Watch a Screening of “The Ordinance” with Stop the Debt Trap LA on Feb 22nd

Join Stop the Debt Trap LA on Wednesday, February 22nd from 2 – 4 pm for a screening of “The Ordinance” documentary film, followed by a short campaign briefing and planning meeting. the-ordinance

With billionaires, racists and Wall Street executives running the country, our communities are especially vulnerable.

Come learn more about how we’re organizing locally to shore up protections for consumers and communities against predatory lenders.

“The Ordinance” is a new short film focused on the fight to reform predatory lending in Texas, and the role that local communities, faith leaders and policy makers played in putting out the “not welcome” mat to financial predators in their community.

Much like in California, the Texas legislature is partial to the payday loan industry, and legally allows for abusive triple-digit interest rate lending. In Texas and in California, communities are fighting back and organizing to pass local policies in their cities to stop the growth of these industries and send a strong message to state and federal policy makers that enough is enough!

Come learn more about the local movement against predatory payday and car title lenders, and how you can get involved in our advocacy campaign!

Light refreshments will be provided.

Please RSVP either on CRC’s Facebook page, or by emailing Liana Molina.

If you have any questions or would like more information, contact Liana at liana@calreinvest.org

You can watch the trailer for the movie by clicking here.

Testimony from California Reinvestment Coalition on Consumer Loans

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

 

On January 11th, the California Assembly Committee on Banking and Finance held a hearing, “Small Dollar Consumer Lending in California.”

Paulina Gonzalez’ testimony is featured in its entirety below.  After reading her testimony, you may also be interested in seeing CRC’s other resources on payday lending, linked below.  Want to join the conversation and share your experience? Visit #StopTheDebtTrap on Twitter and join the conversation!

Paulina Gonzalez Testimony on Small Dollar Consumer Lending

I am the Executive Director of the California Reinvestment Coalition.  We are a statewide financial and economic just coalition with over 300 organizational members across the state.  I know firsthand the needs of our communities, not only from the work that I do and the communities that CRC represents, but I know this because this is the community that I come from.  I grew up in working class south Montebello, in an immigrant family where we struggled to make ends meet.  But luckily for us, we never had the option of taking out a payday or installment loan that would have left us in a worse situation.

CRC’s members work on the front lines of California’s low income communities and communities of color.  Our members are affordable housing developers, CDFI small business lenders, asset building organizations, and tenant rights organizations.

Our membership serves the constituencies that are the target of the aggressive marketing and outreach efforts of high cost lenders, and they are located in low income communities where payday loans and installment loan store fronts are heavily concentrated.  They serve the constituency that therefore often fall prey to these high cost products.

The lobbyists and corporate executives of the predatory lending industry say that they know our community needs and that they our providing a service with their products by helping families during an emergency when they can’t pay their rent or when their car breaks down.  They say that they provide a last ditch option when our communities have no other option.

But really the so called service they are offering is analogous to offering a starving man poisoned food.

These products leave families in a worse situation than when they started; they leave families thousands, if not tens of thousands of dollars in debt paying 100-500% above the principle over the term of a loan.

CRC agrees with the general goal and principal of expanding access to credit for our communities, particularly for under-served populations, however we want to ensure that the credit that is being offered is fair, affordable, responsible credit, not high-cost predatory loans that trap borrowers in a cycle of debt.

We do not believe that high cost credit, in other words, that poisoned food, is the solution for our communities.

We are concerned about the weak legislative and regulatory framework governing payday lending below $300 and car title and installment lending over $2,500.  The failure to regulate this lending space at each end of the lending spectrum allows for lenders to conduct high cost predatory lending with impunity in this space.

At one end of the spectrum, in the under $300 range you have unregulated interest rates and APRs as high as 450% on these loans.  In addition, you have a business model that relies on repeat borrowing.  The CFPB just last year took an enforcement action against ACE Cash Express, one of the largest payday lenders in the country. They found that ACE used illegal debt collection tactics – false threats of lawsuits or criminal prosecution – to pressure overdue borrowers into taking out additional loans they could not afford.  This is the profit making model these lenders rely on, as evidenced by their employee training manual.

On the other end of the spectrum, in the above $2,500 range, the business model is based on triple digit interest rates that force consumers into loans that can take a decade to pay off and can cost tens of thousands of dollars above the original loan cost.

Imagine paying $30,000 on a $5,000 loan.  Does that sound like a service to you? Or does that sound like poisoned food?

