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How Banks and Credit Unions Must Prepare

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The challenges of the COVID-19 recession for lenders have not yet begun to bite in earnest, but banks and credit unions are going to start feeling it soon, according to an expert from Accenture.

The impact on credit of all kinds is going to be felt in different ways depending on the makeup of each financial institution’s portfolio and on the demographics of their consumer and small business borrowers. But as the summer of 2020 moved into fall, the Novocain was wearing off on the recession pain as certain credit relief efforts tailed off and as the impact of multiple stimulus programs ended.

Now lenders will begin feeling a nonperforming loan crisis that will differ from anything seen by most people in the industry today, with the exception perhaps of the oldest credit veterans. This recession’s impact on credit isn’t something that can be blamed on greed, bad credit modeling, overly aggressive marketing, the madness of crowds nor any of the villains of most crunches in memory. Shutdowns introduced to avert the spread of coronavirus slammed the emergency brake on a economy that still pointed to prosperity.

This overall view of where financial institutions stand comes from a report by Accenture and other sources. Chris Scislowicz, Managing Director of Accenture’s financial services practice, and Head of North American credit practice, told The Financial Brand that many lenders, with the exception of the very largest, are only now beginning to get a handle on where they stand on the credit side and what is likely to come.

Lenders Are in the Calm Before the Credit Storm

“The looming nonperforming loan crisis is going to manifest itself differently across consumer segments, across industry segments,” says Scislowicz. “It’s going to affect consumers, homeowners, small business owners and large companies.”

“The looming nonperforming loan crisis is going to manifest itself differently across consumer segments, across industry segments. It’s going to affect consumers, homeowners, small business owners and large companies.”
— Chris Scislowicz, Accenture

An Accenture report, “How Banks Can Prepare for the Looming Credit Crisis,” states that “We are in the calm before the storm, the moment in which payment holidays are not flowing through into consumer credit scores and where underlying business health is being masked by furlough and payroll protection schemes.”

That calm is ending, according to Scislowicz, and many financial institutions are figuring out where they stand. He explains that the drain of the Paycheck Protection Program and forbearance programs on lenders’ attentions and energies cannot be overestimated. In many organizations each stage of the PPP, the Main Street programs and more combined to divert staff and time away from more analytical tasks due to the nature of the health and economic emergency.

“The implications for the industry were pretty profound,” says Scislowicz, “in terms of pulling people off the line. But now the folks with key responsibility for portfolios are starting to take a hard look at things. They are asking, now that programs are winding down, what it means for their books of business.” While issues have already surfaced in commercial lending, that will be expanded as consumer credit forbearance begins to go away.

Matt Komos, Vice President of Research and Consulting at TransUnion, notes that two factors occurred in July 2020 that haven’t shown up in national credit statistics yet. First, credit relief offered to many consumers at the outset of the crisis began to end. Second, the $600 federal unemployment insurance payment boost went away.

57% of consumers reported that they have been economically hit by the COVID recession, according to TransUnion’s Financial Hardship Survey for July.

Here’s what to watch for: “I think the August numbers will give us a sense of what we might expect for the rest of the year,” says Komos. “That’s my preliminary assumption.”

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The Pain Begins Now For Lower-Income Consumers

“I was on the phone with a chief credit officer from a major superregional bank in mid-August,” says Accenture’s Scislowicz, “and he said that they were just starting to see delinquencies tick up.”

Accenture believes lenders will begin feeling more pain in late September to early October — the timing is approximate. From that point on, input from Accenture and other sources indicates, how well or how badly things go will hinge on the progress on COVID containment, Presidential election politics, regulatory attitudes, shareholder pressure on top management of banking companies, and the behavior and judgment of lenders themselves.

“The bottom 20% of the workforce has been hit hardest. People in many blue-collar jobs can’t work from home and have been hit harder by layoffs and closures.”

“Unlike the previous crisis, which was about speculation and overvaluation, what we have here is unemployment taking its toll,” says Scislowicz. Job losses keeps rising, with layoffs beginning to increase as companies reassess their near-term future.

“I think this could get pretty ugly on the delinquency front,” says Scislowicz.

