expert witness services, and training.

During the 1960s, an alternative model for delivering health education to "hard-to-reach populations, traditionally excluded racial/ethnic groups, and other ... underserved communities" was gathering steam. The "instructors" of health education were called promotores de salud ("promoters of health"). Rather than being health care professionals, promotores were lay community members who received specialized training to provide basic health education. The practice was, and remains, especially popular in Latino communities where citizenship, language, and familiarity with the health care system are common barriers to accessing care. The core objective of the promotora is to educate target audiences about health issues affecting their community and provide guidance in accessing health care resources. 

The model is lauded as innovative because it leverages existing social networks to deliver peer-to-peer education. People often seek advice from peers, even when these individuals lack specialized knowledge or training. If misinformation is held by a community member, particularly by a figure of respect, it is likely to be passed on toothers thereby reinforcing the misinformation and resulting in negative consequences on the physical, mental, financial (and so on) health of the community. Formalizing this peer instruction in social networks by recruiting and training promotores has been shown to limit the spread of misinformation and positively affect behavior change.

Acknowledging the successes of the promotora model, the government has even taken steps to institutionalize it in our nation's health care system. In 2011, the U.S. Department of Health and Human Services (HHS) launched the Action Plan to Reduce Racial and Ethnic Disparities. The Plan includes a Promotores de Salud Initiative to "promote the participation in health education ... prevention, and health insurance programs" of the Latino population. 

The application of the promotora model from a health care application to a financial literacy application shows promise as an alternative model to deploy financial education to these same "hard-to-reach populations, traditionally excluded racial/ethnic groups, and other ... underserved communities." (For example, proponents of the promotores de salud model cite the comparatively high uninsured rate among Latinos, especially immigrants, as evidence of its necessity. High uninsured rates among Latinos parallels their high un- and under-banked rates. In Indiana, 17 percent of White households are un- or under-banked compared to 63.3 percent of Hispanic households.) In 2010, three community organizations serving low-income communities in South Texas piloted a promotores de finanzas ("promoters of finance") program.Promotores worked with community organization coordinators to develop benchmarks of financial health. Each promotora received a small monthly stipend and managed a caseload of 5 or 6 families with whom they met weekly. The relationships operated on a voluntary basis and ended when the families felt financially stable or disengaged for personal reasons. 

Although there were challenges, the pilot was successful in achieving its intended objectives—to raise awareness, teach basic financial management skills, build relationships, and empower financial planning. These objectives generated a number of positive outcomes, such as increased enrollment in public benefits programs (e.g. SNAP, childcare assistance, and Medicaid) which are often underused; increased use of financial resources (e.g. VITA, EITC, IDAs); mastery of financial literacy competencies; and increased trust between communities and the formal banking system. 

Anecdotes from the field demonstrate the promotora model's ability to provide a "culturally competent" approach to financial education. For example, a promotora spoke to a client who expressed frustration about their inability to save money for long-term financial goals. The promotora joked that she knew the client could save lots of money because his family had hosted a quinceañera for their daughter's birthday and quinceañeras cost a lot of money. The client laughed, agreed that they were capable of saving, and the session continued in a more positive manner than it had begun. This narrative shows that a pre-translated version of a financial education program may only be a literal translation of a program designed for middle-class Americans, making it unsuitable for low-income immigrants. Small changes to a curriculum or conversation, such as referencing cultural traditions, can have an out-sized impact on participant engagement and behavior change.

Although relatively new, the appropriation of the promotora model from a health care application to a financial literacy application shows promise to deploy financial education in a culturally competent way.

The Indiana College Readiness Report released by the Indiana Commission for Higher Education shows tracks the status of Indiana High School students. Indicators include number of students who took the AP test, earned duel credit from an Indiana public college, Socioeconomic status, and more.
 

Please visit Indiana.gov for other resources regarding Indiana College Readiness.

This primer aims to identify the elements of advocacy, policy design and implementation practices that improve outcomes for people of color. This primer is a companion resource to a state policy "blueprint" which recommends select policies with the potential to address growing wealth and economic inequality.  - Prosperity Now

Prosperity Now - Racial Equity Policy Design and Advocacy: A Primer

Despite national economic growth, including lower unemployment, a (once) booming stock market, and a modest decline in the poverty rate, new research from Prosperity Now shows that economic growth is inequitably distributed. Low- and moderate-income families have not shared in the benefits of broad-based economic growth.

Tuesday, February 6 marked the release of the 2018 Prosperity Now Scorecard. Issued annually, the Scorecard is a comprehensive resource for data on household financial health and policy recommendations to help put everyone in our country on a path towards prosperity. It ranks all 50 states and the District of Columbia across five issue areas: Financial Assets & Income, Businesses & Jobs, Homeownership & Housing, Health Care, and Education. The Scorecard also separately assesses states on the strength of policies to expand economic opportunity. The Scorecard is accompanied by a main findings report titled “Whose Bad Choices? How Policy Precludes Prosperity and What We Can Do About It?”

The Scorecard found scant evidence that federal and state governments were willing to embrace policies that would enable families, particularly those most struggling, to achieve financial security. On the contrary, the Scorecard main findings report shows how national discourse about economic policies reinforces false beliefs about who deserves to reap the fruits of our national labor. Without help from wealth-building policies, most low- and moderate-income individuals, particularly people of color, find themselves falling farther behind.

