“How #Payday #Lenders Fight To Stay #Legal and Still Able To #Lend”

PayDayLenders2#AceDebtNews says tactics by Unscrupulous lenders even leading to people being paid not to sign a petition banning, their type of lending.

It is time to put these types of lenders out of business and prevent their way of #capitalising on people’s #need by making lending so easy, but at a #cost

English: Cash Money - 24 hour payday loan outl...

English: Cash Money – 24 hour payday loan outlet on Yonge St. Toronto, Ontario, Canada (Photo credit: Wikipedia)

This is another copy righted article, but please spread the article, thanks. Editor

The Payday Playbook: How High Cost Lenders Fight to Stay Legal

by Paul Kiel ProPublica,  Aug. 2, 2013, 8 a.m.

A version of this story was co-published with the St. Louis Post-Dispatch.

As the Rev. Susan McCann stood outside a public library in Springfield, Mo., last year, she did her best to persuade passers-by to sign an initiative to ban high-cost payday loans. But it was difficult to keep her composure, she remembers. A man was shouting in her face.

He and several others had been paid to try to prevent people from signing. “Every time I tried to speak to somebody,” she recalls, “they would scream, ‘Liar! Liar! Liar! Don’t listen to her!'”

Such confrontations, repeated across the state, exposed something that rarely comes into view so vividly: the high-cost lending industry’s ferocious effort to stay legal and stay in business.

Outrage over payday loans, which trap millions of Americans in debt and are the best-known type of high-cost loans, has led to dozens of state laws aimed at stamping out abuses. But the industry has proved extremely resilient. In at least 39 states, lenders offering payday or other loans still charge annual rates of 100 percent or more. Sometimes, rates exceed 1,000 percent.

Last year, activists in Missouri launched a ballot initiative to cap the rate for loans at 36 percent. The story of the ensuing fight illuminates the industry’s tactics, which included lobbying state legislators and contributing lavishly to their campaigns; a vigorous and, opponents charge, underhanded campaign to derail the ballot initiative; and a sophisticated and well-funded outreach effort designed to convince African-Americans to support high-cost lending.

Industry representatives say they are compelled to oppose initiatives like the one in Missouri. Such efforts, they say, would deny consumers what may be their best or even only option for a loan.

English: Loan payment schedule of a 1-year, fi...

English: Loan payment schedule of a 1-year, fixed-size payment loan with 3% monthly interest. Shows the accumulation of the interest, the payments and how much of the total cost consists of interest. The effective annual percentage rate is calculated. (Photo credit: Wikipedia)

Quick Cash and Kwik Kash

Missouri is fertile soil for high-cost lenders. Together, payday, installment and auto-title lenders have more than 1,400 locations in the state — about one store for every 4,100 Missourians. The average two-week payday loan, which is secured by the borrower’s next paycheck, carries an annual percentage rate of 455 percent in Missouri. That’s more than 100 percentage points higher than the national average, according to a recent survey by the Consumer Financial Protection Bureau. The annual percentage rate, or APR, accounts for both interest and fees.

Fee Charged: $15

Loan Period: 14 days

Loan Has Been Renewed: 2 times

To renew a loan, borrowers pay only the fees due, not any principal.

The average APR is 23.64 percent on credit cards for consumers with bad credit.

Note: The annual percentage rate accounts for both interest and fees. Sources: Consumer Financial Protection Bureau, Missouri State Department of Finance, CreditCards.com. Graphic by Sisi Wei.

The issue caught the attention of Democrat Mary Still, who won a seat in the state House of Representatives in 2008 and immediately sponsored a bill to limit high-cost loans. She had reason for optimism: The new governor, Jay Nixon, a Democrat, supported reform.

"DO NOT BORROW FROM PAYDAY LENDERS"

“DO NOT BORROW FROM PAYDAY LENDERS”

The problem was the legislature. During the 2010 election cycle alone, payday lenders contributed $371,000 to lawmakers and political committees, according to a report by the nonpartisan and nonprofit Public Campaign, which focuses on campaign reform. The lenders hired high-profile lobbyists, and Still became accustomed to their visits. But they hardly needed to worry about the House Financial Institutions Committee, through which a reform bill would need to pass. One of the lawmakers leading the committee, Don Wells, owned a payday loan store, Kwik Kash. He could not be reached for comment.

Eventually, after two years of frustration, Still and others were ready to try another route. “Absolutely, it was going to have to take a vote of the people,” she said. “The legislature had been bought and paid for.”

A coalition of faith groups, community organizations and labor unions decided to put forward the ballot initiative to cap rates at 36 percent. The main hurdle was collecting the required total of a little more than 95,000 signatures. If the initiative’s supporters could do that, they felt confident the lending initiative would pass.

But even before the signature drive began, the lending industry girded for battle.

In the summer of 2011, a new organization, Missourians for Equal Credit Opportunity (MECO), appeared. Although it was devoted to defeating the payday measure, the group kept its backers secret. The sole donor was another organization, Missourians for Responsible Government, headed by a conservative consultant, Patrick Tuohey. Because Missourians for Responsible Government is organized under the 501(c)(4) section of the tax code, it does not have to report its donors. Tuohey did not respond to requests for comment.

