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“Clean energy” loans put borrowers at risk of losing their homes



This story was originally published by ProPublica, the St. Louis Dispatch, and the Kansas City Star.

Diana Thomas needed a new furnace and four small basement windows for her two-story home on the east side of Kansas City. But she had little cash and bad credit.

In late 2016, a contractor told her about a loan program that required no money down and would let her pay off the balance over time as part of her annual property tax bill. Her first payment wouldn’t be due until the end of the following year.

Thomas, 53, knew she was in trouble when she got her 2017 tax bill. With the loan payment, her taxes had soared from $247 to $1,465. “I was like, ‘Oh my God, what have I done?’” she said.

To pay off her loan of $10,792, including fees, Thomas agreed to 15 years of payments at an annual percentage rate of 10%, for a total of $18,200. That’s more than the value of her home — $16,226, according to the county’s appraisal — when she took the loan.

Since then, Thomas has missed four years of tax payments. Jackson County, where she lives, has placed a judgment against her and, if she cannot come up with three years of taxes, will sell the house in August at a public auction, taking the proceeds to settle the debt and leaving her with nothing.

Thomas is one of about 3,000 Missouri homeowners who have borrowed money through a program known as Property Assessed Clean Energy, which was touted by then-Vice President Joe Biden in 2009 as a way to help lift the country out of the Great Recession while lowering consumers’ utility bills and fighting climate change. Through the program, local governments could borrow money at low rates and make it available to borrowers for energy-saving home improvements, allowing them to pay it back in their property taxes.

But under the management of private companies, PACE programs in Missouri have charged high interest rates over terms of up to 20 years, using the government’s taxing power to collect loan payments through tax bills and enforce debts through liens. By marketing their programs to people who need urgent repairs but have few options for credit, they have disproportionately burdened some of the state’s most vulnerable homeowners, a ProPublica investigation has found.

More than 100 homes with PACE loans in metropolitan Kansas City and St. Louis are at risk of being sold at public auctions after their owners fell at least two years behind on payments, according to a ProPublica analysis. Of those homes, at least 29 are slated for sale at auction this year.

The analysis, which examined about 2,700 loans that were recorded in five counties with the state’s most active PACE programs, found that the loans have put a disproportionate burden on borrowers in predominantly Black neighborhoods. In those neighborhoods, 28% of borrowers are at least one year behind in repaying their PACE loans compared with 4% in mostly white areas. They’re also paying a larger share of their home value toward interest and fees — sometimes more than county appraisers say their homes are worth.

What’s more, the program has operated with little accountability. State law requires that PACE loans go only to people who can afford them and who will reap energy savings at least equal to the costs of the improvement. Yet local government officials tasked with overseeing the program said that they defer to private lenders to determine if those requirements are met, and are unaware of high delinquency rates.

And while the law authorizes PACE programs to do audits to ensure that borrowers save money on their energy costs, they are not required. Officials from PACE programs in the state’s two biggest metropolitan areas said audits are not typically done.

PACE officials and its lenders said that the program provides much-needed financing for home upgrades, particularly in predominantly Black neighborhoods where traditional lenders typically don’t do much business. They said their interest rates tend to be lower than those of some credit cards and of payday lenders, and that most borrowers make their payments.

The most prominent PACE lender in the St. Louis market, the Ygrene Energy Fund, said it has beefed up its standards by making sure borrowers paid previous property taxes on time and by using more conservative property valuations to underwrite loans. It said it has also reduced its delinquency rates since the program began making residential loans.

PACE was “designed to give affordable access to financing for critical property upgrades to those who may find it harder to get other types of financing,” the company said in a statement. “Given our work to date, we are delivering on the program’s mission.”

Jim Holtzman, the chair of the board that oversees Ygrene’s lending in St. Louis County, said the board depends on lenders to make sound loans and gives them wide latitude to operate. He said PACE is meeting its goal of providing financing for home improvements that help the environment.

“It’s like taking 400,000 cars off the street,” Holtzman said. “It’s just a great program for county homeowners.”

David Pickerill, executive director for the Missouri Clean Energy District, the leading PACE program in the Kansas City area, said its loans are crucial for homeowners who need to purchase a new furnace or air conditioning system during an emergency but do not have the cash on hand. It is, he said, “primarily a way to unleash unencumbered equity in a home to pay for energy conservation and renewable energy products.”

Tom Sadowski, president of the MCED board, said its PACE program has improved since it replaced its lender. That company, Renovate America, filed for bankruptcy protection last year after several lawsuits against it in California, site of the country’s first PACE program, which served as the model for Missouri.

Since 2016, PACE has expanded its residential loan program to some two dozen Missouri counties and the city of St. Louis, in spite of a backlash against the industry in California and in Florida, the only other states with large residential PACE programs. In Florida, the program is under investigation by the state attorney general. Ohio has just started to offer PACE to homeowners.

Missouri lawmakers are considering reforms, including a bill in the legislature that would require PACE’s residential loan programs to be examined by the state finance division at least every other year and that would establish penalties for violating the law. The legislation has passed out of the House and is under consideration in the Senate.

On Tuesday, Jackson County Executive Frank White Jr. vetoed a bill that would allow a second PACE program to operate there, saying in a statement he was troubled by ProPublica’s finding of “significant differences between how the program is impacting majority white and majority black areas” of the county.

That’s cold comfort for Thomas, who said she is looking for a lawyer to help her save her home. “I can’t just let them have my house,” she said. “They just can’t take my stuff from me like that.”

Desperate people taking on debt they can’t afford and putting their homes at risk was not what the originator of Missouri’s PACE law intended when she pushed lawmakers to enact the program in 2010.

Rosalind Williams, then the planning and development director in the St. Louis suburb of Ferguson, envisioned PACE as an affordable way to help homeowners restore property value lost in the Great Recession. She and other early supporters of PACE believed local governments would control the program.

