Holmes: House Passes Crucial Consumer Protections In House Bill 123
Lawmakers says bipartisan plan will reform predatory lending practices in Ohio
 
 

State Reps. Michael O’Brien (D-Warren) and Glenn Holmes (D-McDonald) today applauded the passage of House Bill (HB) 123, a bill that would reform Ohio’s payday lending industry by adding commonsense consumer protections for the thousands of Ohioans who take out short-term loans each day.


“I’ve been contacted by constituents in my district who are paying more than 500 percent interest on short-term loans from these lenders,” said Rep. O’Brien. “By adding commonsense consumer protections like capping fees and interest rates, we can crack down on predatory lenders and give working families a fair deal once again.”


In 2008, voters went to the ballot to support the Short Term Loan Act, which set a 28 percent limit on interest rates charged by the payday loan industry. However, lenders found loopholes to avoid the law, and of the more than 650 payday lenders currently operating in Ohio, not one is licensed under the Short Term Loan Act. 


“We must be sensitive to that segment of our population that needs access to emergency funds from pay day lenders, who in turn, often time exploit their circumstances,” said Rep. Holmes. “This bill is a step in the right direction to curb this type of exploitation.”


HB 123 retains the 28 percent interest rate limit enacted by the legislature in 2008 and overwhelmingly affirmed by voters, and allows a monthly fee of 5 percent of the loan amount. The bill also closes the loophole that allows payday lenders to operate under statutes not meant for their industry, by more closely defining the Mortgage Loan Act, the Small Loan Act and Credit Services Organization Act.  Perhaps most importantly, the bill limits the required monthly loan payment to 5 percent of the borrower’s Gross Monthly Income.


After passing the House, HB 123 moves to the Senate for consideration.

 
 
 
  
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