Still, there are strong clues about the source of the $2.8 million Missourians for Responsible Government delivered to MECO over the course of the battle.

Payday lender QC Holdings declared in a 2012 filing that it had spent “substantial amounts” to defeat the Missouri initiative. QC, which mostly does business as Quik Cash (not to be confused with Kwik Kash), has 101 outlets in Missouri. In 2012, one-third of the company’s profits came from the state, twice as much as from California, its second-most profitable state. If the initiative got to voters, the company was afraid of the outcome: “ballot initiatives are more susceptible to emotion” than lawmakers’ deliberations, it said in an annual filing. And if the initiative passed, it would be catastrophic, likely forcing the company to default on its loans and halt dividend payments on its common stock, the company declared.

"DO NOT BORROW FROM PAYDAY LENDERS"

“DO NOT BORROW FROM PAYDAY LENDERS”

In late 2012, QC and other major payday lenders, including Cash America and Check into Cash, contributed $88,000 to a group called Freedom PAC. MECO and Freedom PAC shared the same treasurer and received funds from the same 501(c)(4). Freedom PAC spent $79,000 on ads against Still in her 2012 losing bid for a state senate seat, state records show.

MECO’s first major step was to back three lawsuits against the ballot initiative. If any one of the suits were successful, the initiative would be kept off the ballot regardless of how many citizens had signed petitions in support.

Threatening letters and decoy initiatives

Meanwhile, supporters of the ballot initiative focused on amassing volunteers to gather signatures. The push started with umbrella organizations such as Metropolitan Congregations United of St. Louis, which ultimately drafted more than 50 congregations to the effort, said the Rev. David Gerth, the group’s executive director. In the Kansas City area, more than 80 churches and organizations joined up, according to the local nonprofit Communities Creating Opportunity.

Predominantly African-American congregations in Kansas City and St. Louis made up a major part of the coalition, but the issue crossed racial lines and extended into suburbs and small towns. Within one mile of Grace Episcopal Church in Liberty, a mostly white suburb of Kansas City, there are eight high-cost lenders. “We think it’s a significant problem and that it was important for people of faith to respond to this issue,” said McCann, who leads the church.

Volunteers collected signatures at Catholic fish fries during Lent and a community-wide Holy Week celebration. They went door to door and stood on street corners.

In early January 2012, a number of clergy opened their mail to find a “Legal Notice” from a Texas law firm and sent on MECO’s behalf. “It has come to our attention that you, your church, or members of your church may be gathering signatures or otherwise promising to take directions from the proponents’ political operatives, who tell churchgoers that their political plan is a ‘Covenant for Faith and Families,'” said the letter.

Please be advised that strict statutes carrying criminal penalties apply to the collection of signatures for an initiative petition,” it said in bold type. Another sentence warned that churches could lose their tax-exempt status by venturing into politics. The letter concluded by saying MECO would be watching for violations and would “promptly report” any.

Soon after the Rev. Wallace Hartsfield of Metropolitan Missionary Baptist Church in Kansas City received the letter, a lawyer called. Had he received the letter? Hartsfield remembers being asked. He responded, “If you feel like we’re doing something illegal, you need to try to sue, all right?” he recalls. Ultimately, no suits or other actions appear to have been filed against any faith groups involved in the initiative fight.

MECO did not respond to requests for comment. The law firm behind the letter, Anthony & Middlebrook of Grapevine, Texas, referred comment to the lawyer who had handled the matter, who has left the firm. He did not respond to requests for comment.

Payday lenders and their allies took other steps as well. A Republican lobbyist submitted what appears to have been a decoy initiative to the Missouri Secretary of State that, to the casual reader, closely resembled the original measure to cap loans at 36 percent. It proposed to cap loans at 14 percent, but stated that the limit would be void if the borrower signed a contract to pay a higher rate — in other words, it wouldn’t change anything. A second initiative submitted by the same lobbyist, Jewell Patek, would have made any measure to cap loan interest rates unlawful. Patek declined to comment.

MECO spent at least $800,000 pushing the rival initiatives with its own crew of signature gatherers, according to the group’s state filings. It was an effective tactic, said Gerth, of the St. Louis congregations group. People became confused about which was the “real” petition or assumed they had signed the 36 percent cap petition when they had not, he and others who worked on the effort said.

MECO’s efforts sowed confusion in other ways. In April 2012, a local court sided with MECO in one of its lawsuits against the initiative, throwing the ballot proposition into serious jeopardy for several months until the state Supreme Court overturned the lower court’s ruling. During those months, according to video shot by the rate cap’s supporters, MECO’s employees out on the streets warned voters who were considering signing the petition that it had been deemed “illegal.”

MECO also took to the airways. “Here they come again,” intones the narrator during a television ad that ran in Springfield, “Washington, DC special interests invading our neighborhoods.” Dark figures in suits and sunglasses can be seen descending from a plane. “An army of outsiders approaching us at our stores and in our streets,” says the voice. “But together we can stop them: If someone asks you to sign a voter petition, just decline to sign.”

Although the ad discloses that it was paid for by MECO, it does not mention payday lending or capping interest rates.