But even before legislators passed the measure, entrepreneurs were trying to build businesses around it. Today, much of Missouri’s residential PACE market is run by competing groups of executives in charge of the two institutions that established control over the market early on: MCED and Ygrene.

MCED was the state’s first PACE district, a special governmental unit empowered by state law to sell bonds and file tax liens. Pickerill and John Harris, who both have a background in investment banking, persuaded officials in Jefferson City to create it in 2011. Then Harris got the state to give MCED a dot-gov internet domain name and email addresses. Today, Sadowski is the MCED board’s president, Pickerill the district’s executive director and Harris the finance director.

With Pickerill and Harris in control, MCED’s board then awarded a no-bid contract to run the district to a company the pair owned. That company, in turn, hired other companies to make the loans.

Pickerill and Harris said they do not take salaries from MCED. Under their company’s contracts with the district and lenders, they have collected a percentage of every loan, which they estimated was about $300,000 in total. Through their company, MCED has issued at least $31 million in residential loans since 2016, ProPublica found. The company does not report its revenue to any public body in Missouri.

Pickerill and Harris said they qualified for a government domain name because “we are a political subdivision.”

“We laid the groundwork,” Pickerill said in an interview. “We got all the legal work done. We went out and recruited the municipal members. We put five years of work into this thing to get it going, all without compensation. And so, for that work, we feel like we’re entitled to some recovery of our costs and time.”

As MCED expanded to Jackson County, which includes most of Kansas City, and St. Charles County, in the far western suburbs of St. Louis, another pair of businessmen, Tom Appelbaum and Byron DeLear, started their own PACE company. That company eventually became dominant in the city of St. Louis and St. Louis County, which abuts the city.

Appelbaum and DeLear sold their company in 2017 to Ygrene Energy Fund. DeLear is now Ygrene’s managing director for the Midwest. Appelbaum is a lawyer for St. Louis County.

Today, MCED and Ygrene compete for market share across the state. In St. Louis County, where MCED’s reach has been limited, it has lobbied county legislators to allow it to expand. Ygrene, meanwhile, has moved into MCED’s stronghold in St. Charles County and is trying to enter the Kansas City region.

In an advisory ruling in February, the Missouri Ethics Commission said PACE districts must follow the same rules as other public bodies that hire contractors: They must solicit competitive bids and the lowest bid must be accepted. District officers can’t get paid by contractors they hired.

The commission has never ruled specifically on MCED’s relationship with Pickerill and Harris’ company, and the pair said they were unaware of the commission’s ruling. They said their dual roles as both directors of the district and owners of its primary contractor were completely appropriate and said it wasn’t necessary to put the work out for bid.

“That’s how it works,” Pickerill said. “If you’re on the board of an organization, and you have a group you hire that’s been running it up to your satisfaction, are you really going to put it out for bid?”

Five years after lenders began making residential PACE loans in Missouri, neither of the legislative sponsors is still in office. House sponsor Jason Holsman, a Democrat now on the state’s Public Service Commission, declined comment. The Senate sponsor, Joan Bray, a Democrat, said she didn’t anticipate the problems that have emerged. She said she initially hoped PACE loans would help borrowers make affordable energy-saving home improvements, and that regulators would provide meaningful oversight of the program.

“I didn’t envision this as being an opportunity for a private business to charge interest rates that would put people in a financial bind,” Bray, who is retired, said in an interview.

For many borrowers saddled with PACE debts they couldn’t afford, the program seemed to offer a lifeline in an emergency. When the temperature dropped to near zero in the final days of 2017, and her furnace struggled to heat her 1,100-square-foot home in the St. Louis neighborhood of Walnut Park East, Joyce Piffins had few options. She called a contractor, who told her she could finance a new heating and cooling system through a bank loan if she had good credit. If not, the contractor said, she could use the city’s PACE provider, Ygrene. A home health aide earning $11.50 per hour, Piffins had poor credit and past bankruptcies. She went with PACE.

The contractor priced the project at $11,491. Piffins, 57, agreed to pay $1,658 a year for 15 years at an APR of 12%. By the time she pays off the loan, she will have paid $24,870, including $13,379 in interest and fees. That’s considerably more than the $8,421 the city appraiser said her home was worth when she took out the loan.

Her extremely low home value was a big reason she had to turn to PACE: Few banks would have been willing to lend to her, as even basic repairs would consume a significant portion of her equity. That lack of access to credit, common in Black neighborhoods north of Delmar Boulevard in St. Louis, is partly what drew city policymakers to PACE. Otis Williams, who leads the city’s economic development agency and is secretary of its PACE board, said the program helps “get things done in a marketplace where investors are shy to invest.”

Though Piffins now can heat her home, she might lose it.

After making her first tax payment, she has fallen two years behind. If she misses a third annual payment, the city of St. Louis can list her property for sale at auction. St. Louis County and Jackson County use the same three-year cutoff, while St. Charles County can list tax-delinquent property for sale after two years.

“I didn’t feel like I had a choice,” Piffins said. “I didn’t have money right then to pay for a new furnace, and it was cold.”

PACE lenders tout their product as fair because they charge similar interest rates and fees to almost every borrower — typically around 10% APR, according to ProPublica’s analysis. In fact, that consistency places a heavy burden on neighborhoods with low property values. Because of long-standing residential segregation, those at-risk borrowers are overwhelmingly Black.

Ygrene challenged ProPublica’s use of local government appraisals to measure the cost burden of its loans. The company relies on a private appraiser, whose property valuations tend to be higher than government valuations. Ygrene would not provide the data it used when underwriting Piffins’ loan, but said it will not lend more than 15% of a property’s fair market value, suggesting it had her home appraised at almost $60,000 — a value even Piffins believes is too high. MCED’s standard is 20% of fair market value.

Shawn Ordway, deputy assessor for the city of St. Louis, said that his office uses comparable neighborhood sales to appraise homes and is usually accurate within 10% of market value. Low values for some properties in St. Louis are based on low sales prices for other similar homes nearby, he said.

