Rep. Hintz on passage of the Responsible Lending Act
[We have received the following press release from Rep. Gordon Hintz and are pleased to publish it on his behalf in its entirety as received.]
Madison – Late Tuesday night, the Wisconsin State Assembly passed Assembly Bill 447, the Responsible Lending Act, on a bipartisan vote of 59-38. The bill regulates the payday loan industry by prohibiting the most abusive predatory lending operations to protect Wisconsin consumers. The bill also bans the indefensible auto title loans.
“After years of ignoring the problem, and pandering towards lobbyists protecting the status quo, the Assembly passed the most significant payday lending reform package in the history of our state’s legislature”, said Rep. Hintz.
“Now it is time for the Senate to do their part to protect Wisconsin’s consumers by passing this in the Senate”.
Rep. Hintz previously introduced a bill that included a restrictive 36% APR cap, but it became clear that there was not enough support to pass this measure through the Assembly, Senate and get it signed into law. The amended AB 447 is the product of months of work by Assembly members including Rep. Hintz, Assistant Majority Leader Donna Seidel, Rep. Jason Fields, Rep. Josh Zepnick, Rep. Andy Jorgensen, and Rep. Jeff Smith following a nine-hour hearing in October on short term credit and payday lending in Wisconsin.
“If I wanted to get headlines, I could keep fighting for the rate cap as families suffered throughout the state for the next few years. But it is clear that my original bill just did not have the support to pass both the Assembly and Senate.”
“My goal is and has always been to get meaningful payday reform passed into law this session that will prevent people from getting caught in the debt trap”, said Rep. Hintz. “And the Responsible Lending Act does just that.”
Consumer advocates, credit counselors, and reform advocates have made clear that any meaningful reform must include consideration of a borrower’s income when making a loan; affordable repayment terms; and an end to the total debt cycle. AB 447 has an income test that includes the loan and any interest and fees. Provides a 0% repayment plan option if a borrower is unable to pay on time and bans rollovers, the process when loans are extended by paying just the interest. The bill also bans auto title loans, seen by consumer advocates as the most egregious practice where an individual is left risking their only means of transportation for work in exchange for high cost credit.
“Wisconsin has gone too long allowing these indefensible practices. Lending people more money then they can reasonably pay back and setting them up to fail impacts all of us. Tens of millions of dollars are tied up in high cost debt that would otherwise be spent in out communities, hurting our economy.”
“The only people defending rollovers and auto title loans are the industry and their lobbyists.”
“We are elected to serve the public and protect people from abusive practices that target the most vulnerable.”
“The Senate has a chance to stand with families in Wisconsin or the special interests spending millions of dollars trying to stop us. The public will have to wait and see which side they choose.”
Responsible Lending Act’s (AB 447) strong reform measures:
• Strict Income Test: Limits loans to a maximum of $600 or 35% of biweekly income, whichever is less (this is inclusive of all fees)
• Bans Auto Title Loans
• Bans Rollovers which account for around 90% of all payday lending profits. (A rollover is when the customer comes in at the end of the typical 2-week loan, pays a fee, and extends the loan for another 2 weeks
• One Loan at a time - Bars people from taking out more than one payday loan at a time
• Strict Penalties: Lenders who violate are subject to fines of $500 to $1,000 and up to six months in jail
• Private Cause of Action: borrowers can sue a lender for violation of any provision
• Installment repayment provisions: If a borrower fails to repay their loan then they have the option to repay the outstanding balance in 4 equal payments with no fees
• Other provisions:
o Requires lenders to disclose all costs and fees attached to the loan
o Lenders are limited to charging a one-time fee of $15 for a returned check
o Includes a 24 hour cooling off period for loans repaid on time
o Borrowers have the right to rescind a loan until close of business on the next day
Madison – Late Tuesday night, the Wisconsin State Assembly passed Assembly Bill 447, the Responsible Lending Act, on a bipartisan vote of 59-38. The bill regulates the payday loan industry by prohibiting the most abusive predatory lending operations to protect Wisconsin consumers. The bill also bans the indefensible auto title loans.
“After years of ignoring the problem, and pandering towards lobbyists protecting the status quo, the Assembly passed the most significant payday lending reform package in the history of our state’s legislature”, said Rep. Hintz.
“Now it is time for the Senate to do their part to protect Wisconsin’s consumers by passing this in the Senate”.
Rep. Hintz previously introduced a bill that included a restrictive 36% APR cap, but it became clear that there was not enough support to pass this measure through the Assembly, Senate and get it signed into law. The amended AB 447 is the product of months of work by Assembly members including Rep. Hintz, Assistant Majority Leader Donna Seidel, Rep. Jason Fields, Rep. Josh Zepnick, Rep. Andy Jorgensen, and Rep. Jeff Smith following a nine-hour hearing in October on short term credit and payday lending in Wisconsin.
“If I wanted to get headlines, I could keep fighting for the rate cap as families suffered throughout the state for the next few years. But it is clear that my original bill just did not have the support to pass both the Assembly and Senate.”
“My goal is and has always been to get meaningful payday reform passed into law this session that will prevent people from getting caught in the debt trap”, said Rep. Hintz. “And the Responsible Lending Act does just that.”
Consumer advocates, credit counselors, and reform advocates have made clear that any meaningful reform must include consideration of a borrower’s income when making a loan; affordable repayment terms; and an end to the total debt cycle. AB 447 has an income test that includes the loan and any interest and fees. Provides a 0% repayment plan option if a borrower is unable to pay on time and bans rollovers, the process when loans are extended by paying just the interest. The bill also bans auto title loans, seen by consumer advocates as the most egregious practice where an individual is left risking their only means of transportation for work in exchange for high cost credit.
“Wisconsin has gone too long allowing these indefensible practices. Lending people more money then they can reasonably pay back and setting them up to fail impacts all of us. Tens of millions of dollars are tied up in high cost debt that would otherwise be spent in out communities, hurting our economy.”
“The only people defending rollovers and auto title loans are the industry and their lobbyists.”
“We are elected to serve the public and protect people from abusive practices that target the most vulnerable.”
“The Senate has a chance to stand with families in Wisconsin or the special interests spending millions of dollars trying to stop us. The public will have to wait and see which side they choose.”
Responsible Lending Act’s (AB 447) strong reform measures:
• Strict Income Test: Limits loans to a maximum of $600 or 35% of biweekly income, whichever is less (this is inclusive of all fees)
• Bans Auto Title Loans
• Bans Rollovers which account for around 90% of all payday lending profits. (A rollover is when the customer comes in at the end of the typical 2-week loan, pays a fee, and extends the loan for another 2 weeks
• One Loan at a time - Bars people from taking out more than one payday loan at a time
• Strict Penalties: Lenders who violate are subject to fines of $500 to $1,000 and up to six months in jail
• Private Cause of Action: borrowers can sue a lender for violation of any provision
• Installment repayment provisions: If a borrower fails to repay their loan then they have the option to repay the outstanding balance in 4 equal payments with no fees
• Other provisions:
o Requires lenders to disclose all costs and fees attached to the loan
o Lenders are limited to charging a one-time fee of $15 for a returned check
o Includes a 24 hour cooling off period for loans repaid on time
o Borrowers have the right to rescind a loan until close of business on the next day
posted by Cheryl Hentz at 1:38 PM
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