Installment lenders join the fray

Installment lenders launched a separate group, Stand Up Missouri, to fight the rate-cap initiative — and to differentiate themselves from payday lenders.

As the group’s website put it, “special interest groups masquerading as grass-roots, faith-based alliances” were not only targeting payday loans but also “safe” forms of credit such as installment loans. “Stand Up Missouri does not represent payday lending or payday interests,” the group said in its press releases.

Unlike payday loans, which are typically due in full after two weeks, installment loans are paid down over time. And while many payday lenders also offer such loans, they usually charge higher annual rates (from about 300 to 800 percent). The highest annual rate charged by World Finance, among the largest installment lenders in the country and the biggest backer of Stand Up Missouri, is 204 percent, according to its last annual filing.

Still, like payday lenders, installment lenders such as World profit by keeping borrowers in a cycle of debt. Installment and payday lenders are also similar in the customers they target. In neighboring Illinois, 56 percent of payday borrowers and 72 percent of installment loan borrowers in 2012 had incomes of $30,000 or less, according to state data.

World was the subject of an investigation by ProPublica and Marketplace in May. The company has 76 locations in Missouri: Of all high-cost lenders, only payday lenders QC and Advance America have more locations in the state.

Stand Up Missouri raised $443,000 from installment lenders and associated businesses to oppose the rate-cap ballot initiative, according to state filings.

To broadcast their message in Missouri, the installment lenders arranged a letter-writing campaign to local newspapers, placed ads, distributed video testimonials by satisfied customers, and held a rally at the capitol. Like MECO, Stand Up Missouri also filed suit with their own team of lawyers to block the initiative.

English: The Missourians For Secession's offic...

English: The Missourians For Secession’s official label. (Photo credit: Wikipedia)

Tom Hudgins, the chairman of Stand Up Missouri as well as the president and chief operating officer of installment lender Western Shamrock, declined to be interviewed but responded to questions with an emailed statement. Stand Up Missouri acknowledges that “some financial sectors” may require reform, he wrote, but the initiative backers didn’t want to work with lenders.

“Due to their intense lack of interest in cooperatively developing market-based reforms, we have and will continue to meet with Missourians in all corners of the state to discuss the financial market and opportunities to reform the same.”

“Put a good face on this”

In February 2012, the Rev. Starsky Wilson of St. Louis sat down at a table in the Four Seasons Hotel. The floor-to-ceiling windows reveal vistas of the city’s famous arch and skyline. Lined up in front of him were two lobbyists and Hudgins, he remembers.

The lenders had targeted a community that was both important to their profits and crucial to the petition drive: African-Americans. Wilson, like the majority of his flock, is black.

So were the two lobbyists. Kelvin Simmons had just a few weeks before been in charge of the state budget and was a veteran of Missouri politics. His new employer was the international law firm Dentons, then called SNR Denton, and he was representing his first client, Stand Up Missouri.

Next to Simmons was Rodney Boyd, for the past decade the chief lobbyist for the city of St. Louis. He, too, worked for SNR Denton.

The lobbyists and Hudgins urged Wilson to re-think his commitment to the rate-cap ballot initiative.

Wilson was not swayed, but he was only one target among many. At the Four Seasons, Wilson says, he bumped into two other leaders of community organizations who had been summoned to hear Stand Up Missouri’s message. He said he also knew of more than a dozen African-American clergy who met with the lobbyists. Their message, that installment loans were a vital credit resource for middle-class African-Americans, was persuasive for some. As a result, Wilson found himself mounting a counter-lobbying effort. A spokesperson for Simmons and Boyd’s firm declined to comment.

In Kansas City, Rev. Hartsfield also received an invitation from the lobbyists — but that was not the only case, as Hartsfield puts it, of an African-American being “sent into the community to try to put a good face on this.”

Willie Green spent eight seasons as a wide receiver in the NFL and won two Super Bowls with the Denver Broncos. After he retired in 1999, he opened several payday loan stores of his own and went on to hold a series of positions serving as a spokesman for payday lending, especially to minority communities.

While African-Americans comprise 13 percent of the U.S. population, they account for 23 percent of payday loan borrowers, according to a Pew Charitable Trusts survey. Green was “Senior Advisor of Minority Affairs” for the Community Financial Services Association, the payday lenders’ national trade group, then director of “community outreach” for Advance America, one of the largest payday lenders. Finally, in 2012, he opened his own consultancy, The Partnership Alliance Co., which, according to his LinkedIn profile, focused on “community relations.” Over the past decade, he has popped up during legislative fights all over the country — North Carolina; Georgia; Washington, D.C.; Arkansas; Colorado.

It is unclear who hired Green in 2012 — he declined to comment, and MECO did not report paying him or his company. But to Hartsfield, it was clear he was there to advocate on behalf of payday lending.

Green once penned an open letter to the Georgia’s legislative black caucus arguing that government regulation on payday loans was unneeded and paternalistic: Opponents of payday lending “believe that people unlike them are just po’ chillin’ who must be parented by those who know better than they do what’s in their best interest,” he wrote, according to the Chattanooga Times Free Press.