The assessor for St. Louis County, Jake Zimmerman, acknowledged that government valuations are occasionally wrong, but he questioned how a private company could appraise homes at many times their estimated value.

“That person is either smoking something, hiding something or lying about something,” he said.

Whether or not Piffins’ low home value reflects how much she could sell it for, she is still stuck with a loan she can’t afford, which she signed only because she lacked other options. Andre Perry, who studies racial inequality in home values at the nonprofit Brookings Institution, said that’s not the sign of a good program.

“If that product is going to put you further in a hole, then it’s really not doing the homeowner a service,” Perry said. “We actually need grants of that sort. Not loans based on interest rates where we don’t necessarily know the proper assessment.”

Accurate appraisals are critical for PACE programs because lenders rely on home equity to screen applicants more than credit scores or income. Steve Sharpe, a staff attorney with the National Consumer Law Center who has studied PACE lending, said equity isn’t always a reliable indicator of whether borrowers can pay back a loan.

“Ability to repay has to be about whether a person with a set level of income can afford this particular loan,” he said.

For more affluent borrowers, PACE has been a fast, convenient source of financing for energy-related home improvements. High property values tend to give those borrowers more financial flexibility to manage the loans. Consequently, the resulting debt is less of a burden.

Jason Osborn used PACE when the air conditioning system in his 2,500-square-foot house died in the summer of 2018. He saw that the program promised fast installation and required no money down, so he took out a loan for about $10,300 from Renovate America, which was making the loans for MCED, though its interest rate was higher than other options. He intended to keep his costs low by paying off the loan quickly.

“I knew I wasn’t going to hold this loan for the duration,” said Osborn, who owns a truck and crane company.

Last year, Osborn sold his house in the prosperous, majority-white Kansas City suburb of Lee’s Summit for $325,000 and paid off the PACE loan. In the end, the interest and fees he paid on the loan were a small fraction of the value of his home.

Piffins has almost no chance of settling her debt so easily. She could sell her house, but at its current market value she would have to use most of the money from the sale to pay off the loan. If she holds on to the property, she faces years of pricey payments. She could prepay part of the loan and shorten her term, but she’d need to come up with at least $2,500, as Ygrene and Renovate America require.

Ygrene and MCED both declined to comment on specific loans. Ygrene said in its statement that it does not discriminate in its pricing. MCED said it no longer had access to the valuations used by Renovate America but, like Ygrene, said the public appraisals used in ProPublica’s analysis were too low. Renovate America officials did not respond to requests for comment.

Julie Tracy didn’t like what she was hearing. The tax collector from Worth County, a rural county in northwest Missouri, was in the audience at the annual state tax collectors’ convention in 2016 when executives from the PACE industry made a presentation.

The lenders were gearing up to begin making residential loans after launching the program with a focus on commercial property. Since homeowner loans would be repaid through property tax bills, some county collectors worried that borrowers would fall behind and default. If that happened, the collectors would have to sell borrowers’ homes at public auctions.

Tracy told the PACE executives sitting on stage that day that she thought it was fundamentally wrong for private lenders to use the government to collect debts, according to video from the event.

“I don’t want to do your dirty work for you,” she told the executives.

Steve Holt, then the collector in Jasper County, in southwest Missouri, chimed in. He predicted that PACE loans in his rural county would make the number of delinquent tax accounts go “sky high.”

“I don’t think it’s right,” he said.

John Maslowski, then an executive with MCED’s lender, Renovate America, tried to put the tax collectors at ease. The delinquency rates on PACE loans were minuscule, he said: just four-tenths of 1% in California. And he tried to clear up what he said was a misconception about the program — that the collectors worked for the lenders.

“That is not true,” said Maslowski, who has since left the company. The loans, he said, “are being made on behalf of the Missouri Clean Energy District.”

He also addressed questions about interest rates; some of the collectors were concerned they’d be too high. Maslowski said they would be between roughly 6% and 9% and wouldn’t change.

What’s more, he said, consumer protections were “the cornerstone” of his company’s product. Another Renovate representative explained how the system hinged on the fact that people tend to pay their property taxes, so folding the loan payments into property tax bills improved the likelihood of repayment. Bonds built from bad loans wouldn’t make good investments, the representative said.

Instead of easing their concerns, the meeting left many tax collectors ready to fight. Michelle McBride, the tax collector from the state’s third most populous county, St. Charles County, returned home from the conference determined to lobby the county council to bar PACE from operating there.

McBride disagreed with Renovate’s characterization of PACE as a government program. Rather, she saw it as a group of businesspeople who had figured out how to profit from the government’s power to issue bonds and collect taxes.

“It’s an appearance of a government entity,” she said in an interview. “In my opinion, it is only providing what, historically, a private industry would have done — basically, a loan company, which is not a government undertaking.”

But PACE wasn’t walking away. Renovate hired a lobbyist, Tom Dempsey, to persuade the St. Charles County Council to join MCED. Dempsey had resigned a year earlier as president pro tem of the Missouri Senate, and County Council members knew him well. With his involvement, the council enrolled in PACE that November.

Other tax collectors tried to keep PACE out of their counties. The Clay County collector, Lydia McEvoy, refused to collect PACE loans until the state appellate court in 2018 affirmed a ruling ordering her to do so. Larry Vincent, the Cole County collector, and Leah Betts, then the Greene County collector, helped persuade officials in their counties to drop their involvement in PACE. Other small counties followed suit.

Vincent said that before Cole County withdrew from MCED in 2017, he served as the county’s liaison to the board. He said he found that board members were reluctant to exercise any oversight.

“Once I got uninvolved with it,” he said, “I tried to stay as far away from it as I could.”

State law requires the boards that oversee PACE lending to approve loans only for people who can afford them and to ensure that the estimated energy savings from each project are at least equal to its cost. But board members said they rely on their lenders to make those determinations.

