CONSUMERS WILL SHARE STORIES OF USING PAYDAY LOANS WHILE COMMUNITY LEADERS
DISCUSS CFPB’S NEW OPPORTUNITY TO RESTRICT PREDATORY LENDING

Los Angeles, CA- September 22, 2015: Later today, Rep. Linda T. Sánchez (CA-38), local community leaders, and payday loan customers will discuss predatory payday loans at a round table discussion. The event is cohosted by the Montebello Housing Development Corporation and Mexican American Opportunity Foundation, and will include remarks by Representative Sánchez as well as a consumer sharing their stories with her. Community leaders will discuss the federal Consumer Financial Protection Bureau’s rule-making for payday, car title, and other high-cost installment loans.

“Establishing the proposed CFPB rules on these abusive loans would go a long way to stopping the financial heartaches created for millions of California families who get caught in the payday loan debt trap.” comments Rep. Sánchez. “We need rules which require lenders to make sure consumers can repay their loans and make sure those struggling to get by don’t get trapped by these predatory lending practices.”

Davina Dora Esparza, a former payday loan consumer from East LA explains: “I was stuck in the payday loan debt trap for over three years and paid over $10,000 in fees alone on multiple payday loans. This experience created a lot of stress for me and I couldn’t find a way out. I ended up defaulting on my loans earlier this year,and I will never go back. I hope the CFPB’s new rules will prevent other people from going through what I did.”

Isaias Hernandez, program coordinator with the Mexican American Opportunity Foundation, adds:“Payday lenders claim they are “friendly neighborhood businesses,” but the reality is that they’re more like“neighborhood vacuums.” They draw money out of vulnerable families’ pockets with their predatory loans.”

Renee Chavez, operations manager at the Montebello Housing Development Corporation comments: “The ACE Cash Express $10 million settlement with the CFPB last year showed the need for protections for families and the communities where the industry has taken hold. Payday lenders rely on people getting stuck renewing their loans every two weeks and paying thousands of dollars more in interest than the actual loan guaranteeing large profits. It’s time for protections to be put in place with the CFPB to stand up for families and put a stop to these dangerous loans.”

The event is co-sponsored by the Montebello Housing Development Corporation, Mexican American Opportunity Foundation, California Reinvestment Coalition, Center for Responsible Lending, and National Council of La Raza.

Additional Background:

1. A Center for Responsible Lending analysis of two new reports on the payday lending industry from the California Department of Business Oversight (DBO) shows that payday lenders, who advertise their products as a one-time quick fix for consumers facing a cash crunch, generate 76% of their revenue from borrowers who take out 7 or more loans per year.

2. Almost 800,000 Californians were stuck in 7 or more payday loans last year sending money to payday lenders that would otherwise be spent in our cities and towns and small businesses.

3. In 2014, the 2,014 payday lenders in California made 12,407,422 transactions with 1.8 million individual customers. The average interest rate paid by customers was 361%. (Source: California Dept. of Business Oversight report).

4. In a bipartisan national poll sponsored by the Center for Responsible Lending, 66% of Westerners view payday lenders unfavorably – while 48% view them very unfavorably.

5. In a 2014 poll of California voters, when California voters were told that payday loans have average interest rates of 459%, then 65% of voters said they would “definitely support” a ballot measure that caps interest rates on payday loans at 36 percent.