3/26/2014 9:09:00 AM AARP asks Senate to reject bill on predatory lending
Cynthia J. Fagyas Special to the Review
Officials with AARP Arizona and community partners vow to continue efforts to defeat the "Consumer Lender Loan" House Bill 2526 (HB2526) after the State Senate Finance Committee March 19 narrowly voted (4-3) to advance what AARP deems a predatory lending bill to the full Senate floor.
AARP is opposed to the bill because it increases small loan costs by allowing loans as large as $3,000 to carry an annual interest rate of 36 percent plus an origination fee of up to $150 - more than double what is currently allowed. HB2526 also does not require underwriting standards to assess whether or not a borrower can repay their loan.
Community organizations partnering with AARP include the Southwest Center for Economic Integrity, Morris Institute for Justice and the Arizona Community Action Association.
"We will continue to fight this bill as it increases the rewards of lenders, and it's not in Arizona's best interest to allow these high-cost loans to become more widespread," AARP Arizona Advocacy Director Steve Jennings said. "Vulnerable families, minorities and seniors are more likely to be entrapped into a high cost cycle of debt through these types of loans if this bill is allowed to become Arizona law."
State Senator Olivia Cajero Bedford was among those who voted against the bill during the Senate Finance Committee hearing.
"HB2526 allows lenders to charge even more for these risky, unaffordable loans. This is a dangerous, unnecessary measure that will only make it harder for many Arizonans to reach financial stability," Cajero Bedford said.
State Senator Steve Farley also continues to help lead efforts in the Senate to oppose the bill.
"The fight against predatory lending in Arizona will now continue to the Senate floor," said Farley. "We must not allow out-of-state hedge funds to trap struggling Arizona families in a downward spiral of debt."
State Representative Debbie McCune Davis has long led efforts to combat predatory lending practices in Arizona.
"HB2526 raises the interest rate cap on small loans resulting in additional income to lenders," said McCune Davis. "Responsible companies use underwriting standards to assure that unsophisticated borrowers can repay the loan as well as meet their financial obligations. A requirement for underwriting is not contained in this bill, leaving the door open to predatory practices. It is a sad day in Arizona when the legislature puts hedge fund investors ahead of Arizona residents."
Cynthia Zwick of Arizona Community Action Association agrees.
"Nearly half of Arizonans are in a persistent state of financial insecurity. This bill would allow vulnerable Arizonans to face even higher costs of already high-cost lending," Zwick said.
AARP asks Arizonans to contact their state senators to urge them to reject HB2526 by calling the Arizona Legislature toll free at 800-352-8404.
AARP is a nonprofit, nonpartisan organization, with a membership of nearly 38 million, that helps people turn their goals and dreams into real possibilities, strengthens communities and fights for the issues that matter most to families such as healthcare, employment and income security, retirement planning, affordable utilities and protection from financial abuse.
AARP advocates for individuals in the marketplace by selecting products and services of high quality and value to carry the AARP name as well as help its members obtain discounts on a wide range of products, travel, and services.
A trusted source for lifestyle tips, news and educational information, AARP produces AARP The Magazine, the world's largest circulation magazine; AARP Bulletin; www.aarp.org; AARP TV & Radio; AARP Books; and AARP en Español, a Spanish-language website addressing the interests and needs of Hispanics.
AARP does not endorse candidates for public office or make contributions to political campaigns or candidates.
AARP has staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
Learn more at www.aarp.org.
Cynthia Fagyas is the AARP Arizona Communications Director.