In consumer and mortgage lending Scislowicz says patterns are shaping up differently than in the Great Recession. That crisis and its aftermath tended to vary around the country based on geographical factors that influenced market prices, he explains. The current crisis appears to depend on income level and the nature of the borrower’s employment.

Scislowicz says the bottom 20% of the workforce has been hit hardest. People in many blue-collar jobs can’t work from home and have been hit harder by layoffs and closures, overall.

At the same time that these consumers are suffering, those who still have jobs and who want homes have been bidding the prices of houses up as they pile into residential real estate in a time of extremely low rates, to the point where the housing supply is quite strained,.

“So you’ve got a strong dichotomy brewing between the haves and the have nots,” Scislowicz states.

A consumer survey conducted for Finicity in June 2020 found that people with household incomes of less than $50,000 appear to be getting hit harder by this recession. Some statistics from the firm’s research:

  • 50% have lost their job or had their income reduced, compared to only 31% of households with over $100,000 in income.
  • 73% are having trouble keeping up with bills and payments, versus 57% of those with income between $50,000 and $100,000 and 54% of those with household income over $100,000.
  • While 25% have tried to tap credit less often during COVID, 21% have had to use it more often. Another 23% have not attempted to use credit because they don’t think they would qualify.
  • 68% worry that the recession will damage their credit, while only 52% of people with over $100,000 in household income have that concern.

The TransUnion hardship study indicates that consumers are tending to not tap credit to meet income shortfalls, and those who have received some type of debt relief from lenders have been using that opportunity to pay down their debt more quickly than beforehand.

But the same research indicates that almost a third of renters surveyed said they will soon be unable to pay their rent. This will have ripple effects on landlords as well as on commercial real estate lenders financing multifamily housing.

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Be a Hero … for As Long As Possible

Something else that sets this recession and the credit impact of COVID-19 apart from past slumps is that there is comparatively little history on which to base planning.

“Lenders are going to have to make much faster decisions on credit risk than they have, historically,” says Scislowicz, “because they don’t have the luxury of time.”

Accenture believes that because this recession is not being placed at banks’ doorsteps this time around lenders have the opportunity to be heroes. Some of this has already been seen in early efforts to voluntarily offer credit relief, such as skip-a-pay programs. But this is a limited-time opportunity.

“It will last right up until the point where their shares start to suffer and their shareholders come after them,” says Scislowicz. “By that point they will have their own challenges.”

Initially, Scislowicz believes, regulators are likely to give lenders the leeway they need to continue to help consumer and business borrowers to make it through this rough period. He says that when the firm has spoken to its clients, which skew to the larger end of the banking industry, they are more concerned about shareholders than they are about regulators. “How long that leeway will last is anybody’s guess,” says Scislowicz.

“Accenture’s report warns against the possibility of using ‘blunt-instrument credit management based on short-term considerations rather than surgical intervention guided by forward-looking data and longer-term economics’.”

In early August 2020, recognizing that the first wave of voluntary assistance was winding down, federal regulators acting jointly through the interagency Federal Financial Institutions Examination Council, issued guidance on granting further relief while operating prudently.

“Well-designed and consistently applied accommodation options accompanied by prudent risk management practices can minimize losses to the financial institution, while helping its borrowers resume structured, affordable, and sustainable repayment,” the statement says.

Accenture’s report warns against the possibility of using “blunt-instrument credit management based on short-term considerations rather than surgical intervention guided by forward-looking data and longer-term economics.” Ideally, the report notes, thinking more broadly rather than focusing solely on asset recovery will lead to better outcomes for all.

“What we’re referring to is treating all borrowers the same,” says Scislowicz. He explains that the risk is that lenders will start putting consumers and small businesses into categories based on broad characteristics of their borrowings and making blanket decisions. “This includes such actions as deciding that anybody who has been delinquent for X number of days gets put into either foreclosure or special assets or what have you,” the analyst states.

Slice and Dice Your Portfolio to Find Best Solutions

“What we’re recommending is a more enhanced and segmented view of nonperforming loans than, frankly, many banks have used before,” says Scislowicz.

