URGE GOVERNOR TO SIGN PAYDAY LENDING BILL
The bill improves borrower terms with five new regulations. First lenders can loan no more than $700 or 30 percent of the next paycheck. Currently, lenders like MoneyTree, Inc, a private firm and the largest lender in the state advertises it “… will only loan money to people with both a checking account and a regular paycheck that will cover the loan payment.”
The second regulation is that if a borrower cannot pay or does want to pay off the entire loan, lenders would be required to offer an installment payment plan after the first loan. The present system allows lenders to refuse an installment loan until the borrower takes out three more loans from that lender. The installment plan must be least 60 days and can only charge an origination fee of ten percent.
A third requirement is that Washington’s Department of Financial Industries (DFI) must provide a database of borrowers payday debt that lenders may use in real time. A fourth restriction is that lenders must not lend money to borrowers who are in default on another loan or are paying on an installment loan. Finally borrowers would be restricted to eight loans over 12 months.
These regulations would help solve problems that Kathy Ochs at Serve Wenatchee despises. “The loans are innocent on the face, like rainy day funds.”
Her clients who finally seek help from community agency Serve Wenatchee have borrowed for kids’ school needs, medical expenses, or car repairs, but quickly ended up paying only the fees for months.
Local businesses argue the bill is tilted towards large owners, offices and jobs will be lost, and borrowers will have few safe solutions.
I disagree. These regulations are unlike ones in Oregon, Arizona, Florida, and federal regulations on loans to service personnel, because they restrict interest to 36 percent. This bill leaves very high interest rates in place, so lenders should be able to make a profit at interest rates around 250-300 annual percentage rates. But with such interest rates, borrowers should have the ability to convert loans to installment loans so they can escape the cycle of dependency.
Support this bill in its entirety by calling the Governor at 1-800-562-6000.
Posted by JSR at 5/15/2009 3:29 AM 
Categories: Wealth,Build Better Communities,Politics,Compassion,Justice
Tags: paycheck lending Bill 1709 Washington Fair Loan Act 2009 payday loans Payday Lending MoneyTree
Categories: Wealth,Build Better Communities,Politics,Compassion,Justice
Tags: paycheck lending Bill 1709 Washington Fair Loan Act 2009 payday loans Payday Lending MoneyTree
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