The Wisconsin DFI has established new rules for the recent payday loan law. Here is the pdf:
What’s important to note is that loans more than 180 days are pretty much except from the Veritec database. This is a big deal that the industry and the Wisconsin DFI hammered out.
From the Wisconsin DFI.
Proposed Payday Lending Administrative Rules
The Senate Committee on Small Business, Emergency Preparedness, Technical Colleges, and Consumer Protection has objected to the proposed Administrative Rules for Payday Lending and referred them to the Joint Committee for Review of Administrative Rules (JCAR). The JCAR has until 4:30 p.m. on Wednesday, December 22, 2010 to review the rule; however, that period may be extended for an additional 30 days.
Please note that 2009 Wisconsin Act 405 is effective January 1, 2011 regardless of the status of any Administrative Rules. You will need to be in compliance with the statutes created in the Act. If you accept an authorization to initiate one or more electronic fund transfers from a customer’s account and wait a period of time before initiating the electronic fund transfer or if you accept and hold one or more checks for a period of time before negotiating or presenting the check for payment, you must be licensed as a payday lender under s. 138.14. Unless Administrative Rules for Payday Lending are approved by January 1, 2011 that contain the language proposed in s. 75.02(2), which excluded from the payday loan definition certain loans with voluntary electronic fund transfers, any transaction that involves an electronic fund transfer will be considered a payday loan.
The application form and instructions and the required Payday Lender Bond form are available in a fillable format on our website at http://www.wdfi.org/fi/lfs/forms.htm#pdl. Any payday lender not licensed on January 1, 2011 will be subject to the zoning restrictions set forth in ss. 59.69(4h) and 62.23(7)(hi), Stats.
Statewide Payday Lender Database
Section 138.14, Stats., requires a single statewide payday lender database. The target date for a fully implemented database is March 1, 2011. We previously announced that an Intent to Award letter was sent to Veritec Solutions LLC that would allow Veritec to develop, implement, and maintain the database. The contract with Veritec has not yet been finalized.
If you have questions, you may contact Lisa Lee at 608-267-1708 or lisa.lee@dfi.wisconsin.gov or Janell Fibikar at 608-266-8891 or janell.fibikar@wisconsin.gov.
If you’re doing loans inside a storefront or on the Internet, there are some new laws in effect January 1st.
Here are some general rules:
Looking for software or compliance help? Contact Intro XL.
The Wisconsin Senate passed a new bill in the 11th hour. Here are the details.
The new law would restrict where payday loan stores could locate and limit their loans to $1,500 or 35% of monthly income, whichever is less. Borrowers would be able to renew those loans just once. Auto title loans would be limited to half the value of a vehicle.
Title lenders would be required to notify borrowers before seizing their vehicles; could charge borrowers only “reasonable” storage fees if they repossessed their vehicles; and give borrowers cash back if they sold their vehicles for more than the amount of the loan.
The bill does not include a state database, like Veritec. This is a good thing.
Two things I’m curious about:
The Senate bill is a much better bill. The general assembly bill would ban title loans, limit lenders to $600 and ban rollovers.
If a bill does not pass by this Thursday, it can not become law this year. Read more in the Wisconsin AP News.
Wisconsin has payday loan reform on it’s agenda. The Senate has two bills floating around.
“One bill, written by Sen. Jim Sullivan, D-Wauwatosa, would limit loans to $1,500 and restrict payday lenders from establishing themselves within 1,500 feet of another lender or within 150 feet of a residential area. The bill would also restrict borrowers from rolling over loans to a later pay period more than once.”
“Bill number two limits loans to $600, prohibits any rollover of loans and bans auto title loans.”
One of these bills has until April 22nd to get out of the house. I like our chances. Wisconsin currently has 548 payday loan licenses.
As read at WisPolitics.com:
Senate Bill 530 currently calls for a $900 limit on the size of payday loans, place zoning restrictions on payday lenders and allow one rollover loan for customers who fail to pay initial loans. The state Assembly’s version, Bill 447, would impose a limit on loans of $600 or 35 percent of biweekly income, whichever is less, and would ban rolling over loans from one paycheck to the next, as well as auto title loans. But neither proposed bill has included restrictions on initial interest rates.
It would be a shame if they were to ban title loans. Sure, you can lose your car, but I think people realize that. The reality is that most lenders do not want the car. They want to get paid.
It looks like we’re going to see another state database. Wisconsin is trying to limit borrowers to one payday loan. The good news is no rate cap and I did not read anything about cool off periods.
All in all, it’s a much better looking bill than I’ve seen in other states.
Why they are banning title loans, I don’t know. Does not make any sense to me.
You can read some details in the Milwaukee Journal Sentinel.
This is an update to an Internet lending class action settlement. We reported back in July that the state of Wisconsin had settled a case w/ an online lender for $180k and forgave $432k in debt. The lender, Arrowhead Investments LLC, was not licensed to give loans in the state of Wisconsin.
This is official now, and the lender can not lend in Wisconsin for the next 5 years.
Patricia Nelson of Waukesha was borrowed $550 and paid $2,700 over the next 22 months. This is what we call, in the business, a good payer.
The problem is that it does not look good for the payday loan industry when this happens, especially when she introduces President Obama the day he wins the Nobel Peach Prize.
What people do not realize is that Patricia was paying for all the people that did not pay back their loan. That’s how risk pools work. I don’t know the answer.
You can read more in the Milwaukee Journal Sentinel blog.