Consumers in the middle lending space, that encompasses the pilot program, have the most protections.  There is a usury cap, some underwriting, and there is reporting to credit agencies.

What we should be discussing is strengthening the middle lending space, extending the protections of the pilot to more people by regulating the $300 payday lending space and the above $2,500 lending space.

Our  current concern with each end of the lending spectrum is that lenders are offering these products without assessing the consumer’s ability to repay, thereby forcing consumers to choose between re-borrowing, defaulting, or falling behind on other obligations, we are also concerned about certain payment collection practices that can subject consumers to substantial fees and increase risk of bank account closure.

Consumers need better protections for consumer loans, across the board, from payday to car title to installment loans, such as:

  • underwriting requirements that take into account income and expenses to ensure borrowers have the ability to repay the loan
  • interest rate restrictions and fee caps of 36% APR or less
  • protections against expensive, long-term debt such as limits on re-borrowing and refinancing

We’re encouraged by the forthcoming CFPB rule and we are working hard to win strong reforms and establish a national floor for consumer protections, we believe it’s premature to change the CFLL, given the impending changes in federal regulatory requirements.

If the legislature is going to proceed anyway, the focus should be on regulating each end of the lending spectrum and leveling the lending playing field to protect consumers from high cost predatory loans and therefore expanding access to responsible affordable credit.

CRC resources on predatory payday, car title, and installment lending

Share Your Story about payday, high cost installment, or car title lending- It only takes 3-5 minutes. By sharing your experience, you can help take a stand against predatory lending and help the CFPB understand why consumers need strong rules to limit predatory loans.

Newspapers around the country are weighing in!  Check out this extensive compilation of 109 editorials (and counting!) against the debt traps created by payday and other high cost loans: Editorials Against Payday Lending

Payday Lender Hall of Shame: If you thought payday lenders are here to help, read this shocking expose of their worst practices.  Some truly shocking behavior!

North American Title Loans Repossess Car from Injured Consumer.  Watch this PBS NewsHour segment about TJ McLaughlin, whose car was repossessed after he couldn’t make payments because of a health problem.

 

Share Your California Payday Loan and Car Title Loan Stories

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

 

Have you ever used a payday, car title, or other high-cost consumer loan?

Have you heard the news?

A federal agency, the Consumer Financial Protection Bureau, is designing new rules to better regulate companies who make car title, payday loan, and other high-cost consumer loans.

CRC’s executive director, Paulina Gonzalez, testified at the CFPB hearing where the proposed rules were announced.

This hearing was only the first step, and the industry is already fighting back against common-sense protections.

If you have used one of these loans in the past, consider sharing your story with CRC as we advocate for common-sense consumer protections in the new rules.

Take a look and share your story:  Share Your Story to Ensure Strong Consumer Protections.

The 10 Most Popular Stories in Consumer Finance in 2014 on CRC’s blog

What were the most popular posts on the CRC blog in 2014?

1) Most popular: City of Los Angeles Lawsuit Against Chase, Wells Fargo, Citigroup, and Bank of America

The City of Los Angeles filed a lawsuit against JPMorgan Chase for targeting minorities for predatory mortgages and the subsequent economic damage when these loans went into default.  The City Attorney, Mike Feuer, has already sued Wells Fargo, Citigroup Inc, and Bank of America for the same issues.  See this Law 360 article on a new lawsuit filed in December 2014:  LA Sues JPMorgan, BofA, Citi Over Discriminatory Lending

2. New Resource for Widowed Homeowners Facing Foreclosure

The “widows and orphans” problem refers to the fact that many widows, orphans, and others who inherit or have an ownership interest in property have faced foreclosure upon the death of a loved one because they were not listed on the loan, and the servicer would not work with them so that they could keep the family home.  See the recent announcement from the CFPB that they will providing additional updates to these rules here: CFPB Proposes Expanded Foreclosure Protections

3. Editorials Against Payday Lenders

How do over 50 newspapers feel about the payday lending industry?  Take a look and learn why advocates are excited about the Consumer Financial Protection Bureau’s upcoming rule-making for an industry who had a number of scandals in 2014.

4. The Payday Lender Hall of Shame

This is the worst of the worst when it comes to payday loan stories- here’s just a small sample, be sure to read the full post, and while you’re at it, sign our petition to CFPB Director Richard Cordray.

