4 The Record: Lending Practices

NOW. NOW W WYFF NEWS FOUR PRESENTS. FOR THE RECORD, WELCOME TO. FOR THE RECORD, I’M NIGEL ROBERTSON. WYFF NEWS FOUR IS COMMITTED TO BRINGING YOU IMPORTANT ISSUES THAT ARE AFFECTING OUR COMMUNITY, AND THAT IS WHAT WE PLAN TO DO. EACH SUNDAY MORNING. TODAY WE’RE TALKING ABOUT LENDING PRACTICES. SOME CONSIDER PREDATORY AND A STATEWIDE GROUP THAT’S FORMED TO FIGHT BACK AGAINST THESE PRACTICES. JOINING ME FIRST THIS MORNING IS KERRY SMITH, SOUTH CAROLINA REGIONAL PRESIDENT OF SELF-HELP CREDIT UNION. THANK YOU FOR BEING HERE. WHAT DEFINED TO ME WHAT PREDATORY LENDING IS. WELL, NIGEL, THOSE ARE PRACTICES THAT EXPLOIT THE BORROWERS IN WAYS THAT BENEFIT THE LENDER BUT IS DETRIMENTAL TO THE BORROWER. AND IT CAN BE THINGS LIKE, UM, FOR ONE, IS, YOU KNOW, MAKING SURE THAT THE PERSON THAT COMES IN TO GET THE LOAN HAS THE ABILITY TO REPAY THE LOAN. UM, OR IT’S, UH, SETTING UP, YOU KNOW, INTEREST RATES CAN BE VERY HIGH TRIPLE DIGIT. UM, THERE’S ALSO PRACTICES WHERE OUR LENDERS WILL ALLOW, YOU KNOW, CALL UP FOLKS AFTER THEY’VE HAD THEIR LOAN FOR THREE MONTHS AND OFFER TO REWRITE THAT LOAN AFTER THREE MONTHS AND, AND THAT PARTICULAR PRACTICE IS REALLY EGREGIOUS FOR THE BORROWER BECAUSE MANY OF THE LENDERS AND WE’RE TALKING PAYDAY AUTO TITLE AND INSTALLMENT LENDERS. AND WHAT MAKES THAT SO EGREGIOUS FOR THE BORROWER IS THAT ALL OF THE INTEREST IS ADDED UP FRONT OF THE LOAN. SO IN THREE MONTHS, THEY HAVE NOT PAID ONE DIME ON THE PRINCIPAL OF THAT LOAN. AND, UM, AND SOMETIMES IT CAN BE MORE THAN HALF THE TERMS OF THE LOAN BEFORE ANY PRINCIPAL GETS PAID. YEAH. AND YOU MENTIONED THAT WE’RE TALKING ABOUT PAYDAY AUTO TITLE AND INSTALLMENT LOANS AND SOUTH CAROLINA’S FAIR LENDING ALLIANCE IS ADVOCATING FOR LEGISLATION AGAINST THESE PRACTICES. RIGHT? YES, NIGEL, A GROUP OF OVER 30 STATEWIDE ORGANIZATIONS AND FAITH COMMUNITY AND INDIVIDUALS HAVE COME TOGETHER, UM, ACTUALLY, BACK IN 2019 TO TO START ADDRESSING SOME OF THESE, UM, THESE PREDATORY LENDING PRACTICES IN OUR STATE, BUT ESPECIALLY SINCE THERE ARE NO CAPS AS TO THE AMOUNT THAT A LENDER CAN CHARGE. IN FACT, THE HIGHEST INTEREST RATE THAT WAS FILED IN SOUTH CAROLINA LAST YEAR WAS 850%. WOW. AND, UH, AND ON AVERAGE, IT’S WELL OVER 200%. AND THAT 850% IN INTEREST. YES. ANNUAL PERCENTAGE RATE. YES, SIR. WOW. IT IS, UH, IN FACT, LAST WEEK I WAS WORKING WITH A LADY THAT GOT A $5,000 LOAN JUST TO GIVE YOU THE SCOPE OF THIS, A. $5,000 LOAN FOR A TITLE LOAN LOAN. AND HER INTEREST RATE WAS 700. I’M. 749% WAS THE. AND THAT’S THE HIGHEST CONTRACT I’VE HELD IN MY HAND. AND THESE THESE ARE PEOPLE WHO ARE TRYING. THEY NEED THE MONEY. YES, SIR. AND I WOULD IMAGINE EVERYTHING SOUNDS SO PERFECT WHEN IT’S PITCHED TO THEM. RIGHT. AND WHAT WE KNOW IS WHEN PEOPLE ARE IN FINANCIAL CRISIS, IT’S, UM, IT’S THERE WAS A BOOK DONE. IT’S CALLED, UM, UH, SCARCITY. AND IT TALKS ABOUT