July 28: CFPB Updates This Week

Our research shows that people in Puerto Rico have lower financial well-being compared to people in the rest of the United States, and they struggle more to make ends meet and participate in mainstream financial services. The CFPB works to ensure fair and equal access to financial products and services, especially among those who have been historically left out of full participation in the marketplace. This includes making a concerted effort to ensure that Puerto Rico and the territories are being analyzed and served just as other regions of the United States. In a recent study, we looked at how people living in Puerto Rico use financial products and services, as well as their financial well-being.

When landlords use information from a rental background check that qualifies as a “consumer report” against a tenant, they are required to tell the tenant of their decision and how to contact the company that created the background check. The federal housing agencies encourage landlords to provide this information to renters in writing. The United States Department of Housing and Urban Development, the Federal Housing Finance Agency, and the United States Department of Agriculture are reminding landlords of their obligation to inform tenants and prospective tenants of their rights. When landlords use information from a consumer report, like a rental background check, against a tenant, the Fair Credit Reporting Act requires landlords to tell the tenant of their decision and how the tenant can contact the company that created the background check. This obligation, known as the adverse action notice requirement, applies to any action against a tenant based on information from the background check, including denying a rental application, increasing the rent charged or security deposit, or requiring a co-signer. As the agencies state, providing this information in writing is the best way to ensure that tenants get the information they need, and for landlords to demonstrate they are meeting their legal obligations.

Cashflow data (regular savings, accumulated savings, paying bills on time) helps predict ability to repay and repayment risk, even when accounting for credit scores. Most loan underwriting in the United States makes use of credit reporting data to evaluate repayment risk. Lenders frequently use third party credit scores, and many also develop their own proprietary models. Credit reporting data include individuals’ performance on a variety of credit products, such as mortgages, credit cards, auto loans, and student loans, as well as certain public records and some other forms of lending.¹

The Consumer Financial Protection Bureau (CFPB) released a new Supervisory Highlights report which found unfair, deceptive, and abusive acts or practices across many consumer financial products. For example, auto lenders have originated loan balances above the real value of the car being purchased and engaged in illegal collection practices while servicing these loans. The latest edition of the Supervisory Highlights report covers findings from CFPB supervisory examinations completed from July 2022 to March 2023.

Director Chopra provided prepared remarks at an event hosted by the U.S. Department of Housing and Urban Development on tenant rights.