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.

New Report find Predatory Lending is Growing in California

DBO Car Title Report

new report released earlier this month by the California Department of Business Oversight provides new and disturbing data about the growth of predatory lending in California.

Liana Molina, director of community engagement at the California Reinvestment Coalition released the following statement:

“Today’s report proves that while high-cost installment and car title loans are currently legal in our state, they are causing incredible financial harm for California borrowers.

For consumer loans greater than $2,500, there is no interest rate cap, and it’s clear the lenders are taking full advantage.

Sixty-five percent of loans for $2,500-$4,999 came with interest rates of 70% APR or higher (354,696 loans). For loans of $5,000 to $9,999, thirty percent of the loans (51,236) had interest rates of 70% APR or higher.

Also troubling is that the number of car title loans increased almost 10% last year in California. This is especially disturbing since car title lenders also reported to the Department of Business Oversight that they repossessed nearly 17,000 cars from their customers in 2015. Not only are these lenders originating unsustainable, high-cost, predatory loans, but thousands of people (about 15% of their customers) lost their main mode of transportation as a result of obtaining a car title loan. Even worse, of the 16,989 borrowers who had their cars repossessed, 10,357 of them had a deficiency balance, meaning the lender will continue to harass them for more money beyond just taking their car.

The Consumer Financial Protection Bureau (CFPB) announced new, proposed rules earlier this month that would create national, uniform rules for payday, car title, and installment loans. While the CFPB’s proposed rules are an excellent first step in curbing the many abuses we’ve seen from this industry, there remains several loopholes that we believe the CFPB should eliminate in the final rule.

How can I help stop predatory lending in California?

We are working with our members, allies, and consumers to urge the CFPB to implement a strong, final rule that has NO exceptions for the industry to exploit.

Join CRC by signing our petition and urge the CFPB to prioritize strong consumer safeguards and responsible lending, NOT predatory lenders.

North American Title Loans Repossesses Car from Injured Customer

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.

 

How does the debt trap work?

Watch this PBS NewsHour episode about T.J. McLaughlin, who had to take some time off work after a medical problem.  Short on money for bills, he borrowed $1,200 from a car title lender (North American Title Loans), at 300% interest rate.  But when he lost his job and was unable to make the payments on this loan, they took his car.

If you’re in California and have had a similar experience with car title, payday lender, or high-cost installment loans, please share it with CRC (Click on this link to share your story- it only takes 3 minutes).

The CFPB (Consumer Financial Protection Bureau) is writing rules about high-cost payday, car title, and installment loans. By sharing your experience, you can help the CFPB understand how to make these products safer.  Ultimately, that can mean fewer people going through financial heartaches like the one TJ McLaughlin experienced.

8 Important Points from the CFPB Field Hearing on Payday Lending in Richmond Virginia

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.

Did you miss the CFPB hearing on payday and other high cost loans?  Not to worry, advocates and consumers from around the country testified at the hearing about their experiences with payday and car title loans and we’ve got the highlights below!

1) Ending predatory lending is a top priority of the CFPB and of President Obama: President Obama signaled the importance of putting an end to predatory lending in a speech he gave Thursday in Birmingham, saying, “As Americans, we don’t mind folks making a profit,” Obama said. “But if you’re making that profit by trapping hardworking Americans in a vicious cycle of debt, then you need to find a new business model. You need to find a new way of doing business.”

Watch President Obama’s speech here (payday lending starts at about 15 minutes in):

 

2) When consumers share their stories about payday and car title loans, it isn’t pretty:

ELLIOTT CALLOUT EMAILIt started with a broken ankle and a $500 payday loan. It ended in a three-year ordeal that cost Elliott – a Marine Corps veteran – his wife, and five daughters more than $30,000 and their house…read more here from the PICO National Network.

From a Guardian article about hearing: “I would tell anyone at this point: don’t do it. Do not do it. If I had known what I know now about payday loans, I never would have looked their way,” he said.   The Guardian: Payday loan borrowers: ‘When are we going to be done paying these people?’