MCED said it approves about two thirds of its applicants; Ygrene did not provide its approval rate, but it said in a 2019 meeting with St. Louis County board members that it approved about half of its applicants, minutes show.

With little oversight, lenders and contractors have sometimes acted in ways that are not in the best interests of borrowers, and with few repercussions. Some borrowers said in interviews that they didn’t understand what they were signing or didn’t grasp how the loans would affect their property taxes, but signed anyway.

And while some borrowers said they saw energy savings as a result of the work, others did not.

The districts and their lenders said they screen contractors to ensure they’re qualified. They say they only pay a contractor after the borrower has signed off on the completion of the work, and provide clear information up front about payment terms. They measure energy savings by the efficiency of the improvement, not what the borrower pays for the work, and said it’s up to the borrower to negotiate a price with the contractor.

But in St. Louis, an elderly widow said she had no idea she had taken on thousands of dollars in PACE debt, though she saw her property taxes rise sharply. A disabled couple in the Kansas City suburb of Raytown said they weren’t told of the impact on their property taxes; now they’re two years behind on their property taxes.

A Vietnam veteran and his wife in Kansas City are struggling to pay off a $21,658 loan for a solar panel array despite being enrolled in an energy assistance program; they said they just wanted to do something good for the environment.

In perhaps one of the most financially extreme cases, a PACE borrower in St. Louis County agreed to pay more than six times the value of his home to finance the purchase of a furnace through Ygrene.

Wasim Aziz’s 730-square-foot bungalow in the St. Louis County municipality of Wellston had no connection to gas, electricity or water and was in desperate need of other repairs. Zimmerman, the county assessor, recently described it as being in unsound condition, meaning it’s “practically unfit for use,” according to the assessor’s handbook. Its appraised value at the time was $3,900.

In early 2019, Aziz, a 63-year-old semi-retired union bricklayer, attended a fair organized by a local political leader for people interested in buying and renovating vacant properties. The goal was to connect them with contractors and lenders that came with a government stamp of approval.

Aziz, who acquired his house from a family member after spending time in prison on drug and theft convictions, wanted to fix it up. He grabbed a contractor’s flyer saying financing was available from Ygrene and called the number. When a contractor showed up at his house, Aziz said, he gave Aziz a form to sign to start the job. The contractor hauled in a furnace and connected it to the house’s ductwork.

Aziz assumed, perhaps mistakenly, that the contractor would help him get utility service restored to the house so the furnace would work. The contractor didn’t and, two years later, Aziz continues to live in a house without utilities.

“Nothing is connected,” Aziz said. “I can’t use electric. I can’t use nothing. I don’t even have a thermostat in the house.”

The project cost $9,385. If Aziz makes every payment on his loan, he will pay almost $25,000 for the project over 20 years. He is two years behind on his taxes.

Holtzman, the county PACE board chairman who signed off on Aziz’s loan, said he and the other two volunteer board members don’t ask many questions of Ygrene. He does not keep track of delinquency rates in the county but was not surprised that they were so high, particularly in the county’s majority-Black 1st Council District, which includes Wellston.

“It’s not my responsibility to go hunt down that information,” he said.

Sadowski, the MCED chair, said his board also did not get involved with specific projects, allowing Renovate America to handle every aspect of the loans. He acknowledged that the company, which is no longer the district’s lender, sometimes did a poor job. Renovate America officials did not respond to a request for comment.

Sadowski said he did not know that the law requires that homeowners save as much in energy costs over the life of the loan as what they spent on the project. He said the program is upfront about interest rates.

“Apparently,” he said, borrowers “thought it was a good deal to do this.”

The official whose job it is to sell tax delinquent property in St. Louis is the city’s sheriff, Vernon Betts. A lifelong city resident, he has seen the value of homes plummet since he grew up in the O’Fallon neighborhood.

On some blocks, many homes have been abandoned. Even more have been demolished. That leaves property owners with a tough choice: either walk away or stick with a difficult investment.

“When the houses are falling down,” Betts said, “it’s going to cost you more to keep them up then it would to just let them go.”

A few blocks from where Betts grew up, one homeowner has decided to invest in her property. She is using a PACE loan, which has meant committing to pay many times what her home is worth.

V Esther Boose, 78, borrowed nearly $31,000 for a new roof, windows and siding on a home she bought in 1985 with her late husband. Though she has used it as a rental property, it’s now vacant. By the time Boose repays the loan, she’ll be 96. And on top of the cost of the work itself, Boose will have paid about $46,000 in interest and fees, more than 12 times the value of the house when she took out the loan.

Even after those repairs, the house still needs work. Squirrels come and go through the rotted soffits. The foundation has a crack, there’s no furnace and the pipe fittings have been stolen. The kitchen floor sags.

She was late with part of her first PACE payment, in 2019, but paid on time last year.

“The Lord has gifted me with the ability to come up with the payment at the end of every year,” she said. “I’m doing the best I can.”

Betts questioned whether PACE was helping the neighborhood.

“Now she’s in more debt,” Betts said, “and if she does continue to get deeper and deeper in debt messing around with this house, what do we do?”

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.

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Bad Credit

Inside the Highly Profitable and Secretive World of Payday Lenders



Illustration by Sarah Maxwell, Folio Art

When Bridget Davis got started in the family’s payday lending business in 1996, there was just one Check ’n Go store in Cincinnati. She says she did it all: customer service, banking duties, even painting walls.

The company had been established two years earlier by her husband, Jared Davis, and was growing rapidly. There were 100 Check ’n Go locations by 1997, when Jared and Bridget (née Byrne) married and traveled the country together looking for more locations to open storefront outlets. They launched another 400 stores in 1998, mostly in strip malls and abandoned gas stations in low-income minority neighborhoods where the payday lending target market abounds. Bridget drove the supply truck and helped select locations and design the store layouts.

