Friday, April 23, 2010

Rep. Hintz Praises Assembly's Final Passage of Payday and Auto Title Reform Legislation

[We received this press release from State Rep. Gordon Hintz shortly after midnight after the measure was passed Thursday evening, April 22, 2010.]

Madison – The Wisconsin State Assembly passed the final version of Senate Bill 530, with a strong bipartisan vote of 72 to 25. The bill regulates both Payday and Auto Title lenders.

“Tonight we have done something we can be very proud of,” said Rep. Gordon Hintz (D-Oshkosh). “We have passed Wisconsin ’s first payday and auto title reform law providing protections against the worst practices of the industry. The days of someone paying five times the amount of their original loan are over in Wisconsin .”

On Tuesday, the Assembly amended SB 530 to include auto title loan regulation in the compromise bill. The Senate took up SB 530 earlier today and further amended the bill. The bill came back to the State Assembly for final passage.

“It has been a long and winding road to get to this point, but we stood up to this predatory industry on behalf of Wisconsin ’s consumers,” said Rep. Hintz. “The biggest problem with this industry is that it sets people up to fail by lending more money than can reasonably be paid back. That ends tonight.”

Governor Doyle has stated he would sign this legislation into law.

Key Provisions in the final bill:

· The package would limit payday loans to $1,500 or 35% of monthly income, whichever is less. Auto title loans would be limited to half the value of a vehicle.

· For example, if someone earns $2000 a month, they could receive a loan plus interest and fees totaling $700. However, that is the limit and no additional interest or fees can be added that would exceed 35%, which in this case would be $700. There will be no more stories of people with thousands of dollars of debt from a $500 loan.

· Database to track payday loans and provide data currently unavailable about the volume and amount of loans being lent which will help tremendously in efforts to address better financial services for those in need.

· Any loan with a repayment term exceeding 90 days will also be required to report to credit bureaus as is standard practice for installment loans.

· Limit rollovers to only 1. Rollovers account for around 90% of all payday lending profits.

· Strong auto title provisions:

o Title lenders would be required to notify borrowers before the seizing and the selling of their vehicles

o Only allow lenders to charge borrowers a “reasonable” storage fee if they repossessed their vehicles

o Require lenders to give borrowers cash back if they sold their vehicles for more than the amount of the loan.


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