This suggestion applies particularly to small business lending, which represents so much of American employment and which has taken the COVID recession harder than other business categories. Scislowicz says the temptation to treat small firms identically won’t help lenders nor borrowers.

“Most banks serve niches of small business borrowers,” says Scislowicz. “They should be asking, ‘What do we think is going to happen to this segment and that segment?’”

One example he points to is dry cleaners. With work-from-home still continuing for many companies, he says, people aren’t getting business clothing cleaned very often.

“Do you think that segment will rebound? Or will working from home be the new normal and will dry cleaners suffer in the long term?” asks Scislowicz. The point is that another type of small business just down the street — a medical practice or a pet store — may face an entirely different future. Right now lenders should be assessing each type of business and each individual business as specifically as possible.

This will challenge many institutions because the situation goes beyond what traditional training accounts for. The same focused analysis will be required on other fronts as well. Commercial real estate, for example, in categories besides multifamily housing, will succeed or fail in this slump based on the industry affiliations reflected in the tenant mix.

Blunter Approaches Will Be Inevitable While the Recession Lasts

Scislowicz acknowledges that lenders won’t always be able to avoid wielding broad credit management policies. It will hinge on markets and the individual institution’s own financial health, no doubt.

He says the duration of the recession will also affect how much lenders can tailor their credit responses to each segment and each borrower.

“The longer the recession lasts, the more blunt I think things will get, which is unfortunate,” says Scislowicz. “You’d like to think that the longer it lasts, the more surgical lenders could be. But as time goes on there will be pressure from shareholders as well as from regulators to take blunter approaches.”

For an industry that took much of the heat for the Great Recession, and suffered resulting trust issues for years afterwards, this isn’t a great prospect.

“It will be at odds with public perception and there will be public outcry,” Scislowicz predicts. “The bottom line is that if this goes too long, banks are going to be in an untenable position.”

This is an area where, for a time, credit unions will have the advantage of being able to think in terms of members, not having to be concerned about shareholders, says Scislowicz. That said, they will face regulatory pressures should credit conditions deteriorate badly.

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A Worst-Case Scenario: Lenders Amplify the COVID Recession

An inevitable challenge is that every lender at some level is not only a participant in the economy, but an influence on that economy, whether the scope of that influence is national, at the state level or in a small town.

“If banks suddenly put a hold on funding, we could find ourselves quickly in a different crisis. Similarly, if banks started to suddenly start foreclosing on homes rapidly, they could create a real estate crisis.”

“Banks have to make clear-sighted decisions about how parts of the economy should be restructured,” the Accenture paper states. “Too indulgent, and the economy won’t adapt to serve a post-COVID world. Too harsh, and banks risk becoming pro-cyclical amplifiers of the crisis. That is the fine line between being a hero and a villain.”

Scislowicz says this could happen in the current recession if lenders found that conditions become shaky enough that they decide to turn off the credit tap.

“Liquidity nearly dried up in 2010,” recalls Scislowicz. “If banks suddenly put a hold on funding, we could find ourselves quickly in a different crisis. Similarly, if banks started to suddenly start foreclosing on homes rapidly, they could create a real estate crisis.”

The firm isn’t saying that this kind of development will come, only that it could come if lenders aren’t careful.

“There are levers that lenders can pull and certainly some of those levers could make this recession worse,” says Scislowicz. Another potential risk, for example, is institutions liquidating assets too quickly, flooding the market involved and driving down prices.

Even being helpful to troubled borrowers has be done carefully.

“There’s the concept of lending into a problem, giving someone with a strong business model the funds to get through six more months,” Scislowicz explains. “But the catch is that nobody’s got a crystal ball on how long this is going to last. If we’re still sitting in our homes wearing masks in August 2021, the U.S. will be a very different place, and some very different actions will have to be taken.”

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Bad Credit

Inside the Highly Profitable and Secretive World of Payday Lenders

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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?

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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

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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: gameoffortune.money. To learn more about Tae Lee and Never Go Broke Inc., visit taelee.money and nevergobroke.money or email [email protected]; you also can follow her on Facebook (https://www.facebook.com/nevergobrokeinc) and Instagram (@nevergobrokeinc).

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