  • 1,000 text messages sent to a man after his suicide from debt collectors?
  • $83 million in campaign contributions made by the payday loan industry to prevent strong consumer protections from being enacted into laws
  • Training manuals that tell payday loan staff how to keep customers caught in the debt cycle

5. Banc of California Acquisition of 20 Banco Popular Branches Opposed 

After CRC members and allies opposed this acquisition, Banc of California agreed to create a public, 5 year community benefit and reinvestment plan.

6. Community members gather in Oakland to Celebrate California Reinvestment!

While CRC members and allies are serious about economic justice, they also know how to have fun.

7. Community leaders protest sale of 20 local Banco Popular Branches in Los Angeles

CRC members and allies held a press conference in front of a Banco Popular branch in LA as part of our initial opposition to Banc of California purchasing 20 Banco Popular branches.

8. John Oliver and Sarah Silverman on Payday Loans  

This post is self-explanatory, but if you watch the video, know that this industry is so bad there’s some adult language used by Mr. Oliver and Ms. Silverman.

Our favorite line? 

After a payday lender says “If you can’t pay the loan, don’t worry, we’ll be there to work with you.”

Oliver responds “No S*** you’ll be there, your business model depends on it!

(He’s referring of course to the debt trap that is sprung for the majority of people who take out a payday loan and find themselves unable to repay it two weeks later).

9. Bank Payday Loans No Longer Offered By Wells Fargo or US Bank

CRC was particularly happy to see this announcement after our opposition to banks providing these “direct deposit advance” loans that were very similar to payday loans.  Of course, we’d still like to see the banks get completely out of the business of payday lending, and stop providing financing to these modern day loan sharks.  For more on the financing that main street banks provide to payday lenders, see the report “Connecting the Dots” from our ally, Reinvestment Partners, based in North Carolina.

10. 80 Organizations Call on Federal Government to Address Private Equity and Investor Landlords

Have you heard about Wall Street’s latest profit scheme?  After millions of homeowners lost their homes to foreclosure, private equity is now moving into the housing market, buying roughly $200 billion worth of single-family homes, with the intent of securitizing the rental income…sounds familiar, doesn’t it?  Just look out if you’re a first-time homebuyer (hard to compete with all cash offers), a tenant (you might get booted to make way for higher paying renters), or a community, whose makeup could be changed thanks to the new landlords.

And, our three honorable mentions (we should point out that the OneWest post is only a few weeks old, so it was at a distinct disadvantage!)

A.  Community Leaders Hold Press Conference at OneWest Bank Headquarters 

In December, CRC received a response to our FOIA request to the FDIC, asking how much money the FDIC has paid out and expects to pay out in the future, under controversial shared loss agreements with the bank.  We released the figures (OneWest is on track to receive a whopping $2.4 billion by 2019!) at a press conference with our members and allies in front of the bank’s headquarters, where we called on the Federal Reserve to hold public hearings about this proposed, Too Big To Fail bank merger.  CRC also called on the bank to implement a foreclosure moratorium for surviving spouses whose mortgage is serviced by a OneWest subsidiary, Freedom Financial.  Read Kevin Stein’s HousingWire post to learn about three elderly homeowners who were facing foreclosure by OneWest Bank, and why we’re urging the bank to implement a moratorium until HUD develops rules to address situations where surviving family members are facing foreclosure due to a reverse mortgage.

B. Why we need Operation Choke Point to stop Illegal Online Payday Lenders

Payday lenders need access to your checking account in order to process the loans.  Learn more about Four Oaks Bank, and how 14 consumers were harmed by the bank playing an enabling role in processing illegal predatory loans.

C. Tenants Rights After a Foreclosure Upheld by California Court of Appeal

The story of a bank becoming the owner of a home after a foreclosure trustee sale is common in California.  Unfortunately, so is the experience of these two tenants who had continued paying their rent and should not have been evicted.  After a trustee sale, some real estate agents will try and get the current tenants out of the property as quickly as possible, offering cash for keys, making illegal threats, or even calling the police.  Tenants may or may not know their rights, and the real estate agents may take advantage of this and try and force them out quickly.

Payday Lending Reform Strategy Convening, Los Angeles, 10/10/2014

Los Angeles convening on federal options for reforming payday lending, via the Coalition Against Payday Predators.

Coalition Against Payday Predators

LA Payday Convening invitationPlease join a broad coalition of Southern California-based anti-poverty, Labor, legal services, advocacy, social services, and consumer rights leaders to discuss the achievable local, state-level, and federal options for reforming predatory payday lending.