During their private meeting, Hartsfield said, Green made a similar argument but also discussed church issues unrelated to the ballot initiative. The payday lending industry might be able to help with those, Hartsfield recalled Green saying. The message the minister received from the offer, he said, was “we’ll help you with this over there if you stop this over here.”

Green referred all questions to his new employer, the installment lender World Finance. In a statement, World did not address specific questions but said the company was “pleased to have Mr. Green as a member of its team to enhance World’s outreach to the communities that it serves and to provide him the opportunity to continue his many years of being personally involved in and giving back to those communities.”

Hartsfield did not take Green up on his offer, but the former athlete has served as a gateway to the industry’s generosity before. In 2009 in Colorado, where payday loan reform was a hot topic (a bill ultimately passed in 2010), Green presented the Urban League of Metro Denver with a $10,000 check on behalf of Advance America. Landri Taylor, president and chief executive of the organization, recalled that Green had approached him with the offer and that he was glad for the support. He also said that lending was not a core issue for his organization and that, even if it were, the contribution couldn’t have bought its allegiance.

In Georgia in 2007, Green, then a registered lobbyist, gave a state lawmaker $80,000 a few weeks before the legislature voted on a bill to legalize payday lending. The lawmaker, who subsequently pleaded guilty to unrelated federal charges of money laundering, was one of 11 Democrats to vote for the bill.

After the Atlanta Journal-Constitution broke news of the transfer, Green produced documents showing that it had been a loan for a real estate investment: The lawmaker had promised to repay the loan plus $40,000, but had never done so, Green said. The state ethics commission subsequently found Green had broken no state laws, because lobbyists are allowed to engage in private business transactions with lawmakers.

The case of the missing petitions

By the spring of 2012, supporters of the initiative were in high gear. Volunteers, together with some paid employees, were collecting hundreds of signatures each day. They were increasingly confident they would hit their mark.

In some areas, such as Springfield, the work resembled hand-to-hand combat. Through intermediaries, such as ProActive Signature Solutions, the initiative’s opponents hired people to oppose it.

“It was a well-funded effort,” said Oscar Houser of ProActive. He declined to say which company had retained ProActive. However, only MECO reported spending funds on what it said were signature gatherers. Those employees, according to Houser, eventually focused solely on trying to prevent people from signing the initiative.

Marla Marantz, a Springfield resident and retired schoolteacher, was hired to gather signatures for the 36 percent cap initiative. Just about every day, she could expect to be joined by at least one, and often several, of ProActive’s employees, she says. Wherever she went — the public library, the DMV — they would soon follow. It was a tactic both she and her adversaries (with whom she became very familiar, if not friendly) called “blocking.”

“What we’re doing is preventing them from being able to get signatures,” one ProActive employee says on a video shot by a Missouri State University journalism student. Asked to describe how “blocking” works, the employee says, “Usually, we get a larger group than they have. We pretty much use the power of numbers.” In the video, as Marantz stands outside a public building, she is surrounded by three ProActive employees.

ProActive’s employees did not identify themselves to voters as affiliated with payday lending, Marantz says. They sometimes wore T-shirts reading “Volunteer Petition Official” or held signs urging citizens to “Stand up for Equal Opportunity.”

Marantz shared various photos and videos of her experiences. In one video, a library employee tells a group of ProActive employees they will be asked to leave if they continue to make patrons uncomfortable. At other times, Marantz says, exasperated public employees or the police simply asked anyone collecting signatures to leave the area.

McCann also gathered signatures for the initiative and experienced “blocking.” “I had on my clerical collar, and they seemed to address a lot of their vitriol at me,” she remembers.

In May 2012, Missourians for Responsible Lending, the organization formed by supporters of the initiative, filed suit in county court in Springfield, alleging that MECO, through ProActive, was illegally harassing and assaulting its signature gatherers. The suit included sworn declarations by Marantz and three others who had said they had endured similar treatment. It called for a temporary restraining order that would keep MECO’s employees at least 15 feet away.

MECO, via its lawyers, fired back. The suit was an unconstitutional attempt by supporters of the initiative to silence their political opponents based on alleged “sporadic petty offenses,” MECO argued. Even if the initiative’s detractors “engaged in profanity-laced insults all of the time,” they said, such behavior would still be protected by the First Amendment.

Houser called the suit “frivolous” and said he was happy to let MECO’s lawyers handle it. The suit stalled.

“Blocking” wasn’t the only problem initiative supporters encountered. Matthew Patterson ran a nonprofit, ProVote, that coordinated signature gathering in the Springfield area. On the night of April 25, 2012, Patterson put a box of petitions in his car. Then, realizing he had forgotten his phone in his office, he locked his car and went back inside.

When he returned, his passenger side window was broken and the box of petitions was gone, according to Patterson and the police report he filed. The box had contained about 5,000 voter signatures, about half of which were for the 36 percent cap initiative, Patterson said.

No arrest was ever made. Volunteers from Kansas City and St. Louis converged on the area to recoup the lost signatures. The final deadline to submit signatures to the secretary of state’s office was less than two weeks away.

23,000 over, 270 under

In August, the Missouri Secretary of State announced that supporters of the initiative had submitted more than 118,000 valid signatures, about 23,000 more than needed.