Overall, Indiana ranked 31st in the nation, a slight improvement from 2017 when it ranked 32nd. Vermont ranked 1st for the third consecutive year while Mississippi ranked 51st for the seventh consecutive year. Indiana’s ranking reflects the state’s uneven record of adopting wealth-building policies and other outcomes, such as income poverty, homeownership, educational attainment, and health insurance coverage.

Adopting “bad” policies and/or failing to adopt “good” policies impacts financial security outcomes. The Scorecard highlights policies, such as “Will the state’s minimum wage be at least $15 per hour by 2023 or is indexed for inflation?”, “Does the state protect against payday lending?”, and “Does the state require employers to offer paid medical, family, or sick leave?” The Indiana General Assembly has not adopted any of these recommended policies—and financial security outcomes reflect this.

In Indiana, 28 percent of jobs pay below the federal poverty level, income poverty is 2.4 times higher for households of color than for White households, and 20 percent of households have zero net worth. Raising the minimum wage would greatly help working families, particularly families of color, to achieve financial security and grow their nest eggs.

Two bills introduced in the 2018 Legislative Session would have raised the state minimum wage, which, currently, is the same as the federal minimum wage of $7.25 per hour; however, both died in the Senate upon missing the deadlines for committee hearings. SB308 (Minimum Wage) would have raised the wage to $11.31 per hour, as well as eliminated the tip credit in determining the minimum wage ($2.13) paid to tipped employees. SB121 (Minimum Wage) would have increased the minimum wage in correspondence with indices of consumer inflation (i.e. wages were set to increase to $15 per hour by 2021). The Scorecard also notes that Indiana hasn’t adopted a refundable state Earned Income Tax Credit (EITC) or Child Tax Credit (CTC), exacerbating financial insecurity for working families.

Indiana’s lawmakers missed a number of opportunities to adopt wealth-building policies necessary to pave the path towards prosperity for all Hoosiers regardless of socioeconomic status. As the Scorecard data reflects, missed opportunities to adopt wealth-building policies are negatively impacting Hoosier families and communities as they are, increasingly, excluded from our nation’s aggregate economic gains.

Dig dipper by viewing the Scorecard and its interactive tools on their website.

About Prosperity Now

Prosperity Now (formerly CFED) believes that everyone deserves a chance to prosper. Since 1979, we have helped make it possible for millions of people, especially people of color and those of limited incomes, to achieve financial security, stability, and, ultimately, prosperity. We offer a unique combination of scalable practical solutions, in-depth research, and proven policy solutions, all aimed at building wealth for those who need it most.

On Tuesday, January 16, the effective date of the “Payday, Vehicle Title, and Certain High-Cost Installment Loans” rule, the Consumer Financial Protection Bureau issued a statement, indicating it would engage in a rule-making process to reconsider its Payday Rule. The Indiana Assets & Opportunities Network (the Network) sees this as a significant step backward in consumer protections for low-income households.

Although it remains unclear why the consumer watchdog agency decided to reconsider the Payday Rule, some have suggested there is an effort to create a bank deposit advance loan safe harbor, weaken the ability-to-repay standards and verification requirements, and soften the cooling off period for the loans. Taken together, these actions would drastically weaken the protections the current version of the Payday Rule provides. The Administrative Procedures Act requires that, at minimum, the Bureau must have a public comment period for the revised rule, after which they could finalize a new version.

This announcement comes only three months after the Bureau finalized the Payday Rule, which would address some of the harms associated with payday loan products. The Payday Rule mandates that lenders determine a borrower’s ability to repay, inclusive of making loan repayments and meeting other financial obligations and basic needs, before issuing a loan. The statement also comes on the heels of the November appointment of a new acting director, upon which the Bureau added language to the agency’s description of responsibilities. The added language includes “identifying and addressing outdated, unnecessary, or unduly burdensome regulations.”

Although current leadership at the Bureau may view the Payday Rule as outdated, unnecessary, or unduly burdensome, the Network understands the Payday Rule as providing critical protections to low-income borrowers. The Network supports the Payday Rule, as it offers common sense protection to vulnerable borrowers. The Payday Rule is the culmination of more than five years of stakeholder input and extensive research showing clear evidence of harm caused by making these loans without regard to ability-to-repay. A large body of research has demonstrated that payday and car title loans are structured to create a long-term debt trap that drains consumers' bank accounts and causes significant financial harm, including delinquency and default, overdraft and non-sufficient funds fees, increased difficulty paying mortgages, rent, and other bills, loss of checking accounts, and bankruptcy.

Hoosiers widely support the Payday Rule. According to recent poll data conducted by Indiana Institute for Working Families, Prosperity Indiana, and Brightpoint in partnership with Bellwether Research and Consulting, 78 percent of Hoosiers, inclusive of Republicans, Independents, and Democrats, would favor an ability-to-repay requirement. The Network stands with the majority of Hoosier consumers in supporting these vital protections.

The Network supports initiatives to increase asset acquisition among low- to moderate-income Hoosiers and advocates for policies to protect these assets. Low-income households often turn to alternative financial services, such as payday loans, in times of economic hardship to smooth income volatility; however, these products often trap borrowers in a cycle of debt which deplete a borrower’s wealth and from which it is difficult to recover. The Payday Rule is necessary to help ensure that lenders cannot trap financially distressed borrowers in a cycle of debt that only leaves them worse off. Weakening the Payday Rule would particularly harm veterans, seniors, and communities of color—often targets of payday lenders.