paydayloanindustryblog.com

The payday loan initiative scheduled to be voted on in the November ballot is at risk of being left off the ballot.

Secretary of State Jennifer Brunner said she’ll appoint a hearing officer to decide if consultants hired to collect signatures to place the measure on the ballot properly filed the petitions.

Gov. Ted Strickland in June signed a law restricting the annual percentage rate that lenders can charge to 28 percent, and limit the number of loans customers can take to four per year.

The payday loan industry managed to collect 422,000 petition signatures to place their initiative on the November ballot.The ballot measure needs 241,000 signatures from at least 44 of Ohio’s 88 counties to qualify.

The payday loan measure will repeal the cap on interest, allowing lenders to charge roughly 400% APR’s depending on the term of the payday advance.

Parties supervising the collection of ballot signatures must file a Form 5 with Ohio that lists the names and addresses of signature gatherers and the names of their employers. Brunner’s office can’t seem to find evidence the form was filed by Arno Political Consultants, a California firm hired to collect a portion of its signatures.

This failure could result in having the payday loan measure deleted from the ballot.

Sec. of State Brunner will decide Sept. 25 whether to accept the signatures and allow the referendum to be placed on the ballot.

You’ve got to admit that we in the “sub-prime” financial services industry are a creative lot!

http://www.Burro.com has come up with what we think is a great idea; an Internet based pawn lending business.

They make loans on jewelry, watches, gem stones, gold and memorabilia at a rate of 4% to 6% per month. The rate for loans from $1800 to $180,000 is 6% paid monthly. Loans of $1799 and less are 4% per month.

They appear to be the first true Internet pawn lender. Here’s how it works:
1) You go to their web site and select a category; watches for example
2) You estimate it’s market value, enter a description, post a picture if you wish…
3) You get an immediate estimate of the amount they will loan you
4) You then provide them with your contact info and ID.
5) They pay for a courier service to pickup your item
6) They inspect it and if both parties agree on the value they ACH the funds into your bank account. Typically they loan 40% of this value.
7) You pay 4% to 6% monthly interest.
At the end of 6 months you pay off the loan with interest and a “redemption fee” and they ship your item back by courier.
9) If you fail to repay the loan they sell the item

It’s discrete, convenient, there are no questions, no credit checks, and fast.

We like this business model!

Oh, and one more thing. It’s only available in England currently.

Which of us will be the first to launch a Internet based online pawnshop?

Sometimes we forget just what a payday loan means to a family that experiences a temporary financial setback and has no where to turn for help.

I am a single father of three children. I have had a career in the aviation field since serving 7 years in the U.S. Navy. I make mid 40’s for yearly income. Then I pay my monthly bills and there is no more room for anything else. There have been several times that these payday advance businesses have saved me from a grim financial time. In this position, I haven’t got family, friends to rely on and have to resort to “survival of the fittest.” When a check is returned at my bank, it is the equivelant charge of getting a payday loan of $250 (the fee would be $37 vs. a $35 fee from my bank.) Granted, of course there is a loan involved but the money was used for food, gas etc.

Why is it in the interest of our local state gov. to forbid this? I have spoken to people that are well off with money and everyone of them have agreed that these loans should be terminated, the business should be put under as if they are loan sharks. I have never been late on payment so I wouldn’t know…

Go BuckeyeStateBlog.com here to read the entire article as written by average folks using payday loans to solve temporary problems.

Advance America announced their chairman and co-founder, George Johnson, stepped down for personal reasons.

Advance America was founded in 1997 and currently is operating approximately 2800 loan centers in not only the USA but additionally in Canada and England.

William (Billy) Webster who is also a co-founder will replace Johnson.

The scuttlebutt is that Johnson resigned after the company posted a 4% profit loss in the first six months of the year. Others in the industry discount this assessment.

