Houston Council Considers Restrictions On Payday Lenders
by: Laurie Johnson, February 4, 2013 10:02:00 am
The Mayor's Office first floated the idea of regulating payday loan companies last year.
Now a draft ordinance is heading to the Housing, Sustainable Growth and Development Committee.
Councilmember Wanda Adams chairs the committee and says one of the big problems with payday and auto title loans is that people can't pay them back on time and end up getting another loan to pay off the first one.
"Over 70 percent of single-payment auto title loan consumers, they refinance their loans. And actually it's far above the state average. The state average is 57 percent, we're over 70 percent here in Houston."
To compound the problem, Houston has a high rate of auto repossessions because of these loans, with an average of 112 repossessions a week.
Adams says the city wants to cap the number of times a lending company can roll over a loan and also limit the interest and fees on these loans.
"And I definitely understand that some of our consumers out there cannot go to the bank and get a loan. With these companies, you know they come in handy and I definitely understand that. Not there to shut anybody down or say stop doing business, that's not what I'm saying. But we have to have some type of regulations to be able to protect the quality of life of our citizens, of our constituents and the consumer."
Adams says the proposed ordinance won't come forward for a vote for a few months, as they wait to see if lawmakers in Austin will pass statewide regulations.