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Sponsored primarily by the Evangelical Lutheran Church of America, the group met with City Councilor Heidi Durand, who is leaving office this week, as well as Mayor Johnathan Judd and newly elected State Representative Heather Keeler, to discuss the city’s efforts to praise. Moorhead cut the interest rate on the payday loan dramatically from an average of 250% to 33% with Moorhead’s two lenders.
“Moorhead is a role model for what can be done,” said Durand. “We’ll get it out on the street.”
She said several other cities in Minnesota were in contact to learn more about the city’s program, which is the first of its kind in the state.
In addition to capping the interest rate, the program limits city fees, limits the number of loans to two under $ 1,000 per year, requests repayment within 60 days, and requests detailed breakdowns of all fees and annual reports from lenders to the city.
The program was approved by the city council last autumn and got the city’s two lenders – Greenbacks at 819 30th Ave. S. and Peoples Small Loan Co. at 1208 Center Ave. – to close their shop.
A call to Greenbacks, which lists on its website that its hours of operation are unknown but still has a phone number, was not returned on Wednesday. There is also a sign for the company in front of the office building.
In a public hearing on the plan before it was passed, Chris Laid and his brother Nick of Greenbacks Inc. were the only residents who resisted. They owned the business with their father, Vel.
Nick Laid wrote that passing the bill would likely put them out of business and drive people to Fargo, which has higher interest rates.
“Many people who use short-term consumer credit already have limited access to credit, either due to bad credit, lack of credit, lack of collateral, or a lack of community support structures such as friends or family,” added Chris Laid.
Durand, who has studied and directed the subject for years, said lenders require payment within two weeks or fees go up immediately if the loan cannot be repaid.
Many credit card companies survive with interest rates well below 33%, she said.
She said the Moorhead program is similar to the North Dakota state program, while Minnesota regulations are not nearly as restrictive as the city’s.
Minnesotans for Fair Lending is building and building a website has a facebook page where she calls the payday loans “predatory”, trapping borrowers with triple-digit interest rates.
Durand has repeated that Exodus Lending non-profit organization in Minnesota, which has a 99% success rate in getting borrowers out of payday loan debt.
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