There is little doubt the payday loan industry is under attack as is the mortgage industry, the credit card industry, the banking industry, the oil industry, and others. It’s been noted elsewhere that when the US economy experiences a slowdown the regulators and
competitors, under the guise of consumer protection, attack our industry more vociferously than ever.

Ultimately the payday loan industry is driven by consumer demand; consumers have a huge demand for small loans that are easily obtained with a minimum of hassle. That describes the payday loan product!

Bottom line, when the car requires repair, or the lights are about to be turned off, or you need cash to pay for a presciption, or, or, or… The payday loan product fills the need. And it has certainly been proven that a $15 fee per $100 loaned is still a better deal than bounced check charges or overdraft fees.Why Banks Hate Payday Loans

It should be noted that even in states/provinces not having payday loan physical locations, consumers by the tens of thousands apply for and receive funds via the Internet or call centers! Many of these businesses are offshore. Regulators, legislators and competitors (so-called consumer protectionists) are forcing payday loan consumers into the hands of the offshore companies. Domestic payday loan companies welcome regulation as long as they are allowed to continue to operate at a reasonable profit under any proposed legislation.

It’s crazy how the regulators and legislators who feel the need to control our payday loan industry in an effort to “protect” consumers consistently fail to understand us!

Witness the latest introduction of payday loan legislation by the esteemed senator from Hawaii. These senators introduced a new act to”encourage mainstream institutions to be able to bank the unbanked”.

THEY DON’T GET IT! Payday loan companies ONLY make loans to consumers having a BANK ACCOUNT! HELLO!! Our customer is NOT UNBANKED! They know what they’re doing when they choose to use our product.

And as far as providing consumers with “financial literacy and educational opportunities”, THEY DON”T WANT TO BE BOTHERED! Why don’t the regulators ask? Payday loan customers simply want $300 to $1000 fast without a hassle! Most of the customers I talk to understand where the majority of bank and credit union profits come from Why Banks & Credit Unions Hate Payday Loans

For additional commentary on the stupidity of legislators we suggest you proceed to Payday Pundit

U.S. Senator Daniel K. Akaka (D-HI) introduced the “Improving Access to Mainstream Financial Institutions Act of 2008″. It is cosponsored by Senators Charles E. Schumer (D-NY), Joseph I. Lieberman (ID-CT), and Daniel K. Inouye (D-HI). It is endorsed by The National Association of Federal Credit Unions, the Hawaii Credit Union League, the Council for Native Hawaiian Advancement, and the Hawaii Alliance for Community-Based Economic Development.

Senator Akaka said: “About 45 million Americans do not have a bank or credit union account, denying them access to basic financial services. With these federal resources, mainstream institutions will be better able to bank the unbanked. This bill will also encourage banks and credit unions to provide an affordable alternative to predatory payday loans which typically carry exploitative fees. Several credit unions have developed similar products, including the Windward Community Federal Credit Union in Kailua (Hawaii), which used a federal grant to develop an affordable alternative to help the U.S. Marines and others they serve. More working families need access to affordable small loans.”

Senator Lieberman said: “At a time of rapid innovation in the financial services industry, it is discouraging that a so many Americans remain disconnected from the mainstream system of banking and finance. The sad reality is that in many low-income neighborhoods, the primary source for financial services is storefront check cashers, rent-to-own shops, money transfer operators, and payday lenders charging predatory interest rates. The legislation we are introducing today will help bring low-income communities closer to the retail financial services and savings opportunities they desperately need.”

“A bill like this has been a long time coming. It will promote a culture of saving by encouraging more people to open bank accounts. This bill will also help families get out of the cycle of debt caused by payday loans,” Schumer said.

U.S. Senator Daniel K. Inouye said: “Given the economic struggles currently confronting our nation, this legislation can help many Americans by bringing families without bank accounts into the mainstream of our nation’s financial system. I believe this bill will help many families build savings and improve their credit-risk profiles. That will lower the cost of payment services, and eliminate a common source of personal stress. Enabling more people to be a part of our mainstream financial system, whether through a credit union or a bank, will build the right financial foundation for many families.”

