Лиза Мэдиган продолжает зажигать
Jan. 22nd, 2006 08:46 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
birdwatcherРешив проблему доступности судафеда, прокурор Мэдиган занялась проблемой доступности кредита. Среди прочих требований нового закона -- глобальная иллинийская база данных, куда будут заноситься все payday loans. Кредиторам запрещается ссужать в третий раз, если в этой базе две непогашенных ссуды у данного должника уже имеются.
STRICTER PAYDAY LOAN LAW TOUTED IN PILSEN
Madigan says minority neighborhoods are exploited by high-interest lenders
By CARLOS ROIG Medill News Service
At a press conference in Pilsen Jan. 10, Attorney General Lisa Madigan and other state officials trumpeted the Payday Loan Reform Act, a newly adopted state law that attempts to regulate short-term, high-interest loans otherwise known as "payday loans."
The payouts offer borrowers immediate, but expensive, loans that must be paid back in as little as seven or 10 days.
Many borrowers find themselves unable to pay back the loan when it comes due, necessitating a second quick loan to cover the first, Illinois Senior Assistant Attorney General Tom James said at the event, which was held at the Mexican Fine Arts Museum. These loans can "trap people in a cycle of debt," James said.
This type of lending disproportionately affects minority communities like Pilsen, Madigan said.
The Payday Loan Reform Act went into effect last month. The law caps the flat fees charged on these loans at $15.50 per $100 loaned. It also limits the loans to $1,000, or 25 percent of a borrower's monthly salary, whichever is less.
Before the restrictions were put in place, the annual percentage rate for these loans could be as high as 780 percent, according to James. Under the new law, he added, those rates still can reach up to 200 percent per year.
David Betlejewski, executive director of the Eighteenth Street Development Corp., said that many Pilsen residents don't have the credit background necessary to secure traditional loans.
"A lot of times, people in Pilsen do not necessarily have credit ratings because of documentation or because they're doing things on a strictly cash basis," said
Language issues may also play
a part in the prevalence of these loans in Spanish-speaking communities. Limited English proficiency puts Spanish-speaking loan applicants at a disadvantage, according to Lizveth Mendez, the attorney general's outreach liaison for Latino affairs.
But the ease of communication between Spanish-speaking borrowers and lenders may allow unscrupulous lenders to capitalize on their cultural connection.
"There's already that trust factor. They [borrowers] don't realize that they're being taken for a ride," Mendez said.
This highlights another challenge for borrowers of any type of loan: Lenders know all the ins and outs of loans, while borrowers have limited knowledge.
"Information in lending is everything. The consumer is always at a disadvantage because the lender holds all the cards," James said.
The widening gap between cost-of-living expenses and. wages has also pushed people into short-term loans, according to Betlejewski.
"They're looking for a short-term solution, but they may be creating a long-term problem for themselves," Betlejewski said.
The new law allows an escape hatch for borrowers if they reach 35 days of continuous debt. At that time the borrower can enter a re-payment program that freezes interest charges and gives at least 56 additional days to complete four installment payments.
The final piece of the Payday Loan Reform Act is a statewide database that lenders will need to access prior to issuing a short-term loan. Lenders will not receive an authorization code from the Illinois Department of Financial and Professional Regulation if the database lists two outstanding payday loans held by the prospective borrower. The database is expected to be fully functional by Feb. 1.
И ведь даже ехать далеко не надо, чтобы спросить -- в соседней Индиане есть проф. Лиман.
STRICTER PAYDAY LOAN LAW TOUTED IN PILSEN
Madigan says minority neighborhoods are exploited by high-interest lenders
By CARLOS ROIG Medill News Service
At a press conference in Pilsen Jan. 10, Attorney General Lisa Madigan and other state officials trumpeted the Payday Loan Reform Act, a newly adopted state law that attempts to regulate short-term, high-interest loans otherwise known as "payday loans."
The payouts offer borrowers immediate, but expensive, loans that must be paid back in as little as seven or 10 days.
Many borrowers find themselves unable to pay back the loan when it comes due, necessitating a second quick loan to cover the first, Illinois Senior Assistant Attorney General Tom James said at the event, which was held at the Mexican Fine Arts Museum. These loans can "trap people in a cycle of debt," James said.
This type of lending disproportionately affects minority communities like Pilsen, Madigan said.
The Payday Loan Reform Act went into effect last month. The law caps the flat fees charged on these loans at $15.50 per $100 loaned. It also limits the loans to $1,000, or 25 percent of a borrower's monthly salary, whichever is less.
Before the restrictions were put in place, the annual percentage rate for these loans could be as high as 780 percent, according to James. Under the new law, he added, those rates still can reach up to 200 percent per year.
David Betlejewski, executive director of the Eighteenth Street Development Corp., said that many Pilsen residents don't have the credit background necessary to secure traditional loans.
"A lot of times, people in Pilsen do not necessarily have credit ratings because of documentation or because they're doing things on a strictly cash basis," said
Language issues may also play
a part in the prevalence of these loans in Spanish-speaking communities. Limited English proficiency puts Spanish-speaking loan applicants at a disadvantage, according to Lizveth Mendez, the attorney general's outreach liaison for Latino affairs.
But the ease of communication between Spanish-speaking borrowers and lenders may allow unscrupulous lenders to capitalize on their cultural connection.
"There's already that trust factor. They [borrowers] don't realize that they're being taken for a ride," Mendez said.
This highlights another challenge for borrowers of any type of loan: Lenders know all the ins and outs of loans, while borrowers have limited knowledge.
"Information in lending is everything. The consumer is always at a disadvantage because the lender holds all the cards," James said.
The widening gap between cost-of-living expenses and. wages has also pushed people into short-term loans, according to Betlejewski.
"They're looking for a short-term solution, but they may be creating a long-term problem for themselves," Betlejewski said.
The new law allows an escape hatch for borrowers if they reach 35 days of continuous debt. At that time the borrower can enter a re-payment program that freezes interest charges and gives at least 56 additional days to complete four installment payments.
The final piece of the Payday Loan Reform Act is a statewide database that lenders will need to access prior to issuing a short-term loan. Lenders will not receive an authorization code from the Illinois Department of Financial and Professional Regulation if the database lists two outstanding payday loans held by the prospective borrower. The database is expected to be fully functional by Feb. 1.
И ведь даже ехать далеко не надо, чтобы спросить -- в соседней Индиане есть проф. Лиман.
