Legislators say payday loans need oversight
March 24, 2009
Davis and state Sens. Eliot Shapleigh, D-El Paso, and Rodney Ellis, D-Houston, called on lawmakers to approve a package of bills to reform subprime mortgages and regulate payday loans and tax refund-anticipation loans in Texas.
Written by Brandi Grissom, The El Paso Times
AUSTIN -- Texas lawmakers must regulate payday and mortgage loans to prevent more families from falling into financial ruin as the economy continues to slide, a group of Democratic state senators said Monday.
"In times like these, hard-working Texas families are more susceptible than ever," said state Sen. Wendy Davis, D-Fort Worth.
Davis and state Sens. Eliot Shapleigh, D-El Paso, and Rodney Ellis, D-Houston, called on lawmakers to approve a package of bills to reform subprime mortgages and regulate payday loans and tax refund-anticipation loans in Texas.
As the Texas economy worsens and families struggle to make ends meet, the lawmakers said, more Texans would fall prey to high-interest mortgages and payday loans with annualized interest rates of up to 1,000 percent.
The Dallas branch of the Federal Reserve Bank has estimated nearly 300,000 Texas jobs could be lost this year.
"The time is now to restore transparency and fairness to Texas lending," Shapleigh said.
Rocio Castruita, education director for the El Paso YWCA's consumer credit counseling service, said since December she has seen an uptick in the number of people seeking help because they have defaulted on their mortgages.
"We have seen, definitely, an increase on people needing help," Castruita said.
Alex Vaughn, president of the Consumer Service Alliance of Texas, which represents payday lenders, said that in states that have regulated short-term lenders, personal bankruptcies and bounced checks increased dramatically.
"We encourage our customers to budget responsibly," Vaughn said. "É But, we also believe consumers should have a variety of choices when deciding how to meet individual and family needs."
Brandi Grissom may be reached at bgrissom@elpasotimes.com; 512-479-6606.
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