The bill creates two grant programs within the Department of the Treasury:

• The first authorizes grants intended to help low- and moderate- income unbanked individuals establish bank or credit union accounts, providing consumers with alternatives to rapid refund loans, check cashing services, and lower cost remittances. In addition, bank and credit untion accounts provide access to savings and affordable borrowing opportunities.

• The second provides consumers with a lower cost, short term alternative to payday loans by encouraging the development of affordable payday loan alternatives at mainstream financial institutions. Consumers who apply for these loans would be provided with financial literacy and educational opportunities. Loans extended to consumers under the grant would be subject to the annual percentage rate promulgated by the National Credit Union Administration’s (NCUA) Loan Interest Rates, currently capped at an annual percentage rate of 18 percent.

I was at a dance party in Newport Beach, California the other night (Yes, my girlfriend is a dance teacher so there I was) and the subject of what I do for a living came up.

Now, when I’m in the haughty suburbs of Newport Beach my typical response to the question of, what I do for a living is usually, “I’m in the sub-prime financial services industry.” Probably just like you, I’m not in the mood to defend myself for making money with payday loans. And I know after working on the “front lines” or the “counter” as we say, that we really do help a lot of people. However, I still cringe a bit when this subject comes up. Not as much as I used to but I still get the shivers.

So of course, being in Newport Beach on the “left-coast”, there had to be some kind of consumer protectionist with a desire to attack me. (Actually, I really think he was simply jealous because I am a better dancer than he. I swear he was watching me out of the corner of his eye as I did the West Coast Swing.)

Now this guy was not your typical Center for Responsible Lending (CRL) sympathizer! He knew enough of the “facts” to try to give me a hard time.

But, luckily for me, and the rest of us in the payday loan industry, I had the benefit of very recently reading:

“Predatory Reporting” on Payday Lending?
Donald Rieck, July 18, 2008 (updated, July 21)
Do payday loans sink people into inescapable debt, forcing them to pay many times more the original borrowed amount in interest?

Now this IS ONE REALLY WELL WRITTEN and, more importantly, WELL RESEARCHED article on the REAL FACTORS affecting the attackers of our industry. It’s a bit lengthy but you really should check it out in it’s entirety:

http://www.stats.org/stories/2008/how%5fbad%5fpayday%5floans%5fjuly18%5f08.html

A few highlights…

A Factiva search of newspapers across the country shows that there were over five thousand negative payday loan stories in 2007 alone. NO SURPRISE HERE!

A 2007 study by Veritec http://www.veritecs.com/news.htm

(a government contractor that provides program management to state agencies which regulate the payday loan industry) concludes that the Center for Responsible Lending (CRL) attacks on our industry are totally erroneous. After examining payday loan usage in Florida and Oklahoma, Veritec concluded that the data “simply does not support the CRL conclusion about fees paid” and the need to outlaw payday loans.

A consumer using the option of skipping a credit card payment, rather than using a payday loan, triggers an average late payment fee of $35, according to indexcreditcards.com. “Over-the-limit” fees for credit cards average $36 and the consumer’s credit rating is damaged typically causing the credit card company to increase the APR on future uses of the card.

Another method is check kiting http://en.wikipedia.org/wiki/Check_fraud . But NSF fees average $28.23, according to bankrate.com. Moebs Services, an economic research firm, estimates that NSF fees account for 18% OF THE NET OPERTAING INCOMEOF BANKS AND 60% OF CREDIT UNIONS OPERATING INCOME! That is unreal!!

NO WONDER BANKS & CREDIT UNIONS HATE PAYDAY LOANS!

So, when consumers use payday loans to avoid these bank and credit union fees they cremate the net income of banks and credit unions!