But Jared soon fired his wife for committing what may be the ultimate sin in the payday lending business: She forgave a customer’s debt. “A young woman came to pay her $20 interest payment,” Bridget wrote in court documents last year during divorce proceedings from Jared. “I pulled her file, calculated that she had already paid $320 to date on a principle [sic] loan of $100. I told her she was paid in full. [Jared] fired me, stating, ‘We are here to make money, not help customers manage theirs. If you can’t do that, you can’t work here.’ ”

Photograph by Brittany Dexter

It’s a business philosophy that pays well, especially if you’re charging fees and interest rates of 400 percent that can more than triple the amount of the loan in just five months—the typical time most payday borrowers need to repay their debt, says the Pew Charitable Trusts, a nonprofit organization focused on public policy. Cincinnati-based Check ’n Go now operates more than 1,100 locations in 25 states as well as an internet lending service with 24/7 access from the comfort of your own home, according to its website. Since its founding, the company has conducted more than 50 million transactions.

What the website doesn’t say is that many, if not most, of those transactions were for small loans of $50 to $500 to working people trying to scrape by and pay their bills. In most states—including Ohio, until it reformed its payday lending laws in 2019—borrowers typically fork over more than one-third of their paycheck to meet the deadline for repayment, usually in two weeks. To help guarantee repayment, borrowers turn over access to their checking account or deposit a check with the lender. In states that don’t offer protection, customers go back again and again to borrow more money from the same payday lender, typically up to 10 times, driving themselves into a debt trap that can lead to bankruptcy.

Jared and Bridget Davis are embroiled in a nasty court battle related to his 2019 divorce filing in Hamilton County Domestic Relations Court. Thousands of pages of filings and 433 docket entries by April 26 offer the public a rare glimpse into the business operations of Check ’n Go, one of Cincinnati’s largest privately-owned companies, as well as personal lifestyles funded by payday lending.

The company cleared $77 million in profit in 2018, a figure that dipped the following year to $55 million, according to an audit by Deloitte. That drop in revenue may have something to do with the payday lending reform laws and interest rate caps passed recently in Ohio as well as a growing number of other states.

The day-to-day business transactions that provide such profit are a depressing window into how those who live on the edge of financial security are often stuck with few options for improving their situations. If a borrower doesn’t repay or refinance his or her original loan, a lender like Check ’n Go deposits the guarantee check and lets it bounce, causing the borrower to incur charges for the bounced check and eventually lose his or her checking account, says Nick DiNardo, an attorney for the Legal Aid Society of Greater Cincinnati. After two missed payments, payday lenders usually turn over the debt to a collection agency. If the collection agency fails to collect the full amount of the original loan as well as all fees and interest, it goes to court to garnish the borrower’s wages.

That devastating experience is all too familiar to Anthony Smith, a 60-year-old Wyoming resident who says he was laid off from several management positions over a 20-year period. He turned to payday lenders as his credit rating dropped and soon found himself caught in a debt trap that took him years to escape.

Two things happened in 2019, Smith says, that turned around his financial fortunes. First, he found a stable manufacturing job with the Formica Company locally, and then he took his mother’s advice and opened a credit union account. GE Credit Union not only gave him a reasonable loan to pay off his $2,500 debt but also issued him his first credit card in a decade. “I had been a member [of the credit union] for just two months, and I had a credit rating of 520. Can you imagine?” he says. Smith says he is now debt-free for the first time in 10 years.

Consumer advocates say Check ’n Go is one of the biggest payday lending operations in the nation. But knowing its exact ranking is difficult because most payday lending companies, including Check ’n Go and its parent company CNG Holdings, are privately held and reluctant to disclose their finances.

Brothers Jared and David Davis own the majority of the company’s privately held stock. David bought into the company in 1995, but CNG got its game-changing infusion of capital from the brothers’ father, Allen Davis, who retired as CEO of then-Provident Bank in 1998. Allen sold off $37 million in stock options and essentially became CNG’s bank and consultant.

By 2005, however, the sons were part of a public court battle against their father. Allen accused Jared and David of treating his millions in CNG stock as compensation instead of a transfer from his ex-wife (and the brothers’ mother), sticking him with a $13 million tax bill. In turn, the brothers accused Allen of putting his mistress and his yacht captain on the company payroll, taking $1.2 million in fees without board approval, and leading the company into ventures that lost Check ’n Go a lot of money. Several years of legal fighting later, the IRS was still demanding its $13 million. CNG officials did not respond to requests for comment for this story.

Jared and David split $22 million in profit from CNG in 2018 and, according to the Deloitte audit, CNG’s balance sheet showed another $42 million that could be split between the two brothers in 2019. Jared, however, elected not to receive his $21 million distribution “in order to create this artificial financial crisis and shelter millions of dollars from an equitable split between us,” according to Bridget’s divorce filing.

Worse, she claims, Jared said they would be responsible for paying taxes out of their personal accounts rather than from CNG’s company earnings, making her personally responsible for half of the $5.5 million in taxes for 2019. She believes it wasn’t happenstance that $5.5 million was wired to Jared’s private bank account in December of that same year. Bridget has refused to sign the joint tax return, and Jared filed a complaint with the court saying a late tax filing would cost them $1 million in penalties and missed tax opportunities.

“For the duration of our marriage and to the present, Jared has full and complete control of all money paid to us from various investments we have made in addition to our main source of income, CNG,” Bridget wrote in her motion. She suspects that Jared, without her knowledge or consent, plowed the money for their taxes and from other sources of income into Black Diamond Group, the fund that invests in the Agave & Rye restaurant chain. Beyond the original restaurant opened in Covington in 2018, “they have opened four other locations in one year,” she wrote, including Louisville and Lexington. (The ninth location opened in Hamilton this spring.) Agave & Rye’s website touts its Mexican fare as “a chef-inspired take on the standard taco, elevating this simple food into something epic!”

