Townhall sheds light on predatory lending practices
Friends in Deed and Circles of Washtenaw, two programs working to alleviate poverty among low-income families, co-hosted a town hall at the St. Luke Lutheran Church Tuesday night to discuss predatory lending practices in the state of Michigan.
The event began with an address by U.S Rep. Debbie Dingell, D-Ann Arbor, about the debilitating effects of predatory lending. Dingell explained when unsecured loans are provided at higher than normal interest rates to people in desperate need of fast money, the cyclic nature it promotes among borrowers leads to a cycle of debt.
Jessica AcMoody, a senior policy specialist at the Community Economic Development Association of Michigan, introduced the panel, which consisted of local legislators and community activists. Later, in an interview with The Daily, AcMoody described the nature of predatory loans and the dangerous cycle borrowers can find themselves victim too.
“It is usually higher interest lending that preys on low-income communities,” AcMoody said. “Seventy percent of borrowers in Michigan reborrow the same day they pay off their old loan.”
Nekeah Sotalis, one of the panelists and a single mother, found herself taken advantage of by predatory loans when she took out a $500 loan for her car.
Also, victim to payday loans was one of the panelists and Circles leader, Deanna Williams. She highlighted her experience with the reasoning behind why she and other people can get trapped into taking out predatory loans.
“They’re fast, easy and everyone gets approved,” Williams said. “It might not be good, but everyone thinks it might get them out of their situation.”
The panel explored possible solutions to the issue and took audience questions.
“I think there is legislation out there to put a cooling-off period in between loans, so there would be a 30-day cooling-off period between when you take out a loan and pay it off before you can borrow again,” AcMoody said. “It’s an issue of wages not being high enough for people, and it's an issue of not enough access to banks and credit unions in neighborhoods.”
Community member Marissa Jafferotice spoke to The Daily about her thoughts on the event and her outlook on the issue of why payday loans can be problematic.
“In my neighborhood, I could walk to two payday lenders and zero banks,” Jafferortice said. “I was surprised by how recent payday lending was in Michigan that it was not legal until 2005, and it is still an active issue coming up in the legislature.”
Circles Program Coordinator Suzanne Van Dam helped organize the event and discussed her opinion on the issue of these loans.
“A very small number of very powerful rich people are making money off of these payday loans, and they're vocal about it, and yet the vast majority of us think this is a very unethical thing,” Vandam said. “So, I hope people take action and contact their legislators.”