Home Texas Payday Lending Headlines

0 600

The Waco City Council is set to vote on an alternative to payday and title loans for city employees as part of a pilot program.

According to Texas Community Capital Administrator Matt Hull, payday lending in Texas is more unregulated than in other states.

Hull said in an annual report by the Consumer Credit Commission, in 2014, 36 payday and auto title lenders in Waco charged borrowers up to $10 million in fees.

The Community Loan Center would allow city employees to get small loans through an online system with a longer term for lower interest than your typical payday or auto title loan, according to TCC.

 “This would help keep some of the earnings of the hard-working Waco employees, help retain that money locally from being exported as profit to the payday lenders,” said Hull.

If the city approves the proposal, the TCC, a state non-profit will run the pilot program. It expects to start the program with only a few employers. The TCC raises the funds for the loans from investors, banks with community reinvestment obligations, foundations and philantrophic individuals, according to TCC.

A Waco non-profit, the Heart of Texas Goodwill Industries, could ultimately take over becoming the local lender, if the organization’s board approves it by the end of the month. The local lender licensed by the state recruits employers into the program at no cost. In addition, the lender would have the responsibility of raising loan capital, marketing to employees and finding loans for employee.

Read the original story at KXXV.com

0 619

Screen Shot 2015-04-06 at 1.32.23 PMOn one mile of the Atlanta Highway in Montgomery, Ala., more than a dozen stores offer payday loans or cash on a car title, or they let you pawn a ring. Easy Money, Always Money, TitleBucks: They remind the Reverend Shannon Webster of vultures.

“To cluster like that for the purpose of ripping off the poor, it’s against every kind of moral instruction that we have,” said Webster, 62, pastor at Birmingham’s First Presbyterian Church.

In a confrontation that clergy cast as God vs. greed, religious leaders and consumer advocates in such U.S. states as Alabama, Kentucky, and New Mexico are trying to limit annualized interest on short-term loans that can reach 456 percent, more than 35 times higher than the average fixed-rate credit card.

In Alabama, the sixth-poorest state, previous efforts died thanks to opposition from an industry that metamorphoses to escape regulation, showers lawmakers with donations, packs hearings with lobbyists, and has fought a common database to enforce a $500 loan limit. Advocates say the increased involvement of religious groups may carry the day in the Bible Belt.

Click here to read the whole story.

Federal regulators are creating the first rules on payday loans that are aimed at helping cash strapped borrowers keep from digging themselves into a deep hole of debt. The Consumer Financial Protection Bureau says that laws governing payday lending usually fall short and that greater protection may be needed. The full details of these rules would mark the first time that this agency has used its authority to regulate payday loans. Recently, it has attempted to step up enforcement, which includes a $10 million settlement after accusing ACE Cash Express of harassing borrowers. A payday loan is usually $500 or less. Borrowers will provide a personal check dated with their next payday for the full balance, or they will give the lender permission to take it out of their bank accounts. The total due includes charges that are often much higher than the borrowed amount. Rollovers are also common. Legislators in Ohio, Louisiana and South Dakota unsuccessfully tried to restrict the loans in the last few months. The Consumer Federation of America says that 32 states allow payday loans at triple-digit interest rates, or with no rate cap at all.

“Our research has found that what is supposed to be a short-term emergency loan can turn into a long-term and expensive debt trap,” said David Silberman, the bureau’s associate director for research, markets and regulation. They found that over 80 percent of payday loans are rolled over or at least followed by another loan within 14 days. The agency is considering options like establishing strict rules to make sure the consumer has the ability to repay. Lenders say that they fill a vital need for people who are in a rough patch financially.

“We offer a service that, if managed correctly, can be very helpful to a diminished middle class,” said Dennis Shaul, chief executive of the Community Financial Services Association of America. 

Maranda Brooks, a records coordinator at a Cleveland college, took out a $500 dollar loan to help with her electric bill. With “no threat of loan sharks coming to my house, breaking kneecaps,” she joked, Brooks agreed to the $50 fee. Two weeks later, she saw that the full $550 was deducted from her $800 paycheck. To cover expenses, she had to take out another loan which started a year long cycle. “It was a nightmare of going around and around,” said Brooks.

Many faith leaders and consumer advocates are pushing Congress to form a national interest rate limit for payday lenders, rather than the outrageous three digit rates that are currently being charged. 80 activists from 22 states came to Washington in the hopes that they might shape new laws that are expected from the Consumer Financial Protection Bureau. Many of their congregations are surrounded by payday loan businesses that they say are preying on poor residents. They do so by charging high interest rates and causing a vicious cycle of debt. “Together, you guys are really bringing a strong message and a light and a moral perspective about predatory lending that’s valuable,” said Rachel Anderson, director of faith-based outreach for the Center for Responsible Lending, which lead a three day training session for religious leaders.  “We hope that your message is heard strongly.”

The leaders have asked members of Congress to pass laws that limit interest rates, citing a 36 percent interest rate limit required by the Military Lending Act. “If it’s fair for the military, we felt it should be fair for all people,” said the Rev. Susan McCann of Grace Episcopal Church in Liberty, Mo. Stephen Reeves, who is an associate of the Cooperative Baptist Fellowship in Georgia, said that a limit would eliminate the “creative loopholes” that predatory lenders use. “That’s the solution — to make these funds affordable and attainable, where the trap is not set for the members of our communities and our churches,” he said.

The Community Financial Services Association of America, who represents paydaylenders, is rejecting claims that they prey on the poor and minority communityes, saying that they “provide services to a broad cross section of Americans because there is widespread demand.” They say “payday advance customers are typical hardworking adults who may not have savings or disposable income to use as a safety net when unexpected expenses occur.”

In October, the National Association of Evangelicals released a statement  asking payday lenders to offer services that “do not exploit poor and vulnerable borrowers” and asked the CFPB to such abuse. NAE Vice President Galen Carey said that some consumers might be able to get a 3.5 percent interest rate though a credit union, but many other do not. “That sort of resource is not available to all people, and so that’s why we need to have other provisions,” he said.

It’s not a secret that predatory lenders like Texas because of its lax policies. Take a look at financial fillings for some of the publicly traded alternative finance companies and you will see many references to Texas as a market for their growth. Between 2004 and 2013, the number of auto title lenders and payday lenders has risen from 1,303 to 3,436 in Texas. This is a rate of growth of 264 percent, which is close to what an average payday borrower pays in interest. Saying this is probably being too kind, because rates typically fall between 391 percent, and 521 percent, says the Center for Responsible Living. Cash Station Ltd, which is better known as Power Finance Texas, has sued the city because of its Payday lending ordinance. Their ownership includes a partnership run by state Rep. Gary Elkins, of Houston, who has fought regulation of the payday lending industry.

Texas’ failure to regulate payday lending has led cities, including San Antonio, to take action. San Antonio now requires payday lenders to register with the city and pay a fee of $50. They also are limited to cash advances of no more than 20 percent of a borrowers gross monthly income. Cash Station has refused to register and pay the city the $50 application fee. Managers at its two stores also refused to allow the police access to their business records. These managers are now facing both fines and misdemeanors. Cash Station has sued, and is arguing that it is being harmed by the loss of those employees and the disruption of their business. They could always just pay the fee and comply, however.

0 10194

Powered by Scoop.it

Powered by Scoop.it

Powered by Scoop.it

Powered by Scoop.it