But the state’s rules required that they collect signatures from at least 5 percent of voters in six of the state’s nine congressional districts. They had met that threshold in five districts — but in the First District, which includes North St. Louis, they were 270 signatures short.

A week later, initiative supporters filed a challenge in court, arguing that local election authorities had improperly disqualified far more than 270 signatures. MECO and Stand Up Missouri joined the fray, arguing not only that signatures had been properly excluded, but also that far more should have been tossed out.

Eventually, with only a couple of weeks before the deadline to finalize the November ballot, backers of the initiative decided they could not match the lenders’ ability to check thousands of signatures. They withdrew their challenge.

“It was so frustrating, disappointing,” McCann said. “People had spent hours and hours and hours on this initiative.”

Looking to 2014

The initiative’s supporters now have their eye on 2014, and they have made the necessary preparation by filing the same petition again with the secretary of state.

The industry has also made preparations. MECO has reported adding $331,000 to its war chest since December. Stand Up Missouri has raised another $151,000.

Jewel PatakLast May, Jewell Patek, the same Republican lobbyist who filed the industry’s initiatives in 2011, filed a new petition. It caps annual rates at 400 percent.

The installment lenders have continued their effort to woo African-Americans. In December, Stand Up Missouri was a sponsor of a Christmas celebration for Baptist ministers in St. Louis, and in June, it paid for a $20,000 sponsorship of the National Baptist Convention, hosted this year in St. Louis. It’s retained the same high-powered African-American lobbyists and added one more: Cheryl Dozier, a lobbyist who serves as executive director of the Missouri Legislative Black Caucus. Lastly, Willie Green, according to initiative supporters who have spoken with the ministers, has made overtures to African-American clergy on behalf of World Finance.

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#legal, #lend, #lenders, #payday, #annual-percentage-rate, #consumer-financial-protection-bureau, #financial-services, #loan, #meco, #missouri, #paul-kiel, #payday-loan, #propublica, #responsible-government, #st-louis-post-dispatch

AmeriCashLoans: Borrowing Just $1,000 Turns Into $40,000 Debt

"DO NOT USE PAY DAY LENDERS TO BORROW MONEY"

“DO NOT USE PAY DAY LENDERS TO BORROW MONEY”

#AceDebtNews says as more and more people are put into #debt by #greedy lenders, out to make a profit out of misery.

This story has been agreed and it is copy righted thanks   Editor.

When Lenders Sue, Quick Cash Can Turn Into a Lifetime of Debt

by Paul Kiel ProPublica,  Dec. 13, 2013, 10:47 a.m.

A version of this story will be published in the St. Louis Post-Dispatch on Sunday.

Five years ago, Naya Burks of St. Louis borrowed $1,000 from AmeriCash Loans. The money came at a steep price: She had to pay back $1,737 over six months.

“I really needed the cash, and that was the only thing that I could think of doing at the time,” she said. The decision has hung over her life ever since.

A single mother who works unpredictable hours at a chiropractor’s office, she made payments for a couple of months, then she defaulted.

So AmeriCash sued her, a step that high-cost lenders 2013 makers of payday, auto-title and installment loans 2013 take against their customers tens of thousands of times each year. In just Missouri and Oklahoma, which have court databases that allow statewide searches, such lenders file more than 29,000 suits annually, according to a ProPublica analysis.

ProPublica’s examination shows that the court system is often tipped in lenders’ favor, making lawsuits profitable for them while often dramatically increasing the cost of loans for borrowers.

High-cost loans already come with annual interest rates ranging from about 30 percent to 400 percent or more. In some states, if a suit results in a judgment 2013 the typical outcome 2013 the debt can then continue to accrue at a high interest rate. In Missouri, there are no limits on such rates.

Many states also allow lenders to charge borrowers for the cost of suing them, adding legal fees on top of the principal and interest they owe. One major lender routinely charges legal fees equal to one-third of the debt, even though it uses an in-house lawyer and such cases usually consist of filing routine paperwork. Borrowers, meanwhile, are rarely represented by an attorney.

After a judgment, lenders can garnish borrowers’ wages or bank accounts in most states. Only four states prohibit wage garnishment for most debts, according to the National Consumer Law Center; in 20, lenders can seize up to one-quarter of borrowers’ paychecks. Since the average borrower who takes out a high-cost loan is already stretched to the limit, with annual income typically below $30,000, losing such a large portion of their pay “starts the whole downward spiral,” said Laura Frossard of Legal Aid Services of Oklahoma.

The peril is not just financial. In Missouri and other states, debtors who don’t appear in court also risk arrest.

As ProPublica has previously reported, the growth of high-cost lending has sparked battles across the country. In response to efforts to limit interest rates or otherwise prevent a cycle of debt, lenders have fought back with campaigns of their own and by transforming their products.

Lenders argue their high rates are necessary if they are to be profitable and that the demand for their products is proof they provide a valuable service. When they file suit against their customers, they do so only as a last resort and always in compliance with state law, lenders contacted for this article said.

After AmeriCash sued Burks in September 2008, she found her debt had grown to more than $4,000. She agreed to pay it back, bit by bit. If she didn’t, AmeriCash won the right to seize a portion of her pay.

