Consumer Action serves up financial empowerment to its network

National Financial Empowerment Conference attendees

"Credit is a muscle; if you don't use it you lose it," Ann Marie Erie advised the financial counselors and advocates who joined Consumer Action for its second annual National Financial Empowerment Conference in Chicago in November. Erie, a financial educator for Neighbors Federal Credit Union in Los Angeles, was part of a panel that focused on rebuilding credit after foreclosure.

This year's National Financial Empowerment Conference was underwritten by Consumer Action's Managing Money and Housing Information Projects, Visa and Capital One. Additional support was provided by Citi.

Participants at the free two-day conference learned that no matter which route their clients take out of housing distress, be it foreclosure, short sale or deed-in-lieu of foreclosure, their credit score will take nearly the same hit. Sarah Davies, a senior vice president for VantageScore credit scoring system, explained that recent late payments or foreclosures do the most damage to credit scores and that only time and disciplined, on-time credit payments can heal the score.

Veterans' advocates, credit and housing counselors, and scores of other community-based groups in Consumer Action's national network gathered to share best practices and to learn about the latest issues affecting communities. More than 60 financial empowerment counselors from close to two dozen states shared techniques on how to break the cycle of long-term poverty and help the "new poor," who have seen their finances disintegrate, along with the economy, since 2008.

While families may have lower incomes, their technology needs are growing as they struggle to remain part of our increasingly wired society. Deciphering whether cell phones and cable TV were a "need" or a "want" was a challenge raised by many counselors who work to help individuals live within their means.

Panelists suggested using role models to help people take control of their financial lives. They recommended providing access to people who have achieved financial independence to make concepts like budgeting stick. Panelists noted that language is important. For example, the term "spending plan" carries less baggage than the word "budget" does.

"If you don't plan how to spend your money, someone else will," warned Vernette Allen, director of the Financial Futures Initiative at Action for Boston Community Development. Allen told the audience to encourage people to use their dreams, values and goals to create a spending plan that works.

Day one of the conference included experts from San Francisco and Chicago explaining a movement called "Bank On," where cities partner with banks and credit unions to offer low- to middle-income consumers the opportunity to open a free checking account. Some programs offer "second chance" accounts to those who mishandled an account in the past. Gail Sanders explained that the "second chance"-style checking accounts from Fed Choice Federal Credit Union come with financial counseling to help individuals overcome previous mistakes. Each local Bank On program differs somewhat. Some focus on those who have never had an account and can save money on fees by using a bank or credit union instead of a check cashing service. One hundred cities now offer Bank On programs.

During his presentation, Dr. Billy Hensley of the National Endowment for Financial Education (NEFE) reminded participants of the importance of evaluating their work. Dr. Hensley suggested that counselors ask adult students what the "most engaging and least engaging" parts of a training were to try to capture valid outcomes from the effort.

At the start of the second day, the nation's new consumer financial regulator, the Consumer Financial Protection Bureau (CFPB), was the focus of a presentation by Consumer Action's Ruth Susswein, deputy director of national priorities. Susswein described how the CFPB, as the only regulator with the sole mandate to protect consumers, is trying to be a different kind of overseer by engaging consumers, lenders, investors and any other interested parties before writing new financial rules.

"The CFPB opened its doors only four months ago, and some in Congress have been working actively to slam those doors shut," said Susswein.

Just days before the conference, said Susswein, the CFPB had kicked off its "Know Before You Owe" campaign, designed to make disclosure forms easy to understand when applying for a mortgage or student loan. The agency is combining two key mortgage forms, the Truth in Lending Disclosure and the HUD-1 Settlement Statement, into one form and consolidating other disclosure requirements to cut down mortgage paperwork by as much as 50 percent.

The CFPB opened its complaint division by working with card issuers to resolve consumers' credit card complaints, said Susswein. "All types of consumer complaints are accepted but only credit card complaints will get the Bureau's full attention for now." (To file a complaint, visit http://www.consumerfinance.gov or call 855-411-2372.) Susswein told participants that the bureau will begin tackling mortgage servicing and foreclosure complaints in December.

Speaker Patrice Ficklin, associate director of the CFPB's Office of Fair Lending and Equal Opportunity, was brimming with pride and excitement as she shared some of the bureau's plans with the crowd. Ficklin explained her department's mission to ensure "fair, equitable and nondiscriminatory access to credit." She told the audience that the bureau is working on many of the issues raised by participants, such as payday lending, title lending, private student loans and more.

Consumer Action's Michelle De Mooy turned the group's attention to financial privacy, with a cautionary note to participants about the need to be vigilant in protecting sensitive personal information. As we increasingly conduct financial transactions on the Internet and mobile phones, we need to be informed as to how our financial information is used and who has access to such sensitive information.

De Mooy warned participants that companies and social media sites, like Facebook and LinkedIn, are not protecting our financial details as well as they should be, and that mobile phone users are exposed to financial risk whenever companies merge data with other data to create our "digital profiles."

"Did you know that Google keeps your searches for 18 months?" De Mooy asked the audience, which seemed surprised by her statement.

De Mooy argued that we must be our own financial privacy watchdogs. She recommended using passwords or PINs on smartphones and computers to make it harder for hackers or thieves to steal our personal information.

The conference wrapped up with attendees reciting their favorite "best practices" gleaned during the two-day event. "I'm going to insist that my clients use a Ziploc bag to keep one month's worth of receipts to see where their spending really went, " said one financial counselor, while heads nodded all around the room.