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The Interfaith Center has been a champion on the issue of reforming predatory lending in Virginia for several years. The issue of pay day lending and car-title lending is now getting national attention:

“Our loan is $1.50 per hundred per day, so after 5 days, $7.50,” Berry says. “It would be $107.50 is what they owe back.”

That’s an annual interest rate of 547 percent. A year after taking out the loan, you’d owe more than five times what you originally borrowed.

The predatory lender mentioned in the article above says all that needs to be said:

Berry says he would never take out a payday loan

During the 2010 legislative session, the Virginia General Assembly passed legislation to regulate car title lending in Virginia. Although far from ideal, the measure is a significant step forward for low and moderate income consumers. For starters, the bill closes the open-end credit loophole to car title lenders and establishes a new code section for their product. The bill also requires car title lenders to be licensed and regulated by the State Corporation Commission.

Equally important, the legislation sets multiple parameters for individual loan transactions. It establishes a minimum loan term of 120 days, a maximum loan term of one year, and limits loan size to 50 percent of a vehicle’s fair market value. The measure also requires car title loans to be closed-end transactions and mandates repayment in substantially equal monthly installments of principal and interest. Additionally, the bill prohibits refinancing, renewals, or roll-overs. If a borrower defaults, the lender’s only recourse is to repossess the vehicle.

The glaring flaw of Senate Bill 606 is that it continues to allow car title lenders to charge triple-digit annual interest rates, as high as 264 percent. Even this, however, is a marginal step up from the status quo where annual interest rates range from 300 to 360 percent. So, on balance, Senate Bill 606 is a measure of progress for consumers.

Greed may have undercut our economy but more greed will not help America rebound going forward. We need Wall Street accountability to keep American families from ever having to experience what big bankers and financial institutions have done to this country ever again. This “Great Recession” has created tremendous hardship and that is unfair for everyday people who are working so hard just to pay the bills.

Read more…

For years the Virginia Interfaith Center has worked to cap interest rates of car title and payday loans at 36%APR.  During these years of small reforms, which have had a solid history of impact, one of the things that constantly struck us was the prevelance of female borrowers, particularly from the African American community.

A new study describes why it is that predatory lenders have such an easy time luring women of color into high interest loans.  On average, the net worth of an African American woman is about the value of a deli sandwich.

This link goes to a story where Helen O’Beirne, from HOME, and I comment about this significant issue for housing and community development. rss-13315-1

So while white women have a net worth or wealth level of just over 42,000, black women have a net worth of only about $5 when you take assets and subtract debt.  There are many reasons why this might be but it is clear that we need to get to the bottom of finding a solution to remedy this situation in the future.

By: LaTonya Reed

Last week, the House passed legislation to regulate car title lending in Virginia by a vote of 96 to 2. Although far from ideal — and I mean far — the measure is a significant step forward for low and moderate income consumers. For starters, the bill closes the open-end credit loophole to car title lenders. That was one thing we were working toward. The bill also requires car title lenders to be licensed and regulated by the State Corporation Commission. That was something else we wanted.

Read More HERE.

SB 20 Open-end loan plans; caps finance charges and fees that may be charged on extension of credit.

Senate: Failed to report (defeated) in Commerce and Labor (6-Y 9-N)

YEAS–Colgan, Miller, Y.B., Edwards, Herring, McEachin, Deeds–6.

NAYS–Saslaw, Wampler, Norment, Stosch, Watkins, Wagner, Newman, Puckett, Puller–9.

ABSTENTIONS–0.

Senators Saslaw, Puckett, and Puller joined Republicans in Senate C&L in supporting car title interest rates at over 300% interest.

Even though the majority of Democrats on the committee agree with Senator Mamie Locke that interest on secured loans should never be higher than 36%, the majority leader, a SWVA banker, and a NOVA legislator disagreed.

Predatory lender lobbyists swarm Senator Saslaw

On the subject of payday loan interest caps the payday lenders picked up Senator Edwards as well:

SB 21 Payday loans; limiting interest to a maximum annual rate of 36 percent.
02/15/10  Senate: Failed to report (defeated) in Commerce and Labor (5-Y 10-N)

YEAS–Colgan, Miller, Y.B., Herring, McEachin, Deeds–5.

NAYS–Saslaw, Wampler, Norment, Stosch, Edwards, Watkins, Wagner, Newman, Puckett, Puller–10.

ABSTENTIONS–0.

Watch a video below of a car-title lending victim speaking about her brutal experience:

Car title lenders charge astronomical interest rates, ranging from 25-30 percent per month, which amounts to an annual rate of 300-360 percent. In addition, car title lenders require borrowers to pay transactional fees ranging from $50 – $100.

CLICK HERE TO READ MORE

By: LaTonya Reed

Car title lending hits the mean streets of the GA!

Car title lending will be a hot topic during the 2010 General Assembly session.  Already, nine bills are on the scene and lawmakers still have time to file new legislation.  Three of the proposed measures are squarely in line with the Virginia Interfaith Center’s push for reasonable limitations on the annual interest rates allowed for car title loans.  Senate Bill 20 (Locke) would cap annual interest rates at 36 percent, regardless of loan amount.  And House Bill 187 (Morrisey) would do the same, but also require lenders to be licensed.  Senate Bill 167 (Edwards), like the Consumer Finance Act, contains a 36 percent cap for loans of $2,500 or less.

Read more…

Chris Flores, formerly of the Daily Press, has a new blog out. He covered the payday lending battle in Virginia extensively for the past few years and is now free to tell us what he really thinks about the predatory lending institutions in the Commonwealth. Check out his article HERE!

When we speak to legislators and citizens about the abuses of payday and car title lenders, the numbers we use are so hard to believe that they seem, well unbelievable.  This contract from Advance America not only proves that they are making open ended loans like title lenders, but it also points out that the interest rate is 456%APR unless you are willing to give them access to your bank account electronically.  Additionally, you will note that while Virginia used to have a $500 cap on payday loans, Advance America is now making up to $750 loans by joining the car title lenders in misusing open-ended credit laws.

Senator Whipple, the Center’s 2006 Legislator of the Year, explains in this video how the 2008 Payday Lending reform was supposed to work…..before the payday lenders realized they could mis-use the same open-ended credit statute that Car Title lenders use to charge triple digit interest.  It will be interesting to see, given how happy Senator Whipple is with the outcome of the 2008 debate, if Senate democrats will actually take leadership in ending predatory lending in Virginia.

Even before the Virginia General Assembly begins, Commissioner Joe Face this week sent a letter to the Daily Press asking readers to not blame him for predatory lenders continued attack on vulnerable Virginians.  In an attempt to not be drawn into Virginia’s perennial, “Opps, they did it again,” with payday lenders, Commissioner Face reminds us all that it is not the SCC’s fault that so many in the GA are uninterested in resolving the Car Title and Payday Lending industry abuses.  The next few weeks should give Virginians an idea of the continued strangle-hold lenders have – a handy of list of the industry is among the names listed on VPAP.