New program needs additional partners to boost financial stability
As industry representatives, city officials and the Texas Legislature regroup in their corners in the battle over payday and title lending reform, the United Way of Denton County is moving ahead to provide residents with banking alternatives.
Earlier this month, the United Way held its first meeting with banking representatives to launch “BankOn Denton.” The initiative is meant to boost the financial stability of low- and moderately low-income households. The meeting included representatives from the Federal Reserve Bank of Dallas, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and many bankers from the local branches of state and national banks and credit unions.
Four major banks have already committed to the local program, according to Gary Henderson, president and CEO of United Way of Denton County.
To finish setting up the program, the United Way is seeking support from community partners, providers of other financial services, and community and faith-based organizations. To be successful, the program needs both elements — training in financial literacy and trusted banking partners — to help people holistically, Henderson said.
The plan is to help people establish a small cushion of savings for themselves so that they can avoid high-cost borrowing, he said.
“Even if it’s just saving $300 or $400,” Henderson said. “It’s about stopping the [financial] leakage before it happens.”
The United Way is trying to launch the program as quickly as it can, Henderson said, given the pressing need in the community for alternatives to high-cost financial services. He expects that local banks will be ready for the referrals, and community partners will be ready to make those referrals, by Sept. 1.
Late last year, area residents, churches and community groups became concerned about the proliferation of high-cost, short-term lenders in Denton. Organized as Denton for Fair Lending, they told the City Council that payday and title lenders had stripped about $2.6 million in wealth from the community in the form of credit-access fees and also had repossessed at least 66 cars in 2012.
They asked the city to pass an ordinance regulating the businesses, known as credit-access businesses, similar to those passed in Austin, El Paso, Dallas and San Antonio. On March 19, the Denton City Council approved the new rules.
Even though Denton modeled its ordinance after the one adopted by Dallas that withstood a legal challenge from the Consumer Service Alliance of Texas, the alliance filed suit against Denton on April 5.
The alliance claims to represent the Denton businesses as it seeks to block the new rules for the credit-access businesses. Last week, Denton filed its answer and counterclaim, calling into question the trade association’s standing and asking for attorney’s fees and court costs. No hearing has yet been scheduled in the case.
Also similar to what happened in Dallas, Denton residents are reporting they are being told that, in order to roll over any unpaid balances and continue making payments, they must travel to another city.
Kimberly Babb put up the title to her 2000 Dodge Durango at the end of January so that she and her husband, Dale Babb, would have enough money to travel to Fort Bragg in North Carolina to visit his son, who was injured in Afghanistan. Title Max refused their partial payment in May. Instead, they would have to transfer their loan from the Denton branch to Flower Mound.
Both Babb and another Title Max customer, Jennie Reed, are worried about the transfer of their business to Flower Mound. Reed’s truck, though meticulously kept, needs an expensive repair, she said.
“I’m not sure it will make it to Flower Mound,” Reed said, adding that she was worried that if she couldn’t make it to Flower Mound on the day the payment was due — a requirement of the lender — she could lose her truck.
Jose and Linda Casarez already saw their car repossessed. They put up the title to his 1999 Oldsmobile Intrigue to borrow $933 in October. They had paid close to $800 when Jose Casarez said he missed the April payment. Even though he has discovered the car is worth about $1,200, he now owes $1,504 and he has to come up with at least $753 and go to Title Max’s impound lot in Dallas to retrieve it.
Deputy City Attorney John Knight declined to speculate on any possible investigations into violations of Denton’s ordinance. Ryan Grelle, spokesman for the Denton Police Department, said no one had filed a complaint with city police against a payday or title lender since the new ordinance was adopted.
Multiple calls for comment to the Title Max corporate headquarters in Savannah, Ga., were not returned.
Once people have paid more than their original balance to a high-cost, short-term lender, they may have a legal case, according to Ann Baddour, of Texas Appleseed, which partners with the legal community to promote social and economic justice.
In addition, until the last day the Legislature is in session, there is still a chance for meaningful reform at the state level, Baddour said. Questions remain whether Denton’s ordinance would be allowed to stand, depending on the type of reform that passes.
Senate Bill 1247 passed the Texas Senate with a number of amendments that restored reforms stripped out in a Senate committee. Advocates said those reforms would protect more consumers statewide. But advocates are also concerned that a push to pre-empt cities from making ordinances with stricter regulations could survive in another form, such as an amendment to other legislation.
“People have said before that reform was dead, but this legislation has continued to move in unexpected ways,” Baddour said. “We continue to be hopeful that something meaningful will come out of committee and the floor of the House.”
SB 1247 remains pending in the Texas House Committee Investments and Financial Services Committee. Texas Rep. Mike Villarreal, D-San Antonio, held a press conference last week to say he and Texas Sen. John Carona, R-Dallas, who sponsored the bill, didn’t have the votes to get it or other meaningful payday and title reform bills out of committee.
Saturday is the last day for House committees to report Senate bills, and Tuesday is the last day for the House to consider Senate bills.
More information on how to reach the Texas House committee members can be found under the “Committees” tab at www.house.state.tx.us.
PEGGY HEINKEL-WOLFE can be reached at 940-566-6881 and via Twitter at @phwolfeDRC.