THE BRAIN SCIENCE. AND WHEN PEOPLE ARE IN FINANCIAL DISTRESS, IT’S THEY LITERALLY DON’T HAVE THE BANDWIDTH TO CRITICALLY ANALYZE A, YOU KNOW, THESE KINDS OF LOANS. AND SO FOLKS ARE, ARE JUST FOCUSED ON TRYING THEIR BEST TO, TO SOLVE AN ISSUE AND, AND DON’T LOOK FURTHER THAN WHAT MAY REALLY APPEAR IN THEIR MAILBOX. AND THESE LENDERS DO THINGS LIKE A LIVE CHECK WHERE THEY SEND. IT’S A CHECK. ALL THEY DO IS ENDORSE IT AND DEPOSIT IT WITH THEIR FINANCIAL INSTITUTION, JOHN LYON, AND IT BECOMES A LOAN AND THEY DON’T REALLY REALIZE THE IMPACT UNTIL IT’S TOO LATE, BECAUSE ONCE IT’S DEPOSITED, THAT LOAN IS THEY’RE RESPONSIBLE FOR THAT LOAN. SO ARE THESE ONLY PLACES WHERE PEOPLE GO TO FIND THE LOAN, OR IS THIS SOME OF THIS COME IN THE MAIL TO TO PEOPLE’S HOMES. IT’S, UM, MAIL. WELL, THEY TEXT THERE’S IS CALLS. SO IT IS, UM, VERY TARGETED AND AND WHAT WE KNOW IN THE STATE IS THAT, UM, THESE LENDERS MAKE LOANS AND TARGET OUR MINORITY POPULATIONS AND OUR LOW WEALTH FOLKS. IN FACT, WE LOOKED AT WHERE THESE LENDERS ARE LOCATED AND THE MAJORITY OF THEM ARE IN COUNTIES AND CITIES WITH POVERTY RATES OF OVER 13 TO 33%. AND, AND, UM, AND SO IF YOU DRIVE AROUND IN THESE AREAS OF OUR STATE, YOU WILL SEE FOUR AND FIVE OF THEM, YOU KNOW, BESIDE THE LIQUOR STORE AND THE CHECK CASHING PLACES. YEAH. SO THIS THESE PROBLEMS ARE PRETTY WIDESPREAD THEN. YES. UM, THE EDGAR DYER INSTITUTE AT COASTAL CAROLINA JUST RELEASED A REPORT IN JANUARY THAT SHOWS THAT OVER 400,000 SOUTH CAROLINA TOWNS ARE IN SERIOUS FINANCIAL DEBT IN INSTALLMENT LOANS THAT ARE 60 DAYS OR MORE PAST DUE. THAT’S 10% OF OUR ADULT POPULATION IN IN MANY WAYS, THERE’S NO WAY OUT OF THAT. YES, THAT IS ABSOLUTELY TRUE. AND WHAT WE’VE SEEN AT DOING THIS WORK IS INDIVIDUALS HAVE COME FORWARD AND THEY STARTED WITH MAYBE A. 700 OR $1000 LOAN, TEN YEARS AGO, TEN, TEN YEARS AGO. AND THEY’RE STILL BECAUSE IT JUST KEEPS GETTING REWRITTEN. AND AT WHEN THEY REWRITE THOSE LOANS, THEY ADD ON ALL KINDS OF INSURANCES. AND LIKE I SAID, THEY’VE NEVER TOUCHED THE PRINCIPAL OF THAT INITIAL LOAN. WOW. THAT’S TERRIFYING. WELL, AND WHAT WE’VE SEEN AND WE’VE TRIED, UM, YOU KNOW, AS FOLKS COME TO US, WE YOU KNOW, WE DO OUR BEST TO FIND WAYS TO HELP GET THEM OUT OF IT. BUT A LOT OF TIMES THEY’RE JUST SO FAR IN THAT IT RUINS THEIR CREDIT. THEY GET THEIR ACCOUNTS CLOSED BECAUSE A LOT OF TIMES THESE LENDERS REQUIRE A BANK ACCOUNT TO MAKE THE PAYMENTS. AND THEN WHEN THEY DON’T HAVE THE MONEY TO PAY IT, THEY’RE CHARGED NSF FEES. AND THEN THEIR BANKS OR CREDIT UNIONS SOMETIMES CLOSE THEIR ACCOUNTS BECAUSE IT’S IN THE NEGATIVE, AND THEN THEY CAN’T GET ACCOUNTS AT OTHER TRADITIONAL FINANCIAL INSTITUTIONS. WOW. WELL, THANK YOU FOR BEING HERE AND TALKING ABOUT THIS. AND WE’RE JUST GETTING STARTED. OUR CONVERSATION ON LENDING PRACTICES ONLY BEGINNING NEXT, WE’LL SPEAK WITH A COMMUNITY LIAISON WORKING TO PROTECT PEOPLE