Illinois Payday Loans

Many consumers applying for Illinois payday loans or mortgages are going to start sharing more personal information with lenders next year wether they like it or not. In a recent news article post on Chicago Tribune’s Business section, it tells of how many more factors are soon going to be taken into consideration with regards to credit reporting.

 

 

FICO scores, the industry standard for determining credit risk in mortgages backed by Fannie Mae, Freddie Mac and the Federal Housing Administration, largely have been based on a person’s credit history. But in an attempt to develop a more well-rounded picture of a person’s finances beyond credit, tools are being developed to help the lending industry dig deeper.

Fair Isaac Corp., or FICO, the company behind the widely used scoring formula, and data provider CoreLogic this week announced a collaboration that will result in a separate score that will be available to mortgage lenders and incorporates information that will include payday loans, evictions and child support payments. In the future, information on the status of utility, rent and cellphone payments may also be included.

Separately, last month, the big three credit reporting agencies, Experian, Equifax and TransUnion, began providing estimates of consumer income as a credit report option. And earlier this year, Experian began including data on on-time rental payments in its reports.

The new information could prove to be a double-edged sword for consumers: It may open the door to homeownership to some consumers who have, according to industryspeak, a “thin file” or worse, a “no-file,” meaning they lack sufficient credit histories.

On the other hand, the extra information may make a borderline borrower look even worse on paper. Also, it’s unlikely to quiet critics who complain that too much emphasis is put on a single number. Read more….

Although as the article states, these extra check could possibly make people’s credit look worse than it is, it can help first time borrowers with no credit. With the economy the way it is in the U.S. right now, I think new borrowers will be the only ones who can benefit and they are in the minority when it comes to Illinois payday loans and mortgages.

Illinois Payday Loans

An opinion handed down this week by the Illinois Supreme Court could have an impact on how the Bloomington City Council moves forward on a request to limit interest on payday loans according to  City attorney Todd Greenburg. This will affect a push to limit the interest rates charged on Illinois Payday Loans.

WJBC News report by Ryan Denham:

Bloomington City Attorney Todd Greenburg said Thursday that prior to the ruling, the chances were “very good” that the courts would rule that home-rule municipalities have the authority to regulate interest rates on payday loans and consumer installment loans. “I can’t categorically state that there is no possibility whatsoever that home-rule regulation would be upheld (after the ruling), but I think it’s definitely an uphill battle,” Greenburg said. Read full article here.

Read the full Illinois Supreme Court rulling PDF: Illinois Supreme Court StubHub ruling 

The Illinois People’s Action, a community church group that backed the proposed interest limits, “will take the be considering the new ruling as we continue our talks with the City Council,” said IPA member Jack Porter. “We will have to look at it very carefully. Whatever we do will have to take into account what the Supreme Court said,” said Porter. “The timing of the ruling could delay the process of bringing a measure to the council, but it could prove advantageous if it allows the new legal precedent to be addressed ahead of an ordinance. A move that could help the city avoid or overcome legal challenges,” said Porter about Illinois payday loans.

The only thing I can add is, if you don’t want to pay the crazy interest rates and fees by Illinois payday loans vendors - don’t borrow the money. Now what about these gas prices? Snow tires for the bicycle maybe….

Arizona Attorney General to Payday Lenders,

“Don’t Let the Door Hit You on the Ass On Your Way Out of the State.”

June 15, 2010

Statement by Terry Goddard, the Arizona Attorney General.

Arizona’s law authorizing high-interest payday loans is scheduled to expire on June 30, 2010. In anticipation of this long-awaited date, I have set up “Operation Sunset” – an enforcement initiative that will aggressively pursue and prosecute payday lenders who attempt to evade the ban on payday loans.

In 2008, Arizona voters made it clear that they opposed the continuation of the payday loan industry when they overwhelmingly defeated Proposition 200, which would have allowed payday lenders to operate in the state indefinitely. Despite this defeat, the payday loan industry continued to pursue a repeal of the sunset provision and lobbied for legislation that would have provided the industry essentially the same benefits as Prop 200. As Attorney General, I strongly opposed this legislation, arguing that it would overturn the will of the voters and perpetuate a debt trap for thousands of Arizona citizens. Fortunately, the legislature refused to extend the sunset period.

The Operation Sunset Enforcement Team will be dedicated to implementing the will of the voters and preventing payday loans being issued after June 30. This unit, which is comprised of attorneys, investigators, and paralegals, will respond to consumer complaints, perform undercover operations, shut down operations that attempt to offer payday loans after the sunset, and where appropriate, bring claims for injunctive relief and civil penalties against those who violate the law.

I have written payday lenders to notify them that my office will be watching for any efforts to perpetuate illegal lending practices. We will be looking at the substance of the loan transaction, not its name. In other states that have banned payday loans, the industry has not gone away quietly. Deceptive practices have included pre-paid debit cards, which carry a high interest rate plus additional fees; Internet payday lending, which would violate Arizona law, and sham auto title loans. The latter are likely to be seen in our state since more than 200 payday lenders have recently applied for auto title loan licenses.

Payday loan borrowers have better options. They can work out a payment plan directly with creditors to pay off bills over a longer period of time. They can get credit counseling to help set up a debt repayment plan or develop a budget. Nationally accredited counseling agencies can be found online at www.nfcc.org. Other alternatives include getting a loan from a credit union, which may offer better terms than a bank, or talking with a community organization or faith-based program that helps low-income households. Ending payday loans promises to benefit far more people than it will hurt.

I intend to make sure that these lenders do not continue to market illegal loan products under different names that will keep borrowers in a hopeless cycle of debt. For Operation Sunset to be most effective, we need the help of consumers. If you witness or become aware of a lender issuing payday loans after June 30, I encourage you to call our payday lending hotline at 866-879-5219 or email us at operationsunset@azag.gov. Together, we can work to ensure the end of predatory payday lenders in Arizona.

Illinois Governor Pat Quinn signed a bill into law Monday putting a cap on the often high interest rates charged on short-term consumer loans. The law regulates the so-called “payday loan” business, which usually requires its loans to be paid back within two weeks, and which have historically charged consumers higher interest rates. The loans are often the only option available to some borrowers who need money in a hurry, and their interest rates can keep borrowers in a cycle of debt.

Bill HB 537 also places restrictions on “consumer installment loans,” which the law defines as lasting longer than six months. The Chicago Tribune explains some of the new regulations:

Under the new rules, interest rates would be capped at 99 percent for consumer installment loans of $4,000 and less and at 36 percent for loans that are $4,000 or more. Previously, there were no limits on how much loan companies could charge in interest, and some borrowers were smacked with rates as high as 700 to 1,000 percent, according to Quinn’s office. … Interest rates on payday loans also would be limited, with rates being capped at $15.50 for every $100 borrowed over a two-week period. Additionally, loan firms would have to verify that a borrower has the ability to repay a loan and would not be allowed to issue pay day loans if monthly payments would exceed 25 percent of a person’s gross monthly income. That limit drops to 22.5 percent for those taking out longer consumer installment loans.

Attorney General Lisa Madigan, who was among the leaders in advancing the legislation, praised its passage Monday. But she continued to warn consumers that payday loans still have much steeper interest rates than those offered by banks and even credit cards. The loans “will still be costly, and should only be used in emergencies and in the last resort,” Madigan said.