Ultimately, AmeriCash took more than $5,300 from Burks’ paychecks. Typically $25 per week, the payments made it harder to cover basic living expenses, Burks said. “Add it up: As a single parent, that takes away a lot.”

But those years of payments brought Burks no closer to resolving her debt. Missouri law allowed it to continue growing at the original interest rate of 240 percent 2013 a tide that overwhelmed her small payments. So even as she paid, she plunged deeper and deeper into debt.

By this year, that $1,000 loan Burk’s took out in 2008 had grown to a $40,000 debt, almost all of which was interest. After ProPublica submitted questions to AmeriCash about Burks’ case, however, the company quietly and without explanation filed a court declaration that Burks had completely repaid her debt.

Had it not done so, Burks would have faced a stark choice: declare bankruptcy or make payments for the rest of her life.

A Judge’s Dismay

Appointed to Missouri’s associate circuit court in St. Louis last year by Gov. Jay Nixon, Judge Christopher McGraugh came to the bench with 25 years’ experience as an attorney in civil and criminal law. But, he said, “I was shocked” at the world of debt collection.

As in Burks’ case, high-cost lenders in Missouri routinely ask courts to hand down judgments that allow loans to continue growing at the original interest rate. Initially, he refused, McGraugh said, because he feared that would doom debtors to years, if not a lifetime, of debt.

“It’s really an indentured servitude,” he said. “I just don’t see how these people can get out from underneath [these debts].”

But he got an earful from the creditors’ attorneys, he said, who argued that Missouri law was clear: The lender has an unambiguous right to obtain a post-judgment interest rate equal to that in the original contract. McGraugh studied the law and agreed: His hands were tied.

Now, in situations where he sees a debt continuing to build despite years of payments by the debtor, the best he can do is urge the creditor to work with the debtor. “It’s extremely frustrating,” he said.

Since the beginning of 2009, high-cost lenders have filed more than 47,000 suits in Missouri, according to a ProPublica analysis of state court records. In 2012, the suits amounted to 7 percent of all collections suits in the state. Missouri law allows lenders to charge unlimited interest rates, both when originating loans and after winning judgments.

Borrowers such as Burks often do not know how much they have paid on their debt or how much they owe. When creditors seek to garnish wages, the court orders are sent to debtors’ employers, which are responsible for deducting the required amount, but not to the debtors themselves.

AmeriCash, for instance, was not required to send Burks any sort of statement after the garnishment began. She learned from a reporter how much she had paid 2013 and how much she still owed.

After AmeriCash’s deduction and another garnishment related to a student loan, Burks said she took home around $460 each week from her job.

No court oversees the interest that creditors such as AmeriCash charge on post-judgment debts. For instance, the judgment that Burks and an attorney for AmeriCash signed says that her debt will accrue at 9 percent interest annually. Instead, AmeriCash appears to have applied her contractual rate of 240 percent a year.

That seems unjustified, McGraugh said. “I would believe you’re bound by the agreement you made in court.”

In the past five years, AmeriCash has filed more than 500 suits in Missouri. The suits often result in cases like Burks’, with exploding debts. One borrower took out a $400 loan in late 2005 and by 2012 had paid $3,573 2013 but that didn’t stop the interest due on the loan from ballooning to more than $16,000. (As in Burks’ case, AmeriCash relieved that debtor of his obligation after ProPublica submitted a list of questions to the company.)

AmeriCash, a private company based in a Chicago suburb, has five stores in Missouri, as well as 60 more across four other states. The company did not respond to repeated phone calls and emails about its practices. The firm’s attorney, Wally Pankowski of the Evans & Dixon law firm, declined to comment.

Cases in which lawsuits led to exploding debts abound in Missouri, and ProPublica found examples involving several different lenders.

Erica Hollins of St. Louis took out a $100 loan from Loan Express just before Christmas 2006. She soon fell behind on the payments, but instead of suing immediately, the company waited, the debt growing at 200 percent interest all the while. When the company sued two and a half years later, it received a judgment to collect on $913, including interest.

For years, the company garnished Hollins’ paychecks from her job at a nursing home. When, after a total of nearly $3,600 in payments, Hollins still had not cleared her debt, she called Loan Express’ attorney, she said. As in Burks’ case, the lender was represented by Pankowski. “I asked him would I ever be done paying for this?” she recalled. “And he said, 2018Maybe, maybe not.’ ” (Pankowski declined to comment on the case.)

Hollins sought legal help. Now she’s filed suit against the company, alleging it intentionally delayed suing so that her debt would multiply. The suit is ongoing.

Todd Stimson, who owns Loan Express, as well as three other stores in Illinois, said his company waited to sue Hollins because he believed her wages were already being garnished by another creditor. He also said his company gave her ample opportunity to avoid a suit in the first place but that Hollins didn’t pay. Companies like his have to sue in such situations, he said. Otherwise, “word gets out in the neighborhood, 2018Oh, you won’t get sued anyway, just don’t pay them.'”

As for Hollins paying back more than 35 times what she borrowed, Stimson said his company might have stopped the garnishment if Hollins had asked, although he added that “legally, I don’t have to.”