In his response, Jared wrote, “We have very limited regular sources of income.” He says he isn’t receiving any additional distributions from CNG, the couple’s primary source of income, “and this is not within my control. The company has declared that we would not make any further distributions in 2020 given economic circumstances. This decision is based on a formula and is not discretionary.” Agave & Rye helped produce $645,000 in income for Black Diamond in 2020 but has paid out $890,000 in loans, he says. Through August 31, 2020, he wrote, the couple’s “expenses have exceeded income from all sources.”

The divorce case filings start slinging mud when the couple accuses each other of breaking up their 22-year marriage and finding new partners. Jared claims Bridget began an affair during their marriage with Brian Duncan, a contractor she employed through her house flipping business. Bridget, he says, paid Duncan’s company $75,000 in 2018 as well as giving him a personal gift of $70,000 that same year. Jared says she also bought Duncan at least one car and purchased a house for him near hers on Shawnee Run Road for $289,000, then loaned money to Duncan. Jared says Duncan has been late in repaying the note.

While Bridget says Duncan has been drug-free for several years, he has a rap sheet with Hamilton County courts from 2000 to 2017 that runs five pages long. It lists a half-dozen counts of drug abuse and drug possession, including heroin and possession of illegal drug paraphernalia; assaulting a police officer; stealing a Taser from a police officer; criminal damaging while being treated at UC Health; more than a dozen speeding and traffic violations; a half-dozen counts of driving with a suspended license; receiving stolen property; twice fleeing and resisting arrest; three counts of theft; two counts of forgery; and one count for passing bad checks.

Bridget has fired back that Jared not only is hiding his money from her but spending it lavishly on vacations, resorts, and high-end restaurants with his new girlfriend, Susanne Warner. Bridget says Jared gifted Warner with $40,000 without Bridget’s knowledge, then declared it on their joint tax return as a “contribution.” Bridget’s court filings include photocopies of social media posts of Jared and Warner globetrotting from summer 2019 to summer 2020: vacation at Beaver Creek Village in Avon, Colorado; cocktails at High Cotton in Charleston, South Carolina, and dinner at Melvyn’s Restaurant and Lounge in Palm Springs, California; getaways at resorts in Nashville and at a lakefront rental on Norris Lake ($600 per night); in the Bahamas at a Musha Cay private residence ($57,000 per night), at South Beach in Miami, and at a private beach at Fisher Island; in Mexico at Cabo San Lucas; in the U.S. Virgin Islands at Magen’s Bay and on a private yacht ($4,500 per night); in California at Desert Hot Springs, the Ritz-Carlton in Rancho Mirage, and Montage at Laguna Beach; and in the Bahamas at South Cottage ($2,175 per night).

For her part, Bridget has gone through some of the top lawyers in town faster than President Trump during an impeachment—six in all, two of whom she’s sued for malpractice. She sent four binders of evidence to the Ohio Supreme Court, asking for the recusal of Hamilton County Judge Amy Searcy and claiming Searcy was biased because of campaign donations from Jared and his companies. Rather than deal with the list of questions sent to her by Chief Justice Maureen O’Connor, Searcy stepped down. Two other judges have since stepped into the fray, and in March Bridget filed for a change of venue outside of Hamilton County, arguing she can’t get a fair trial in her hometown. At press time, a trial date had been set for June 28 in Hamilton County.

The poor-mouthing in the divorce case has reached heights of comic absurdity. Jared claims he’s “illiquid” because he didn’t get his distribution from CNG in 2019. Bridget has received debt collection notices for the nearly $21,000 owed on her American Express card and a $735 bill from Jewish Hospital. There’s no sign yet that anyone is coming to repossess her Porsche, which according to her filings has a $5,000 monthly payment. Each party has received $25,000 a month in living expenses, an amount later reduced to $15,000 under a temporary legal agreement while the divorce case is being sorted out. Court filings show that Jared’s net worth is almost $206 million and Bridget’s is $22.5 million.

In the early 1990s, Allen Davis was raising eyebrows at Provident Bank (later bought by National City), and not only because of his very unbanker-like look of beard, ponytail, and casual golf wear. He was leading the company into questionable subprime home loans for people with bad credit and a frequent-shopper program for merchants, though the bank’s charter barred him from getting involved in full-blown predatory lending practices. With guidance and funding from his father, Jared, at age 26, launched Check ’n Go in 1994 and became a pioneer in the payday lending industry. Jared and his family saw there were millions of Americans who didn’t have checking or savings accounts (“unbanked”) or an adequate credit rating (“underbanked”) but still needed loans to meet their everyday expenses. What those potential customers did have was a steady paycheck.

Conventional banks share a big part of the blame for the nation’s army of unbanked borrowers by imposing checking account fees and onerous penalties for bounced checks. In 2019, the Federal Deposit Insurance Corporation estimated there were 7.1 million U.S. households without a checking or savings account.

The Davises launched Check ’n Go on the pretext that it would “fill the gap” for people who occasionally needed to borrow money in a hurry—a service for those who couldn’t get a loan any other way. But consumer advocates say the real business model for payday lending isn’t a service at all. The majority of the industry’s revenue comes from repeat business by customers trapped in debt, not from borrowers looking for a quick, one-time fix for their financial troubles.

Ohio’s payday lending lobbyists got a strong hold on the state legislature in the late 1990s, and by 2018 Democratic gubernatorial candidate Richard Cordray could rightfully claim in a campaign ad that “Ohio’s [payday lending] laws are now the worst in the nation. Things have gotten so bad that it is legal to charge 594 percent interest on loans.” His statement was based on a 2014 study by the Pew Charitable Trusts.

The frustration for consumer advocates was that Ohioans had been trying to reform those laws since 2008, when voters overwhelmingly approved a ballot initiative placing a 28 percent cap on the interest of payday loans. But—surprise!—lenders simply registered as mortgage brokers, which enabled them to charge unlimited fees.

