Local faith leaders head to KC to protest predatory lending

More than 25 local faith leaders are headed to Kansas City today for the National Day of Action to End Predatory Lending.

Part of a nationwide wave of actions to protect borrowers from predatory lenders, the Consumer Financial Protection Bureau is expected to release a proposed set of rules for the payday, title and installment loan industry. The rules will have a 90-day public comment period, according to a news release.

Locally organized as Faith Voices of Southwest Missouri, Congregational Coordinator Susan Schmalzbauer said the clergy are demanding the CFPB rein in predatory lenders who they say evade regulation or exploit legal loopholes to peddle high-cost loans to vulnerable consumers.

“We believe that predatory lending hurts us all,” she said in the release. “It not only hurts the borrower with average interest rates of 450 percent, and which legally can climb as high as 1,900 percent, but it destroys the fabric of our whole community.

“We see this harm in the Department of Housing and Urban Development’s designation of Springfield as a severely distressed city and in the Impacting Poverty Commission’s report that has flagged predatory lending as a symptom of poverty in our city.”

According to the release, Missouri has the highest average interest in the nation at 451.91 percent. Missouri statutes allow up to 1,950 percent interest. According to the Missouri Division of Finance, roughly 2 million payday loans were taken out in Missouri from October 2013 to September 2014, the most recent period recorded. The average amount borrowed was nearly $310 with an average annual percentage rate of 452 percent.

Legislative action has been slow coming. During the most recent session, Rep. Don Gosen, R-Ballwin, filed a bill seeking to limit renewals to two rounds from six and prohibit a borrower from having more than $750 in outstanding loans at one time. House Bill 1881 was referred to the banking committee where it failed to receive a hearing.

Among the interfaith group of clergy and laity traveling today are the Rev. Phil Snider, senior pastor at Brentwood Christian Church; the Rev. George Paul Wood, executive director of Assemblies of God Publications; Danny Chisholm, senior pastor at University Heights Baptist Church; Marla Marantz of Temple Israel Sisterhood; and Tom Faulkner, director of Crosslines.

Among other contributions to the cause so far, Wood signed letters asking elected officials to cap the rate at 36 percent, and Chisholm started University Hope, a payday loan rescue program with money donated by church members.

Earlier this year, Springfield’s CU Community Credit Union rolled out a payday loan alternative, dubbed the Fresh Start Loan Program. Funded through a $2 million U.S. Treasury grant, the program includes a credit builder loan program, payday consolidation loan and title loan alternative. The initiative offers loans of $500 or less for 26-28 percent interest.