Not all lenders pursue as much as they are legally entitled to. Some lenders charge triple-digit rates in their contracts, but they lower the rate after receiving a judgment.

Speedy Cash, for instance, has filed at least 9,382 lawsuits in Missouri over the past five years, more than any other high-cost lender, according to ProPublica’s analysis. It has six stores in the state, in addition to making loans online.

Speedy Cash’s loans can be very expensive. A 2011 contract for a $400 loan, for instance, shows a 389 percent annual interest rate and total payments of $2,320 over a year and a half.

Case Files: Missouri

Missouri allows high-cost lenders who win judgments against  delinquent borrowers to charge unlimited interest rates on the debts, inflating the amount owed. Here are three examples:

 

#americash-loans, #americashloans, #burk, #burks, #jay-nixon, #loan, #missouri, #national-consumer-law-center, #naya-burks, #oklahoma, #propublica, #st-louis, #st-louis-post-dispatch

Mortgage Fraud Examiners Warns Beware Of Pretender Defenders

English: Notice of Trustee's Sale, Foreclosure...

English: Notice of Trustee’s Sale, Foreclosure, Mortgage Crisis (Photo credit: Wikipedia)

Mortgage Fraud Examiners, the investigative firm who warned the public about loan modification scams, the “criminal loan modification trap,” the “Mortgage Elimination” scam and worthless services like “forensic loan audits” and “securitisation audits” is now warning that “pretender defenders” may be cheating homeowners out of victory by ignoring contract breaches and tortuous acts underlying their mortgage transactions! 

Only exposure of contract breaches and/or tortuous conduct underlying a mortgage transaction provides a sound strategic basis for liberating homeowners from the bondage of mortgage foreclosure.” So says Storm Bradford, Founder of Mortgage Fraud Examiners.

Mortgage Fraud Examiners is a project of Lex Consulting, LLC. For over 30 years, Lex Consulting has provided litigation support to attorneys, helping them break into new areas of practice, or providing specialized advice for complex cases requiring novel approaches to the law. Due to the recent housing crisis, Mortgage Fraud Examiners, a team of specially trained legal professionals, was created to provide borrowers and the legal community with comprehensive assistance to help keep them in their homes.

Homeowners and attorneys need to understand a promissory note; mortgage/deed of trust is nothing more, nothing less, a contract. Moreover, attorneys need to be extra careful. According to several ethics counsel we contacted around the country, failing to identify contract breaches and/or tortuous conduct may justify a homeowner suing a foreclosure defense attorney for malpractice or at least disgorgement of fees if the homeowner were to lose their property and these problems were later identified. Bradford reiterates the point, made by the ethics attorneys, “foreclosure defenders who fail to properly examine the mortgage transaction might face legal malpractice claims by their clients: Let me ask you this. If a client goes to an attorney with a contract dispute, what is the attorney ethically bound to do? Is not it to look for breaches in, and tortuous conduct related to the contract?”

Thomas K. Plofchan, Jr., an attorney in Sterling, Virginia, who employs the services of Mortgage Fraud Examiners, adds: “Ultimately, the only real issue is whether a proper lien has been created with the house as collateral. It is astonishing just how many legal errors, contract breaches, and frauds, can be exposed by a meticulous examination of the mortgage transaction.” Matter of fact, in two recent cases we were able to identify and establish evidence to show the deeds of trust were void. The result for the homeowners was receiving their respective homes free and clear. So, it’s quite clear, a thorough examination of the mortgage contract is the ONLY proven method to uncover evidence that could affect the validity of the lien.”

Bradford claims that so many foreclosure attorneys fall into the Pretender Defender category that homeowners must develop ways to determine whether the attorney can and will be able to identify contract anomalies within the mortgage transaction, and get them a financial settlement and/or their house free and clear if found. ?Asking a simple question, like how many cases have you won, would be a good starting point.

Bradford explained the favorite strategy of the “Pretender Defenders:” “They use arguments like ‘show me the note,’ ‘securitization,’ ‘MERS,’ ‘robo-signing,’ and so on. Although these have some legal validity, inevitably, the entity foreclosing corrects the defects and wins because of one central fact that everybody knows – the borrower failed to repay the mortgage loan as agreed. These ?pretender defenders know that the court will eventually grant the foreclosure, Bradford says, and that their typical defenses generally amount to nothing more than STALL tactics.