Another option to payday loans is for the consumer to purchase “overdraft protection.” However, The Woodstock Institute, a nonprofit group that promotes economic development in lower-income and minority communities, estimated that the APR for bounced check “protection” averages 2400 %!!

Sheila Bair, the current chairman of the board of directors of the Federal Deposit Insurance Corporation (FDIC), during a 2005 speech, stated “the ‘enormous’ fees earned on these programs discourage credit unions and banks from offering payday loans. Since they reap such enormous revenue from overdraft protection and bounced check fees, credit unions and banks have a vested financial interest in limiting consumer options and having payday loans removed from the marketplace.” She warned that customers were “catching on” and turning to payday loans for their “cheaper product.”

Even more astounding, the Center for Responsible Lending (CRL), which has focused their tremendous resources against the payday loan industry, is headed by CRL founder and Self-Help Credit Union CEO Martin Eakes! On March 18, 2008, Forbes.com published an article titled “Subprime’s Mr. Clean: Martin Eakes’ Campaign to Straighten Out Subprime Lending Has Some Wrinkles.” The article makes the point that Eakes’s leadership of a credit union creates a conflict of interest with regard to CRL’s activities. The article quotes noted economist Donald Morgan:

“Who then benefits from payday loan bans? Credit unions, for one, notes Morgan. He says interest rates on overdrafts charged by credit unions and banks can exceed 2,000 percent, dwarfing the high interest rates on payday loans. Credit unions, he adds, have been especially hurt by payday lenders cutting into their overdraft fees.”

Forbes.com notes that in North Carolina where payday loans are outlawed, CRL and Eakes were “instrumental in outlawing payday loans.” Forbes.com also notes that Self-Help assets have jumped from $114 million in 2003 to $292 million in September 2007! CONFLICT OF INTEREST? HELL YES!!!!

Additionally, a study by Morgan and Strain’s evaluated how households fared in Georgia and North Carolina after payday loans were prohibited:

“Compared to households in states where payday lending is permitted, households in Georgia have bounced more checks, complained more to the Federal Trade Commission about lenders and debt collectors, and filed for Chapter 7 bankruptcy protection at a higher rate. North Carolina households have fared about the same. This negative correlation- reduced payday credit supply, increased credit problems- contradicts the debt trap critique of payday lending, but is consistent with the hypothesis that payday credit is preferable to substitutes such as the bounced check “protection” sold by credit unions and banks or loans from pawn shops.”

Easing restrictions on payday loan limits actually seem to IMPROVE consumer financial difficulties. Witness Hawaii, where payday loan limits were increased from $300 to $600. Borrowers problems with debt and the Hawaiian rate of bankruptcy fillings actually DECLINED!

And regarding the effect of banning payday loans on the incidences of bounced checks, Morgan and Strain note:

“On average, the Federal Reserve check processing center in Atlanta returned 1.2 million more checks per year after the ban (on payday loans). At $30 per item, depositors paid an extra $36 million per year in bounced check fees after the ban.”

So, it shouldn’t require Sherlock Holmes to figure out just who really hates payday loans and why they fight us so hard in the name of protecting the consumer! It’s never been about the consumer. It’s about the MONEY! You know the old saying, “Follow the Money.”

Do you think that banks and credit unions may even be funding organizations like CRL?

HELL YES!!!!

Do you think the media and the journalists will figure all this out?

Hell No!!!

Oh, and do you think I was able to DESTROY that consumer protectionist guy at the dance?

HELL YES!!!

Please read the full article at:

http://www.stats.org/stories/2008/how%5fbad%5fpayday%5floans%5fjuly18%5f08.html

And please forward our Newsletter to journalists, regulators, legislators and anyone else interested in helping consumers to maintain choice in the financial products they have access to!

