by Malaika Mitchel of Accomack County, Virginia
I’m writing to thank Delegate Lamont Bagby and all of the members of the House of Delegates who passed HB 789 on Friday to protect Virginia families from predatory loans and to improve access to affordable credit. This legislation will finally regulate online, payday, and car title loan companies who have been charging more than 200 percent interest in Virginia. It is strongly supported by the Virginia Legislative Black Caucus, the Attorney General, and the Governor.
I am a member of Virginia Organizing, Eastern Shore Chapter. We have worked with our allies at the Virginia Poverty Law Center and a broad coalition across the Commonwealth to encourage responsible lending for many years, because our members or their families have been trapped in predatory loan debt.
In our community, hardworking people who are struggling to make ends meet might take out a loan in order to pay rent during a month when they are too sick to work their regular hours. They hope that once they get back to work, they can repay the loan. But the interest rates allowed in Virginia are so high, and the payments are so unmanageable, that you can barely pay down the principal. This leads to thousands of Virginians losing their cars – their way to get to work – each year.
The Commonwealth has such lax regulation of these predatory lending companies that we have become the place to go for lenders who want to gouge the most vulnerable. They target single mothers, veterans, and low-income communities, especially communities of color. And the very same companies are charging far less in other states. It’s past time for reasonable regulations on these lenders.
The Virginia Fairness in Lending Act would cap interest rates at 36 percent and a maximum monthly fee. Despite the industry’s talking points, these reforms have been proven to work in other states where people still have access to credit at fair prices. Payday lenders in states like Ohio and Colorado claimed that reform would put them out of business. But what actually happened is that they became more efficient and made loans at much lower prices instead. The legislatures in those states called the predatory lenders’ bluff, and ours should too.
HB789 would protect borrowers from debt traps and give families a pathway out of debt. It requires lenders to get a license if they want to make loans in Virginia; it strengthens the Attorney General’s power to go after any unlicensed lenders; and it declares any unlicensed loans void, so borrowers don’t have to repay them.
I hope that the Senate Finance Committee votes in favor of the Senate version of this bill, Senator Mamie Locke’s SB421. This bill is one of the most important things the legislature can do this session to protect Virginia families. I hope that our lawmakers vote for SB421 to close all the loopholes in Virginia’s broken laws, expand access to affordable loans, and bring down prices on the 200 and 300 percent interest loans that have plagued our community for too long.