{"id":20815,"date":"2017-02-22T11:29:35","date_gmt":"2017-02-22T17:29:35","guid":{"rendered":"http:\/\/update.legislature.ne.gov\/?p=20815"},"modified":"2017-02-22T11:29:35","modified_gmt":"2017-02-22T17:29:35","slug":"restrictions-proposed-for-payday-lenders","status":"publish","type":"post","link":"https:\/\/update.legislature.ne.gov\/?p=20815","title":{"rendered":"Restrictions proposed for payday lenders"},"content":{"rendered":"

Borrowers of short-term, delayed deposit loans would receive more favorable loan terms under a bill heard by the Banking, Commerce and Insurance Committee Feb. 21.<\/p>\n

\"Sen.
Sen. Tony Vargas<\/figcaption><\/figure>\n

To secure a delayed deposit loan \u2014 often called a payday loan \u2014 a borrower typically submits a personal check for the loan amount, which is then held and cashed by the lender at the end of the loan period, typically 34 days.<\/p>\n

LB194, introduced by Omaha Sen. Tony Vargas, would limit the amount of interest that could be charged on a delayed deposit loan to 36 percent. Vargas said some Nebraska delayed deposit lenders currently charge more than 450 percent interest on loans, creating a cycle of debt and poverty.<\/p>\n

\u201cThis industry, as it exists currently, takes advantage of vulnerable Nebraskans and traps borrowers in a cycle of debt from which it is difficult to escape,\u201d he said. \u201cIt is my intention [with LB194] to make this lending model work better for Nebraskans.\u201d<\/p>\n

An individual loan could not exceed $500 under the bill. The total monthly payment could not exceed 5 percent of a borrower\u2019s gross monthly income or 6 percent of his or her net income. The bill would require loan repayment plans with equal installment payments \u2014 including all principal, fees, interest and charges \u2014 payable over a minimum six-month repayment period.<\/p>\n

Lenders could not enter into more than one payday loan with the same borrower at any one time. Lenders also would be required to conspicuously display a schedule of all applicable finance charges, fees, interest and penalties.<\/p>\n

Robert Haller, representing the Lincoln chapter of the Society of St. Vincent de Paul, testified in support of the bill. He said the banking resources low-income families rely upon often require money upfront, furthering the cycle of debt.<\/p>\n

\u201cMany borrowers find these loans quickly repayable, but there are enough people caught in the trap to justify the regulations of LB194,\u201d Haller said. \u201c[This bill] is an important step toward the provision of banking resources that give low-income families the financial stability that high-income families enjoy.\u201d<\/p>\n

Several former delayed deposit borrowers testified in support of the proposed regulations, including Elsa Ramon-Moody of Omaha. She said it is easy for some to fall into a cycle of renewing loans out of desperation.<\/p>\n

\u201cPeople have dire emergencies where there is very little recourse but for them to go to [these] lenders,\u201d she said. \u201cLB194 will help protect consumers and help stop lenders from exploiting low-income borrowers through predatory lending practices.\u201d<\/p>\n

Glenda Wood of Bellevue also spoke in support of the bill. She and her husband initially took out a $500 delayed deposit loan to pay for new car tires, but fell into a cycle of continuously renewing the loan to pay for the original loan amount. Over eight years, the couple spent close to $10,000 in principal, interest and fees trying to pay back the original $500 loan, she said.<\/p>\n

\u201cThe debt cycle can affect a person\u2019s ability to maintain adequate housing and support a household,\u201d she said. \u201cPeople need access to affordable credit and having fair and reasonable loan payments would accomplish that.\u201d<\/p>\n

Opposing the measure was Brad Hill, president of the Nebraska Financial Services Association and manager of several delayed deposit lending branches. He said lenders offering such loans provide a valuable service to people who need money quickly. Complaints against lenders in the delayed deposit industry in Nebraska are few and far between, Hill said.<\/p>\n

\u201cThis is paternalistic legislation from a group of people who have taken it upon themselves to tell other people what to do with their money,\u201d he said.<\/p>\n

The committee took no immediate action on the bill.<\/p>\n","protected":false},"excerpt":{"rendered":"

Borrowers of short-term, delayed deposit loans would receive more favorable loan terms under a bill heard by the Banking, Commerce and Insurance Committee Feb. 21. <\/p>\n","protected":false},"author":1,"featured_media":20813,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"colormag_page_container_layout":"default_layout","colormag_page_sidebar_layout":"default_layout","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[6],"tags":[184],"class_list":["post-20815","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking-commerce-and-insurance","tag-sen-tony-vargas"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/update.legislature.ne.gov\/wp-content\/uploads\/2017\/02\/LB194Vargas2-21-17a.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts\/20815","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=20815"}],"version-history":[{"count":1,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts\/20815\/revisions"}],"predecessor-version":[{"id":20816,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts\/20815\/revisions\/20816"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/media\/20813"}],"wp:attachment":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=20815"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=20815"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=20815"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}