The Payday Loan Guys,

The Trihouse Team
Trihouse Payday Loans
702-889-9555
Signup: Free Monthly Newsletters
http://www.PaydayLoanIndustry.com
http://www.AutomobilePawn.com
http://www.CheckDataSystems.com
http://www.paydayloanlegislation.com
http://www.PaydayLoanIndustryBlog.com

WOW! A movie about a family running a payday loan store!! Who would have thought? This could be real interesting. They’ll never improve on “The PawnBroker” with Rod Steiger. But, what’s next? A reality show about a Check Casher or a Auto Title Loan Lender?

MEDIA RIGHTS CAPITAL AND THE CW NETWORK ANNOUNCE PREMIERE DATES AND CASTING FOR ORIGINAL SUNDAY NIGHT PRIMETIME PROGRAM “EASY MONEY”

July 19, 2008 (Burbank, CA) - Casting and premiere dates were announced today for the new Sunday night line-up on The CW Network, including “In Harm’s Way,” “Surviving Suburbia,” “Valentine” and “Easy Money,” by Dawn Ostroff, President, Entertainment, The CW and Keith Samples, President, Television, Media Rights Capital. “In Harm’s Way,” “Valentine” and “Easy Money” will premiere on Sunday, September 21, with “Surviving Suburbia” scheduled to debut on November 2, timed with the beginning of November sweeps. The four original programs are part of The CW Sunday night primetime programming block produced by Media Rights Capital. Programming for the 5:00-6:30 p.m. timeslots will be announced soon.

“EASY MONEY” - Premiering September 21, 9:00-10:00 p.m.

The cast of “Easy Money,” a new one-hour drama about a family that runs a high interest loan business, includes Emmy Award-winning actress Laurie Metcalf (”Desperate Housewives,” “Roseanne”), Jeff Hephner (”The O.C.”), Judge Reinhold (”Swing Vote,” “The Santa Clause Trilogy”), Nick Searcy (”Rodney”), Jay Ferguson (”Sleeper Cell”), Gary Farmer (”Moose TV”) and Katie Lowes (”The Ghost Whisperer”). Diane Frolov and Andy Schneider (”Northern Exposure,” “The Chris Isaak Show,” “The Sopranos”) serve as Executive Producers for the series, along with producer Brandon Hill.

In “Easy Money,” 28-year-old Morgan Buffkin (Hephner) finds himself in charge of Prestige Payday Loans, his eccentric family’s enormously successful short-term loan business. Any doubts Morgan has about running his family’s business are quickly replaced by dealing with family business: Morgan’s brother Cooper (Ferguson) insists on driving a silver-plated Hummer, his sister Brandy (Lowes) has questionable morals, he suspects that his mother (Metcalfe) and father (Searcy) are not being completely honest with him about his relation to the family, and every so often, part-time detective Barry (Reinhold) drops in. “Easy Money” follows the Buffkin Family in a modern-day Dickensian tale of money and identity.

Following is the Sunday night premiere date schedule:

Sunday, September 21

9:00-10:00 p.m. “EASY MONEY”

About Media Rights Capital:

MRC is a leading independent film, television and digital studio. The company specializes in the creation of premium content, custom building distribution for each of its projects and partnering directly with leading creative talent. 2008 film projects include “Shorts,” written and directed by Robert Rodriguez; “The Box,” written and directed by Richard Kelly and starring Cameron Diaz; “Linha de Passe,” written and directed by Walter Salles; “Foxcatcher,” written and directed by Bennett Miller; “Alfred Hitchcock and the Making of Psycho” and new films by Sacha Baron Cohen and Todd Field. Upcoming television projects include “The Goode Family” created by Mike Judge, John Altschuler and Dave Krinsky for ABC; “Outnumbered” by Larry Levin for Fox Television; “The Life and Times of Tim” created by Steve Dildarian, premiering in June on HBO; “Rita Rocks” for Lifetime Television; “Krod Mandoon” for Comedy Central; and a newly conceived “Name That Tune” in an unmatched cross-network arrangement between MTV, VH-1 and CMT. MRC is producing digital projects including an original series with Raven-Symone, Second City’s QUARANTINE, “Sometimes Daily” with Amanda Congdon and an upcoming animated series with original characters created by Seth MacFarlane.