Consumers also shared their experiences during the public comment period- below are retweets about the stories:Car Title borrower

payday borrower

New Economics For Women shared a consumer story that illustrates how the debt cycle works:

When Lorena (Alias), of Los Angeles, CA, found herself in a tight financial spot, she turned to payday lending….She visited a Speedy Cash location in Los Angeles, CA and borrowed $255, paying $45 in fees and hoping to be able to pay it back in two weeks time….Unfortunately, that was not enough time for her to stabilize her finances, and she had to repeat the loan. She has now repeated the loan 7 times, paying $315 in fees alone….Not only has she had to pay the added $315, she has also acquired overdraft fees. On five occasions, Speedy Cash has taken the money out of her bank account while she was still waiting on disability checks to come in, adding $175 to her expenses, due to payday lending….Hoping to catch up on some of her expenses and be able to get rid of the initial payday debt, she took out a second loan at Speedy Cash for $2,600. However, that loan did not help her at all and has instead dragged her deeper into the cycle of debt. In addition to the repeat loans every two weeks, Lorena now has to pay $38 every two weeks to repay the $2,600 loan. She has fallen behind on her bills and rent and has reached out to family and friends for help. Currently she owes Speedy Cash $2,755 and can only see that amount growing as time goes by.

3. Besides personal stories, research on payday and car title loans has found the products are toxic for the majority of people who use them- pushing them deeper into a cycle of debt.

From a new Pew research report on car title loans:

  • Between 6 and 11 percent of title loan borrowers have a car repossessed annually.
  • To repay a title loan, 47 percent report using a cash infusion, such as a tax refund.
  • 66% of car title borrowers believe the industry should be more regulated.

4. Advocates and practitioners advocate based on the stories and experiences of the people they work with:

Adam Rust, Research Director at Reinvestment Partners, spoke about his organization’s work in housing counseling and providing free tax preparation services.  He agreed that they see people facing difficult financial situations, but explained that paydayloans won’t right the ship- instead they’ll only cause people more hardship.

Paulina Gonzalez, executive director of the California Reinvestment Coalition explained in her testimony that “in many of our communities, we need more income, not just credit.”

5. People across the country are concerned about high cost lenders trying to use loopholes to escape regulations- or using cash to wield influence:

NC AFL CIO

lobbyists

6. While the industry tried to play the “we create jobs card” it turns out that’s not true either:

According to a report from the Insight Center for Community Economic Development, the payday loan industry was responsible for a net loss of over 14,000 jobs in 2011, and a net economic loss of over $750 million.  Bankruptcies that are triggered by payday loans were responsible for another $169 million net economic loss.

7. States like North Carolina and New York that got rid of payday lenders don’t want them back.  

Carlene McNulty, an attorney from the North Carolina Justice Center, commented that North Caorlina had kicked payday lenders out ten years earlier- and the state doesn’t want them back.

NY payday loans8. Communities notice where payday loan companies locate their stores- and where they don’t:

Where do payday lenders locate

 

Want to learn more about payday and car title loans?  We have a few resources:

1.Over 70 editorials have been written about payday lending- Has your local newspaper written one yet? Take a look: Editorials against payday lending  

2. Ever wonder why people are concerned about payday loans and some of the companies that make them?  Is it the high interest rates? The debt traps they create for their customers?  Their shady collection tactics?  The amount of money they spend lobbying state legislators in order to protect their profits instead of their customers? Maybe it’s the extra fees they don’t disclose? All of the above?  Check out the Payday Lender Hall of Shame.

3. It’s not just payday loans that can be dangerous to your health- it’s also high cost car title loans and high cost installment loans too: Careful! Alternatives to Payday Loans Can Also Be Predatory

4. Thinking about an online payday loan?  Here’s 8 strong reasons not to! (hint: if you don’t like having your identity stolen, steer clear!)  8 Reasons Not to Get an Online Payday Loan