New Ohio Lending Law Will Affect Payday Loans
By Paul RizzoPayday Loan Writer
It’s no longer so easy to acquire a regular or no faxing payday loan in Ohio.
Residents seeking loans now have a watchdog on the lookout for predatory lenders, in the form of legislation signed into law this month that also gave the state attorney general the power to pursue offenders.
The Ledger Independent quoted Senate Bill 185, in which rules are clarified on the “methods loan officers, mortgage bankers and non-bank mortgage lenders can utilize in determining a consumer’s ability to repay a loan and whether a consumer received a reasonable, tangible net benefit from a refinanced loan.”
Speaking to payday loan lenders: Part of the law addresses the behavior of lenders; in section 1345.02 (A), it reads:
“No supplier shall commit an unfair or deceptive act or practice in connection with a consumer transaction. Such an unfair or deceptive act or practice by a supplier violates this section whether it occurs before, during or after the transaction.”
Ohio Attorney General Jim Petro has initiated a series of meetings with representatives of fast cash loan lending institutions, consumer agencies and the Ohio Department of Commerce for suggestions on more proposed rules.
To make sure its customers are treated fairly, Check Advance in Maysville posts what it calls its Best Practices List.
“It shows the customer how they can work their way down in loan amounts,” said Penny Adams. “We try to work with customers so they do not get stuck in a system of constantly owing.”
At U S Bank, which has several branches in the area, customers are not declined for loans without a second look at their financial picture, but putting people in a financial bind is not part of the process.
“We are in the business of helping people,” said Teri Charest, a US Bank public relations representative.
In Kentucky, anti-predatory lending law enforcement came to the forefront in 1999, when two Kentucky-based companies were cited with five payday cash advance lenders from across the country identified and investigated in Operation Home Equity conducted by the Federal Trade Commission, for lending practices the FTC determined to fall under the definition of abusive lending practices.
According to FTC documents, in Operation Home Equity - the first such enforcement of Federal laws governing predatory cash advance lenders - one company was based in Lexington. A Louisville based company was also cited.
In January, 2006, a near record settlement of $325 million was reached with Ameriquest Mortgage Company, with nearly $1 million in restitution coming to over 3,400 Kentucky consumers.
“We believe that Ameriquest engaged in unfair and deceptive practices that harmed consumers,” said Greg Stumbo, Kentucky attorney general, in a statement released with the settlement announcement. “But they’ve agreed to change. This is a landmark agreement that will change Ameriquest’s practices, and it will set standards we expect other mortgage lenders to follow.”
In addition to Ohio SB 185, on Jan. 1, 2007, Ohio’s new Homebuyer’s Protection Act will go into effect. It provides Petro with the authority to investigate, prosecute and further define and prohibit predatory lending practices in Ohio.
A public hearing is scheduled for Nov. 16 to address any proposed new rules and discuss any other issues regarding various kinds of bad credit payday loans.