More information about the Convening here.

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Advocates bite back at payday lenders for “Shark Week” action

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

 

Payday Loan Shark Attack!

Payday Loan Shark Attack!

Consumers, youth leaders and advocates staged a demonstration at a Check ‘N Go storefront in downtown San Francisco today to raise awareness about a unique breed of sharks – financial predators offering payday loans – as part of the Discovery Channel’s “Shark Week.”

Check out the coverage on Univision: Evite préstamos imposibles de pagar, ¿cómo evitar los préstamos del día de pago?

And on CBS San Francisco: Rally In San Francisco Calls Attention To Predatory Payday Lenders

During Conference

The CFPB will begin writing payday loan rules in early 2015, and advocates are urging the federal Consumer Financial Protection Bureau (CFPB) to implement strong consumer protection rules to end the payday loan debt trap. Research indicates most payday loan consumers end up in long-term debt after taking out their first payday loan, typically using 10 payday loans a year. Consumers who have struggled with payday loan debt or who have been harassed by payday loan collectors are encouraged to file complaints and share their stories with the CFPB via their website: www.consumerfinance.gov.

Group Picture Final

Community groups have been campaigning for local and statewide reforms for over a decade, resulting in numerous California cities adopting restrictive land use measures to restrict the growth of payday loan stores. Despite local leaders taking action, the California state legislature has failed to enact any consumer protections.

CRC payday organizer Liana Molina

Liana Molina from CRC

“Our state Senate and Assembly have repeatedly rejected payday loan reform proposals that would rein in payday loan abuses,” explains Liana Molina, an organizer with the California Reinvestment Coalition. “People think these loans will help them stretch their paychecks.  Instead, they find themselves in an endless cycle of renewing their original loans and paying hundreds of dollars in fees as a result.”

Michael Hampton

Michael Hampton, leader of Community Housing Partnership’s Community Organizing Resident Engagement program

“We’re calling on the payday loan industry to end their attacks against working people, and for the CFPB to do what our state has failed to do: end the debt trap,” says Michael Hampton, a leader of Community Housing Partnership’s Community Organizing Resident Engagement program.

Graciela Aponte

Graciela Aponte with the Center for Responsible Lending, California

Graciela Aponte of the Center for Responsible Lending and Fernando Aguilar of the Youth Leadership Institute also spoke to the crowd about the issue and what communities can do to fight back against the payday loan industry.

Fernando

Fernando Aguilar of the Youth Leadership Institute

CRC was proud to work with Community Housing Partnership’s Community Organizing Resident Engagement (CORE) tenant leaders, Youth Leadership Institute (YLI) and Mission SF Community Financial Center youth leaders, the Tenderloin Housing Clinic, the Housing Rights Committee of SF and the Center for Responsible Lending California to organize this action. Similar events are taking place across the country this week, coordinated by National People’s Action.

Payday loan shark attack

William “Bill” Gandy

Are you angry about payday loans and the financial damage they cause?  Sign our petition to the Consumer Financial Protection Bureau: Tell the CFPB: Payday Loans Must Include Consumer Protections

Also, check out John Oliver and Sarah Silverman’s take on payday loans: John Oliver Last Night.  (Some adult language)

Pressed for time?  Check out Consumerist, where they pulled out the five best lines from this episode: The Best Lines From John Oliver’s Takedown Of The Payday Loan Industry

John Oliver and Sarah Silverman on Payday Loans

Editor’s note: The CFPB, a federal agency, has proposed new rules for payday, car title, and high-cost installment lenders.

 

BUT, they need to hear from consumers- that means you! We have an easy-to-use page where you can weigh in- it only takes a minute and will help bring about important consumer protections with these loans. Please share a line or two in the comments box about why you care about this issue and want to see strong federal reforms.

PS: You do NOT have to be a payday, car title, or installment borrower to sign the petition.

If you haven’t watched it yet, John Oliver and Sarah Silverman have an AWESOME segment on payday lenders and why they are so scuzzy.  Check it out, and after you watch it, consider signing CRC’s petition to the CFPB, calling on the CFPB to put customers first when they design new rules for payday lenders.

Still fired up?  Check out CRC’s collection of 45 editorials against payday lenders,  Our Payday Lender Hall of Shame, or our recent update on Seven New Laws, policies, and settlements related to payday lending.