About The CW:

The CW Network was formed as a joint venture between Warner Bros. Entertainment and CBS Corporation. The CW is America’s fifth broadcast network and the only network targeting women 18-34. The CW offers a six-night, 13-hour primetime lineup that runs Sunday through Friday; a two-hour weekday afternoon block; and a five-hour Saturday morning animation block that delivers a total of 30 hours of programming a week over seven days. The network’s primetime schedule includes such popular series as “America’s Next Top Model,” “Gossip Girl,” “Everybody Hates Chris,” “Smallville,” and upcoming series including “90210″ and “Stylista.”

Arkansas payday loan companies get creative! Nothing new here.

Roughly one-third of the payday loan companies Arkansas  Attorney General Dustin McDaniel ordered to shut down or face the possibility of lawsuits have remained open and restructured their businesses to avoid state regulation, an advocacy group said in a report released Wednesday.

The report by Arkansans Against Abusive Payday Lending reported that 55 of the 156 payday lenders McDaniel targeted with cease-and-desist letters are open.

The Report indicates the lenders have adopted payday loan models in an attempt to circumvent regulations of the Check Cashers Act and the recent crackdown by Attorney General McDaniel.

McDaniel told payday lenders they would face lawsuits if they did not shut down by April 4, and 101 lenders closed in response. The attorney general in May filed lawsuits against 20 payday lenders that he said were violating the state’s constitution by charging high-interest loans.

Arkansans Against Abusive Payday Lending said that the total number of payday lenders operating in Arkansas has dropped from 237 in March to 136 this month. McDaniel’s office has said he focused on companies that offer “deferred presentment loans” where the businesses not only exchange cash for a check but also agree to delay the depositing of the check for a specific time.

The Arkansans Against Abusive Payday Lending organization said that the majority of payday lenders targeted by McDaniel but still open are now operating what they call a “money order” model where payday loans are offered at an interest rate of 8.98 percent annually. The loan is issued in a corporate check or money order. The borrower is asked to endorse the corporate check and it is cashed for an additional fee of 10 percent of the check’s amount.

Fed Chairman Ben Bernanke, testifying before the Senate Banking Committee today, said the best approach for reducing the reliance by consumers for payday loans is more competition.  He further stated that banks and CU’s (credit unions) should be encouraged to develop and offer new products that could compete with payday loan “store-fronts”.

This makes the most sense to us as well. Let the market place develop products and solutions for today’s payday loan, auto title loan, rapid tax refund (RAL’s), customers.  Competition will drive prices down and offer new solutions.

Government should not decide for the market place and remove consumer choice from the equation; EVER!

What do you think?

So ex-president Bill Clinton, “also called on more governors to follow the lead of California Gov. Arnold Schwarzenegger (R) and former Arkansas Gov. Mike Huckabee (R) and reduce childhood obesity by bringing healthier lunches and more exercise to schools. He also urged states to go after pay-day lending operations, whose short-term, high-interest loans hit the poor the hardest, he said. Clinton said there are more check-cashing and payday lending operations in the United States than all the McDonalds and Starbucks worldwide”. http://www.stateline.org/live/details/story?contentId=325309

A little research and we discover Starbucks had 15,012 stores in 44 countries http://en.wikipedia.org/wiki/Starbucks .

And McDonald’s operates over 31,000 restaurants worldwide, employing more than 1.5 million people. http://www.mcdonalds.ca/en/aboutus/faq.aspx

It took about 15 seconds to get the facts!

Even the most optimistic payday loan protectionists estimates there are no more than 22,000. And with recent events in Arkansas, Ohio, Oregon, and NH we are certain there are less.

One more strike against letting the consumer decide!