A leading consumer advocate is raising concerns that debt collectors may become much more aggressive during the COVID-19 pandemic.
Richard Cordray, former director of the Consumer Financial Protection Bureau and author of “Watchdog: How Protecting Consumers Can Save Our Families, Our Economy, and Our Democracy”, said in an interview with CNBC that the CARES Act will not be a silver bullet when it comes to helping people during the health crisis.
In a wide-ranging interview, Cordray said that the process for obtaining relief under the CARES Act can be complex and difficult for some consumers to understand. For instance, the mortgage forbearance relief outlined in the bill only applies to people with fedarally-backed mortgages throug Fannie May, Freddie Mac and Ginnie Mae. That leaves out between 35 and 40 percent of all mortgages.
Cordray says his former agency, the CFPB, needs to be aggressive with lenders about enforcement of consumer protection rules.
But he said the thing that keeps him up at night is the specter of collection agencies becoming even more aggressive in their collection efforts. He said they will possible cross legal lines in an effort to recoup outstanding debt, and people need to have an advocate looking out for them when they have lost their jobs, had hours severely cut, or had credit ruined by circumstances beyond their control.
Cordray said that the suddenness of the economic downturn is unprecedented. And many who thought the recession of 2008 was a once-in-a-lifetime thing suddenly find themselves facing the same issues just 12 years later.