Colorado's new law on high-cost lending may be a model for other states

Polo Rocha | American Banker
Some states, particularly Utah, have relatively loose limits on the interest rates that banks chartered within their borders can charge. Those banks sometimes work with high-cost lenders to offer loans with rates above what Colorado and other stricter states would otherwise allow — an arrangement that consumers advocate deride as the "rent-a-bank" model. That approach is "saddling working families with high-cost debt," said Ellen Harnick, director of state policy at the Center for Responsible Lending. Other states should follow Colorado's lead and prevent their residents from being charged

Predatory Lending’s Prey of Color

Ramenda Cyrus | The American Prospect
“It meant that the entire industry had to move to a safer product, or bear increased financial risks to their own balance sheets,” said Mitria Spotser of the Center for Responsible Lending (CRL).

Minnesota caps rates on payday loans — with a wrinkle

Polo Rocha
Minnesota's law is not a flat out 36% rate cap, but by putting strict limits on payday loans with rates between 36% and 50%, it could drastically reduce the product's availability. The law will "disrupt the predatory business model" of payday lenders so that they stop "creating long-term debt traps for consumers," said Yasmin Farahi, deputy director of state policy at the Center for Responsible Lending.

Fintechs Fear Contagion of Colorado’s Interest Rate Import Ban

Evan Weinberger | Bloomberg
Online lenders have used the Avant and Marlette settlements as a model, choosing to get a state license and be supervised by Colorado financial regulators. Those fintechs are considered the “true lender” in a transaction, not their out-of-state bank partners. But the settlements addressed misconduct only after it occurred, said Ellen Harnick, the director of state policy at the Center for Responsible Lending. The Colorado bill that opts out of DIDMCA provisions prevents violations of Colorado interest-rate laws from happening in the first place, she said.

‘It Left Me with Nothing’: The Debt Trap of Payday Loans

Michael Sainato | The Guardian
“The debt trap is very much by design and it’s how payday lenders’ business model works,” said Yasmin Farahi, deputy director of state policy and senior policy counsel at the Center for Responsible Lending. “They succeed by making sure their customers fail. They target low-income communities and communities of color, and it’s a model that’s based on their customers failing, essentially, for them to stay in business and generate fees.”

When Debt Settlement Leads to Financial Harm

Rochelle Sparko | AARP
Seventy-five-year-old Army veteran Lester Rodgers, Jr. lives in Chatham County on a fixed income. When his wife passed away, he worried that he would not have enough money to keep his home. Lester saw a TV ad from Themis Law, PLLC, which claimed to be a national law firm located in Washington, D.C. with expertise in saving peoples’ homes. In reality, Themis is a debt settlement company operated by the founder from his home.

House GOP Rebuked for 'Cruel and Reckless' Effort to Reverse Student Debt Relief

Jessica Corbett | Common Dreams
Another letter signatory, the Center for Responsible Lending (CRL), called out the GOP-led effort just ahead of the vote Wednesday. "This is yet another political stunt from some members of Congress to prevent tens of millions of borrowers, including low-wealth individuals, service members, public service workers, women, and people of color from receiving relief ahead of the Supreme Court's decision regarding the fate of student debt cancellation, said Jaylon Herbin, CRL's director of federal campaigns.