The increasing problem of student-loan debt is causing a sea change in the housing market, Richard Cordray, director of the Consumer Financial Protection Bureau, told a crowd at the Boulder Summer Conference on Consumer Financial Decision Making.

“According to an analysis by the Federal Reserve Bank of New York, for the first time in at least a decade, households with student-loan debt are less likely to have a mortgage than those without student-loan debt,” Cordray said. “We are seeing more student-loan borrowers shying away from making this investment.”

Forty-nine percent of Americans recently surveyed by the National Association of REALTORS® said that student loan debt is a “huge obstacle” to home ownership.

Lawmakers and regulators are targeting the operation of student-loan servicers. Cordray said the CFPB is working with other regulators to provide incentives to student-loan servicers to provide more modifications and refinancing options for private student loans. CFPB also plans to conduct more investigations into student-loan servicers who are making it difficult for borrowers to prepay portions of the loan or charge excessive fees for servicing processing errors, and the agency plans to fine those found at fault.

Source: Housing Wire