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Ashford announces passage of House Bill 123
Ashford, Koehler’s predatory lending bill receives favorable
passage
State Rep. Michael Ashford (D-Toledo) this week announced
the passage of House Bill (HB) 123, which addresses
predatory lending and closes the loopholes used by credit
services organizations in the State of Ohio. The bill,
joint-sponsored with Rep. Kyle Koehler (R-Springfield),
passed out of the House today 69-14 with bipartisan support.
“HB 123 will aggressively address the predatory loans that
range from 500-600 percent interest on short-term loans,”
said Ashford. “Borrowers in the state of Ohio pay almost
$900 billion in interest, which takes money out of their
pockets. Back in 2008, 70 percent of voters passed a bill to
reform payday lending. However, the payday lenders found a
loophole to operate in current law. This legislation has
garnered the support of coalitions across the state.
“In Ohio, it is estimated that 10 percent of the adult
population (roughly 1 million people) have used a payday
loan – which is the fourth highest rate in the United
States. Ohio’s market consists of more than 650 payday loan
storefronts in 76 of Ohio’s 88 counties, 90 percent of which
are owned and operated by companies that do business in
other states.
“In 2008, the state legislature took the first step to check
a runaway industry hell-bent on nickel-and-diming families
out of whatever hard-earned money they could scrape up
through the ballot initiative Referendum 5 and Sub HB 545,
which was signed into law in June of 2008. Through these
efforts, we capped interest rates at 28 percent and added a
number of other important consumer protections. Voters
overwhelmingly approved by 80 percent. Today, polls have
shown out of likely Ohio voters, 78 percent of Republicans,
75 percent of independents and 88 percent of Democrats
support stricter reforms in this industry. More than 90
percent of Ohioans believe that payday installment loans
common today – borrowing $400 for a fee of $350 paid back
over three months – is completely unfair.
“Modeled after legislation passed in Colorado in 2010, HB
123 is commonsense legislation that looks out and protects
Ohio’s most vulnerable communities, who rely on small loans
to provide for their families and to make ends meet.
Sixty-nine percent of first time borrowers use the loan for
recurring bills (including rent or utilities) while just 16
percent deal with an unexpected expense such as a car
repair. Payday loans are unaffordable for most borrowers and
it becomes harder not easier to make ends meet. Since the
enactment of reforms, Colorado’s borrowers spend 42 percent
less annually on payday loans but receive more days of
credit. And, by requiring more affordable payments,
borrowers have seen a decline in APR rates and were able to
pay off the loans within the 6-month time frame if not
sooner.”
HB 123 now goes to the Senate for further consideration.
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