Fair Lending for Texas
Lead: Texas Impact Education Fund (now known as The Texas Interfaith Center for Public Policy)
Project Location: Austin, Texas — Statewide
Predatory financial services, such as payday lending, threaten the stability of thousands of Texas households and can impact families’ ability to afford health care, healthy food, and housing. Payday lending, a small, short-term unsecured loan linked to a borrower's paycheck, is a vicious scheme that often ensnares borrowers into rolling over loans, adding to high debt burdens. In Texas, the average payday borrower pays $840 for a $300 loan. It is estimated that Texans borrow $3 billion annually in payday-type loans, or more than 10 percent of the national total.
The Texas Impact Education Fund and its partners will use their grant funding to help end the cycle of payday debt rife in Texas. Compared to other states, Texas has not closely regulated payday lenders. That began to change in 2011 when a coalition of consumer, faith, business, and other organizations helped to pass legislation requiring such lenders to register with the state and report certain basic information, such as loan portfolios and loans made each quarter.
Under the grant, the Texas Impact Education Fund and its partners will build on that momentum by pursuing four additional policy reforms, including limiting the number of times a loan can "roll over," developing alternative loan programs, ensuring that Texas' financial regulatory agencies use payday loan regulation revenues to provide financial literacy education, and encouraging local policy changes that limit the proliferation of payday and auto title lenders. Stakeholders plan to achieve these reforms by educating and informing community members and decision-makers, working collaboratively with the regulatory bodies overseeing such lenders, and promoting the issue, solutions, and results of a survey that examines the experience of borrowers with the media.