This brings up a pressing question. How often do ?pretender defenders miss valid defenses that may help homeowners? A recent lawsuit by the FDIC shows that this happens all the time. The FDIC had 292 appraisals performed by an appraisal management company for Washington Mutual analyzed. The FDIC found ?more than 75 percent of appraisals reviewed were found to contain multiple egregious violations of USPAP and applicable industry standards. The FDIC’s Big Appraisal Fraud Suit: Why It Smells Fishy

Foreclosure defenders should be identifying tortious conduct, and contract breaches. And finding problems within the mortgage transaction is relatively easy, we find appraisal fraud in eight out of every ten mortgage transaction we examine, which coincides with the findings of the FDIC, and that doesn’t include all the other types of tortious conduct and contract breaches that are usually present. So in most cases the homeowner has a ninety percent chance or better of having something viable that puts them in the proverbial driver’s seat. Most often the demonstration of a strong cause of action will lead the bank to ask for a settlement. The settlement or the lawsuit could result in getting the house free and clear, and/or money for the foreclosure victim, plus fees and costs for the attorney.” Quicken Loans on losing end of $3 million predatory lending verdict

Bradford adds, “if the homeowner had a choice of possibly stalling the foreclosure action or possibly getting their home free and clear, and/or a monetary settlement from the bank, does anyone really believe the homeowner would choose the stall tactic? And yet, many do because these ‘pretender defenders’ misled them. By just delaying the inevitable foreclosure, some pretender defenders bill their clients anywhere from $1500.00, to $3500.00 or more upfront, and $500.00 to $1500.00 a month until their foreclosed on. In the end, the client loses the house and has lost to the ‘pretender defender’ $5,000.00 to $20,000.00 badly needed for relocation after the foreclosure. Confusing Lawyer Fees Complicate Foreclosure Battles

Mortgage Fraud Examiners provides services for attorneys and their clients who face foreclosure and for homeowners who suspect problems underlie their mortgage transaction. They discover appraisal fraud, loan application fraud, other tortious conduct, contract breaches and both typical and atypical violations of all kinds. They provide a report of the findings within 7 business days, and, as a service to attorneys, may provide it styled as a complaint ready for filing or for settlement negotiations.

The first line of action for any homeowner or attorney should be the examination of the mortgage transaction first, and in the off-chance there’s nothing there of any consequence you can always stall afterwards, but never first! There really are many legal options available to homeowners facing foreclosure,” Bradford concludes. ?However, the only process that works is to find a REAL legal dispute that a judge is willing to accept as a valid reason to slam the bank, such as contract breaches, tortuous misconduct, etc. Every mortgage transaction has unique facts, every claim has different applicable law, and only by properly examining the mortgage transaction is one going to find the answers.”

Sent to Ace Mortgage Desk for immediate press release by Mortgage Fraud Examiners for which we thank them.    

#business, #foreclosure, #home-insurance, #lawsuit, #lawyer, #loan, #mortgage-loan, #washington-mutual

The True Cost Of Care Reforms

United Nations Human Rights Council logo.

United Nations Human Rights Council logo. (Photo credit: Wikipedia)

English: Andrew Lansley, British politician an...

English: Andrew Lansley, British politician and Shadow Secretary of State for Health, speaking at the Health Hotel reception at the Manchester Central Conference Centre during the Conservative Party Conference 2009. (Photo credit: Wikipedia)

Care 

The Health Secretary, Andrew Lansley, has suggested that elderly people could be forced to pay up to £100,000 towards the cost of their care before the Government picks up the bill. The figure is nearly three times the £35,000 cap proposed by Andrew Dilnot. Pensioners moving into residential homes would be able to borrow money from their local authorities, meaning they would not have to sell their homes before they die. Such a move angered councils, charities and unions, with pensioners’ groups describing the loans as a “death tax”. Sir Merrick Cockell, chairman of the LGA, said the proposals were “papering over the cracks” and did nothing to resolve the funding shortfall faced by town halls. Councils will also have to offer a minimum level of care and be unable to limit who could get care.

This extract l saw today and it led me to write this about the truth behind the story!

At the same time l saw this article and it became so clear to me about how we are so easily deceived!

Human Rights Considerations

A Government panel of experts are considering whether Labour’s Human Rights Act should be extended to include so-called “socio-economic rights”. Such a move would allow the unemployed to take the Government to court if ministers did not provide a minimum standard of living. The review has also raised the prospect of a legal ban on all discrimination against any group, and the introduction of the “environmental right” to live free from pollution. 

What ever happened to our human rights and how is it we let these so-called politicians, dictate our lives, to such an extent that we have no life. Let us look at this great new way to stop people selling their home to pay for their care. On my post yesterday l said how l saw the future and how we will all become hooked by what we need becoming what they want! On the face off it the government gives us a new way to keep our home and excludes to add the fact that the loan will enhance their lending policy and earn their lenders a nice healthy interest to boot! On the plus side we can all wait until we die and instead of a cap of £35,000 it will be a mere £100,00 plus interest of course. But what about death duties that can be mitigated by giving away our assets prior to death, oh hang on we cannot and another tax is payable at a mere X now and by the time of your death Y or even Z.

So in 1980 onward we are all told to become homeowners and we will all be better off and not have to rent anymore, well  that was a crock was it not! Well it all fell apart for some in the early 90’s and many lost their home. Then we all saw a rise in property that trebled and quadrupled until a home could cost millions in places of the world. So why not use it to borrow and borrow and borrow and have more and the upshot when we retire and pay off our mortgages, the government puts us back in hoc to them until the day we die!

So the true cost of care reforms is not what we are told we gain,but what we lose. By the fact we wanted this bill and now we have got it and we do not like the fact, we are the real losers again!

#andrew-dilnot, #andrew-lansley, #government, #labour, #loan, #local-government-association, #merrick-cockell, #secretary-of-state-for-health