The Davis family and five other payday lending companies controlled 90 percent of the market back then, an express gravy train ripping through the poorest communities in Ohio. The predatory feeding frenzy, especially in Ohio’s hard-hit Rust Belt communities, prompted a 2017 column at The Daily Beast titled, “America’s Worst Subprime Lender: Jared Davis vs. Allan Jones?” (Jones is founder and CEO of Tennessee-based Check Into Cash.) In 2016 and 2017, consumer advocates mustered their forces again, and this time they weren’t allowing for loopholes. The Pew Charitable Trusts joined efforts with bipartisan lawmakers and Ohioans for Payday Loan Reform, a statewide coalition of faith, business, local government, and nonprofit organizations. Consumer advocates found a legislative champion in State Rep. Kyle Koehler, a Republican from Springfield.

It no doubt helped reform efforts that former Ohio Speaker of the House Cliff Rosenberger resigned in spring 2018 amid an FBI investigation into his cozy relationship with payday lenders. Rosenberger had taken frequent overseas trips—to destinations including France, Italy, Israel, and China—in the company of payday lending lobbyists. In April 2019, Ohio’s new lending law took effect and, since then, has been called a national model for payday lending reform that balances protections for borrowers, profits for lenders, and access to credit for the poor, according to the Pew Charitable Trusts. New prices in Ohio are three to four times lower for payday loans than before the law. Borrowers now have up to three months to repay their loans with no more than 6 percent of their paycheck. Pew estimates that the cost of borrowing $400 for three months dropped from $450 to $109, saving Ohioans at least $75 million a year. And despite claims that the reforms would eliminate access to credit, lenders currently operate in communities across the state and online. “The bipartisan success shows that if you set fair rules and enforce them, lenders play by them and there’s widespread access to credit,” says Gabe Kravitz, a consumer finance officer at the Pew Charitable Trusts.

Other states like Virginia, Kansas, and Michigan are following Ohio’s lead, Kravitz says. Some states, such as Nebraska, have even capped annual interest on payday loans. As a result, Pew researchers have seen a reduction in the number of storefront lending op­erations across the country. Even better, Kravitz says, there’s no evidence that borrowers are turning instead to online payday lending operations.

Cincinnati is one of five cities chosen for a grant to replicate the success of Boston Builds Credit, an ambitious effort that city launched in 2017 to provide credit counseling in poor and minority communities by training specialists at existing social service agencies. The program also encourages consumer partnerships with credit unions, banks, and insurance companies to offer small, manageable loans that can help the unbanked and underbanked improve their credit ratings. “Right now, local organizations are all kind of working in silos on the problem in Cincinnati,” says Todd Moore of the nonprofit credit counseling agency Trinity Debt Relief. Moore, who applied for the Boston grant, says he’s looking for an agency like United Way or Strive Cincinnati to lead the effort here.

Anthony Smith is thankful that he’s escaped the downward spiral of his payday loans, especially during the pandemic’s economic turmoil. “I’m blessed for every day I can get paid and have a job during these difficult times, just to be able to pay my bills and meet my responsibilities,” he says. “I’ve always kept a job, but until now I’ve had crappy credit. That doesn’t mean I’m a bad guy.”

Can others worth millions of dollars say the same?

Inside the Highly Profitable and Secretive World of Payday Lenders Source link Inside the Highly Profitable and Secretive World of Payday Lenders

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What’s Questionable Credit and Can I Get a Car Loan With It?



Questionable’s definition means that something’s quality is up for debate. If a lender says that your credit score is questionable, it’s likely that they mean it’s poor, or at the very least, they’re hesitant to approve you for vehicle financing. Here’s what most lenders consider questionable credit, and what auto loan options you may have.

Questionable Credit and Auto Lenders

Many auto lenders may consider questionable credit as a borrower with a credit score below 660. The credit score tiers as sorted by Experian the national credit bureau, are:

  • Super prime: 850 to 781
  • Prime: 780 to 661
  • Nonprime: 660 to 601
  • Subprime: 600 to 501
  • Deep subprime: 500 to 300

The nonprime credit tiers and below is when you start to get into bad credit territory and may struggle to meet the credit score requirements of traditional auto lenders.

This is because lenders are looking at your creditworthiness – your perceived ability to repay loans based on the information in your credit reports. Besides your actual credit score, there may be situations where the items in your credit reports are what’s making a lender question whether you’re a good candidate for an auto loan. These can include:

  • A past or active bankruptcy
  • A past or recent vehicle repossession
  • Recent missed/late payments
  • High credit card balances
  • No credit history

There are ways to get into an auto loan with questionable credit. Your options can change depending on what’s making your credit history questionable, though.

Questionable Credit Auto Loans

If your credit score is less than stellar, it may be time to look at these two lending options:

  • What Is Questionable Credit and Can I Get a Car Loan With It?Subprime financing – Done through special finance dealerships by third-party subprime lenders. These lenders can often assist with many unique credit situations, provided you can meet their requirements. A great option for new borrowers with thin files, situational bad credit, or consumers with older negative marks.
  • In-house financing – May not require a credit check, and is done through buy here pay here (BHPH) dealers. Typically, your income and down payment amount are the most important parts of eligibility. Auto loans without a credit check may not allow for credit repair and may come with a higher-than-average interest rate.

Both of these car loan options are typically available to borrowers with credit challenges. However, if you have more recent, serious delinquencies on your credit reports, a BHPH dealer may be for you. Most traditional and subprime lenders typically don’t approve financing for borrowers with a dismissed bankruptcy, a repossession less than a year old, or borrowers with multiple, recent missed/late payments.

