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Shedding light on issue helps all

As part of Sunshine Week, the Denton Record-Chronicle news team gathered a number of government records under Texas open records laws to determine the scope of payday and title lender presence in Denton.

The series revealed 14 of 39 payday lending storefronts opening in the past five years with several operating in Denton a year or less. Records show a number of the storefronts are clustered near University Drive, Loop 288, Dallas Drive and Carroll Boulevard/Fort Worth Drive. These facts have caught the attention of a group of concerned residents and nonprofit organizations known as Denton for Fair Lending.

Denton for Fair Lending asked city officials to adopt regulations on how much short-term lenders can charge and how often they can make high-cost extensions. On Tuesday night, the Denton City Council did just that — requiring lenders to structure loan repayments in no more than four installments, each of which must pay down 25 percent of the loan amount.

The council also passed regulations effective April 9 that would require no more than three renewals or refinancing of loans to be repaid in lump sums. Proceeds from each refinancing must pay down at least 25 percent of the original loan.

The terms were borrowed from the city of Dallas, which has withstood legal challenge from the lending industry.

Cities adopting such regulations include Austin, El Paso and San Antonio.

Denton for Fair Lending organizers shared stories of borrowers who find themselves trapped in a cycle of debt as fees multiply for late payment or refinancing, such as one cited case of a $75 loan growing to $5,600 in three years.

Payday loan trade association officials say the short-term loan industry is growing based on demand amid the economic downturn. And, some borrowers are unable to secure loans elsewhere.

One customer, Sybil Shephard, found herself in a debt cycle after taking a payday loan out for a friend. When unexpected expenses popped up, she was unable to pay it back quickly and the short-term loan increased with additional fees.

Then, as soon as the bill was there, it was gone. A man declining to offer his name dropped off a receipt to Shephard after reading the story, showing the bill had been paid in full.

Helping Denton residents take care of each other and themselves is the reason for these new ordinances and the good deeds of both the unknown man as well as the group of individuals banding together to find answers.

And it is results like these that keep us investigating issues that speak to the heart of what makes this community tick.