Category: Laws

17
Jan

Mississippi Financial Service Centers: Short Term Lending Industry Resource

Financial Service Centers of Mississippi Lenders Association.

Are you a Lender? Are you operating in Mississippi?

Yes? Then you MUST join the Financial Service Centers of Mississippi association!

Support your local association! This is a NO BRAINER! 

The Team over at the Mississippi Assoc. have launched a new website AND have new events on the calandar.

From their new website, “The association is dedicated to offering information and tools to its members, so members are able to serve their customers in a fair, ethical, and helpful way. If you need information on Mississippi’s short-term lending industry, this is a good place to start. We keep our members well informed about upcoming legislative actions and other news events. We offer members the opportunity to meet and share ideas, find ways to be better at what we do and stay on top of issues that concern industry.”

They go on to write, “In today’s uneasy regulatory climate, it is important for business owners in this industry to stay informed. FSCM offers the opportunity to network together so members can not only be informed about important issues, but to be recognized as a large —and needed— financial industry in this state. This association holds an annual conference and a yearly membership meeting, which also offers the opportunity to meet your legislators and members of the Mississippi Department of Banking and Consumer Finance.”

So… head on over to Financial Service Centers of Mississippi website, check out the upcomimg events, become a member and SUPPORT  the “Business of Lending Money to the Masses” industry!

Mississippi payday loans, title loans, installment loans

MISSISSIPPI FINANCIAL SERVICE CENTERS

 

 

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22
Aug

Texas CAB-CSO Payday Loan Model Under Attack

Texan consumer groups focus on upcoming CAB/CSO credit access businesses such as payday lenders to make their views known to Texas Sunset Commission

The Texas Fair Lending Alliance urged Texans to contact the Sunset Commission before Aug. 29, when the group meets regarding the Texas OCCC. This  office oversees licensing for Texas credit access businesses [CAB – CSO], including payday and auto-title lenders.

The Texas Fair Lending Alliance is a coalition of 60 consumer organizations.

“Texas Appleseed and United Ways of Texas referred to “Sunset review”—a process established to hold state agencies accountable by periodically evaluating whether they should continue to exist—offers opportunities to strengthen consumer protection against what they consider predatory lending.”

Texas CAB’s and their customers must prepare to support the continued existence of appropriate regulations to assure continued access to small dollar loans in Texas for those borrowers with no where else to turn!

Already, approximately 45 cities have adopted city ordinances placing limits on the number of times payday loans can be rolled over and paid in installments, and to require that proceeds from any renewal payments apply toward reducing the original loan principal.

The Texas Legislature should seek to preempt city ordinances and allow the expansion of new, competitive loan products and services. When you need $300 to fix your car in order to keep your job, where do you go for fast, no-hassle cash?

Already, online payday loan lenders such as Elevate, Avant, Speedy… are taking away market share and jobs from local, established Texas store-front lenders. This reality hurts commercial landlords and tax revenue as well.

Here come the online tribal lenders.

Shut down the loan stores helping consumers who reside in Texas and the tribe lending entities [TLE] will continue to take market share as well. I get a dozen calls every day from consumers who need an immediate loan – that’s CASH in their hands – NOW. They do not want to wait 2 – 5 days for their payday loan proceeds to “appear” in their bank account. Online lenders are still slow and clunky.

The Texas Sunset Commission includes five state senators, five members of the Texas House of Representatives, and two members of the public appointed by the lieutenant governor and speaker of the house.

Comments? Questions about “the business of lending money to the masses?” Email TrihouseConsulting@gmail.com

 

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10
Aug

HB 123 Ohio Small Dollar Loan Law

Ohio Payday Loan and Credit Services organization Bill 123 as passed: The bill will require lenders offering certain types of consumer loans and regulated under the Small Loan, General Loan, or Credit Service Organization laws to obtain licensure instead under the Short-Term Loan Law.

Overview
In FY 2018, the Consumer Finance Section of the Division of Financial Institutions within the Department of Commerce (COM) oversaw approximately 1,600 licenses and registrations under the various lender laws covered by the bill. Overall, the changes in the bill will steer lenders who currently offer small-dollar, shorter term loans and wish to continue to do so in the future from licensure under the Small Loan, General Loan, or Credit Services Organization laws instead to licensure under the Short-Term Loan Law.

The modifications to the Short-Term Loan Law in the bill include (1) increasing the maximum loan amount from $500 under current law to $1,000 under the bill, (2) increasing the duration of loans from at least 31 days to a maximum duration of one year, (3) establishing a monthly maintenance fee that is the lesser of 10% of the originally contracted loan amount or $30, and (4) establishing requirements for a borrower’s eligibility for a loan that has a duration less than 91 days. The bill also caps the total amount of fees and charges that can be charged to 60% of the  originally contracted loan amount.

To differentiate between the loans that can be made under the Short-Term Loan Law, the bill requires that loans made under the Small Loan Law and General Loan Law have either a minimum duration of more than one year or a loan amount greater than $1,000. Additionally, the bill prohibits credit services organizations (loan brokering services) from brokering extensions of credit when the amount is less than $5,000 and the repayment term is under one year.