Requirements of Bad Credit Car Loans

In many cases, your income and down payment size are the biggest factors in your overall eligibility for bad credit auto loans. Expect to need:

  • 30 days of recent computer-generated check stubs to prove you have around $1,500 to $2,500 of monthly gross income. Borrowers without W-2 income may need two to three years of professionally prepared tax returns.
  • A down payment of at least $1,000 or 10% of the vehicle’s selling price. BHPH dealers may require up to 20% of the car’s selling price.
  • Proof of residency in the form of a recent utility bill in your name.
  • Proof of a working phone (no prepaid phones), proven with a recent phone bill in your name.
  • A list of five to eight personal references with name, phone number, and address.
  • Valid driver’s license with the correct address, can’t be revoked, expired, or suspended.

Depending on your individual situation, you may need fewer or more items to apply for a bad credit auto loan. However, preparing these documents before you head to a dealership can speed up the process!

Ready to Get on the Road?

With questionable credit, finding a dealership that’s able to assist you with an auto loan is easier said than done. Here at Auto Credit Express, we want to get that done for you with our coast-to-coast network of special finance dealerships.

Complete our free auto loan request form and we’ll get right to work looking for a dealer in your local area that can assist with many tough credit situations.

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Bad Credit

Entrepreneur Tae Lee Finds Her Fortune



By Jasmine Shaw
For The Birmingham Times

Birmingham native Tae Lee had plans last year to visit the continent of Africa, the South American country of Columbia, and the U.S. state of Texas.

“I was going to stay in each place for like four to six weeks, and then COVID-19 happened,” she said. “So, I just was like, ‘You know what, I’m just gonna go to Mexico and stay for six months.’”

Once home from Playa Del Carmen, located on Mexico’s Yucatán Peninsula, the 33-year-old entrepreneur put the final touches on “Game of Fortune: Win in Wealth or Lose in Debt,” a financial literacy card game for ages 10 and up.

“We created ‘Game of Fortune’ because we realized there was a gap in learning the fundamentals of money,” said Lee. “We go through life not knowing anything about money and then—‘Bam!’—real life hits. Credit, debt, and bills come at us quick!”

Lee believes the game “gives players a glimpse of real life” by using everyday scenarios to teach them how to make wiser financial decisions without having to waste their own money.

“I feel like [financial literacy] can be learned in ways other than somebody standing up and preaching it to you over and over again,” she said. “You can learn it in ways that are considered fun, as well.”

Which is why “we want the schools to buy it, so we can give students a fun way to learn about financial literacy,” she added.

Lee, also called the “Money Maximizer,” is an international best-selling financial author, speaker, coach, and trainer who is known for her financial literacy books, including “Never Go Broke (NGB): An Entrepreneur’s Guide to Money and Freedom” and the “NGB Money Success Planner High School Edition.” The Birmingham-based financial guru focuses on creating diverse streams of income in the tax, real estate, insurance, and finance industries.

For Lee, it’s about building generational wealth, not debt.

Indispensable Lessons

Lee got her first glance at entrepreneurial life as a child watching her mother, Valeria Robinson, run her commercial cleaning company, V’s Cleaning. Robinson retired in 2019.

“My grandmother had a cleaning service, too,” said Lee. “So, even though I didn’t start out as an entrepreneur, watching my mom and grandma do it taught me a lot.”

Lee grew up in Birmingham and attended Riley Elementary School, Midfield Middle School, and Huffman High School. She then went on to Jacksonville State University, in Jacksonville, Alabama, where she earned bachelor’s degree in physical education. She struggled to find a career in her field and became overwhelmed by student loans.

“My credit and stuff didn’t get bad until after college,” she said. “I was going through school and taking money, but nobody told me, ‘Oh, you’re gonna have to pay all of this back.’”

Before embarking on her extensive career in money management, Lee had not learned the indispensable lessons that she now shares with clients.

“‘Don’t have bad credit.’ That’s all I learned,” she remembers. “Financial literacy just wasn’t taught much. I learned the majority of my lessons as I aged.”

In an effort to ward off collection calls and raise her credit score, Lee researched tactics to strategically eliminate her debt.

“I knew I had to pay bills on time, and I couldn’t be late with payments,” she said.

Lee eventually began helping friends revamp their finances and opened NGB Inc. in 2017 to share fun, educational methods to help her clients build solid financial foundations.

“People were always coming to me like, ‘How do I invest in this?’ and ‘How do I do that?’ So, I said to myself, ‘You know what, people should be paying to pick your brain.’”

Legacy Building

While Lee enjoyed watching her clients reach milestones, like buying a new car with cash or making their first stock market investment, she was also designing “Game of Fortune” to teach the value of legacy building.

“The game gives players the knowledge to build generational wealth, not generational debt,” she said. “It gives you a glimpse of life, money, and what can truly happen if you mismanage your coins.”

Using index cards to create her first “Game of Fortune” sample deck, Lee filled each card with pertinent terms related to debt elimination and credit and wealth building. She then called on a few friends to help her work through the kinks.

Three of her good friends—Barbara Bratton, Daña Brown, and Sha Cannon—were just a few of the people that gave feedback on the sample deck.

“From there I met with Brandon Brooks, [owner of the Birmingham-based Brooks Realty Investments LLC], and four other financial advisors to fine-tune the definitions and game logistics,” Lee said.

Though Lee was unable to land a job in physical education after graduating from college, she now sees her career with NGB Inc. as life’s unexpected opportunity to teach on her own terms.

“Bartending and waitressing taught me that working for someone else was not for me,” she replied. “In order to get the life I always wanted, I had to create my own business.”

In her entrepreneurial pursuits, Lee strives to be an open-minded leader who embraces the need for flexibility.

“COVID-19 has shown me that in entrepreneurship you have to maneuver,” she said. “When life changes, sometimes your business will, too. You may have to change the path, but your ending goal can be the same.”

“Game of Fortune: Win in Wealth or Lose in Debt” is available and sold only on the “Game of Fortune” website: To learn more about Tae Lee and Never Go Broke Inc., visit and or email; you also can follow her on Facebook ( and Instagram (@nevergobrokeinc).

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