Consumer finance licenses and registrations

The bill will require payday lenders to… here’s the actual Bill 123 as passed and signed by the Ohio Governor:

HB 123 Passed – Effective October 2018
How to Start a Consumer Loan Business: Installment lending, car title loan lending, payday loan lending, personal loan business

Click This Image for Some Light Reading 🙂 Over Your Weekend!

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19
Jul

New Ohio Payday Loan Bill Near Passage

A new Ohio Payday Loan Bill will

  • bill would cap the life of a loan to one year
  • limit the amount to $1,000
  • cap the initial fee on that loan to 2 percent of any amount above $500
  • cap total fees collected at 60 percent of the principal
  • and cap monthly maintenance fees to 10 percent of the outstanding principal or $30, whichever is less.
How to Start a Consumer Loan Business: Installment lending, car title loan lending, payday loan lending, personal loan business

Click This Image for Some Light Reading 🙂 Over Your Weekend!

“Taking one side of the argument in the final version of a complex and far-reaching piece of legislation flouts transparency and is no way to enact legislation that will potentially cut off access to short term loans to Ohio residents and put hundreds of Ohioans out of work,” said Pat Crowley, spokesman for the Ohio Consumer Lenders Association.”

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06
Jul

Texas CAB, Credit Access Business, Credit Services Organization Loan Model

Why Use the Texas CAB/CSO Model to Lend Money to the Masses?

Texas CSO-CAB Lending Model

Texas CSO-CAB Lending Model

In the old n’ times lenders funding payday loans – nowadays often referred to as installment loan lenders –  in states not having specific payday loan “safe-harbor” legislation, lenders like Curo, Enova, Elevate, would partner with a state-chartered FDIC insured bank (Bank of Delaware is one example) in order to charge payday loan borrowers more than the maximum state usury rates allowed.

This was the case in Texas, Arkansas, Pennsylvania, New Jersey…  The payday loan company acted as a “marketer, a servicer and a processor for the bank. This loan model is referred to as the “bank-model.”  The “bank-model” was extremely popular for years and resulted in substantial profits for the companies utilizing it.

As an example, a dated study by the Texas Consumer Credit Commissioner estimated 1.81 million loans were made in Texas using the “bank-model.”  $626 million dollars were loaned.  The average loan was $338 with an average APR of 511%.

The Federal Deposit Insurance Corporation’s Revised Guidelines for Payday Lending, which took effect way back in July of 2005, adversely impacted those payday loan lenders using this “bank model” to export usury rates across state lines.  This edict forbids banks from providing payday loans to people who have had an outstanding payday loan from any lender for more than 3 months in the previous year.  The Revised Guidance limits the frequency of customer usage of payday loans and limits the period a consumer may have a payday loan outstanding from any lender to an aggregate of three months during the previous 12 month period.  Based on an average term of 15 days, this effectively limits the number of payday loans that may be made to any consumer to six during any 12 month period.  All payday loans made from any payday lender would count against this limit.

So in the state of Texas, and Ohio and a few others, the cunning payday loan operators conceived of employing the “Texas Credit Services Organization (CSO) / Texas Credit Access Business (CAB)” loan model.

Texas CAB-CSO-Credit Access Business

The Texas CAB/CSO Model Explained

By implementing this CSO Model, we payday loan/installment loan lenders can service the continuing, unabated consumer demand for our loan products while remaining profitable enough to earn a fair return on our investments, pay our employees a fair wage, pay our taxes and support our communities.

The bottom-line is demand for the payday loan/installment loan product has been clearly established.  The CAB/CSO model is on a firm foundation with specific case law to support it; it has already survived a federal court case.  Additionally, the CAB/CSO model can yield higher transaction fees and margins than the bank model or, as in the state of Texas, the “Regulated Lender” licensing model.

The multi-million dollar payday loan companies have spent millions of dollars in legal fees to research and refine the CSO/CAB model; follow their example.

Texas: Do you know just enough to be dangerous? Do you need an in-depth understanding of how the Texas CAB/CSO consumer loan model works? Are you wondering how the 3rd Party Lender fits into all this? Why it appears you must pay to lend your own money? How do you get licensed to offer loans in Texas? Do you need a 3rd Party Lender?

We’ve got you covered! Our newest Training Manual is our 88 page:

Texas CSO-CAB Lending Model

Texas CSO-CAB Lending Model

“Texas CSO/CAB Model & Analysis: the Credit Services Organization Ver. 10.0.”

Table of Contents

What is a CAB/CSO

How a CAB/CSO Works

Nuts & Bolts of 3rd Party Lender

Key CAB/CSO Characteristics

Why Use the CAB/CSO Model

Pros & Cons Regarding the CSO Model

Strategies for implementing the CAB/CSO Model

CSO/CAB Software Solutions

Advance America & the CSO Model

Payday Lenders Strike Back

Key Legal Authority

Typical CSO Documentation

Resources

A Typical Consumer Loan Agreement

Introduction

Key Characteristics

Key references

Basic Program Documents and Materials

10% loans under Texas Finance Code Chapter 302

Texas Credit Services Organization Act (Tex. Fin. Code Chapter 393) 

79th Texas Legislature, Regular Session

Texas Finance Commission Review

Texas Attorney General Review

Other Background Information

Developments in Other States

CREDIT SERVICES ORGANIZATION: TYPICAL AGREEMENT

TEXAS FINANCE CODE

Lovick versus RiteMoney LTD

You can get a PDF copy now! Immediate download available.


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