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Texas Appleseed. The Texas Market Texas has 3300 payday and auto title locations across the state, in urban, suburban, and rural areas. Loan charges average.

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Presentation on theme: "Texas Appleseed. The Texas Market Texas has 3300 payday and auto title locations across the state, in urban, suburban, and rural areas. Loan charges average."— Presentation transcript:

1 Texas Appleseed

2 The Texas Market Texas has 3300 payday and auto title locations across the state, in urban, suburban, and rural areas. Loan charges average 300%- 600%APR. 3 of 4 borrowers rollover loans. 17,000 cars were repossessed in the first half of 2012nearly 1 in 10 borrowers lost their vehicles.

3 Borrower Overview It started out to help me over a temporary cash flow shortage and has turned into a five-year nightmare. –Nancy Oliver, Denton, Texas Loans are most often used for basic expenses, such as rent, utilities, and food. Primary product appeal: speed, convenience, and guaranteed results 2009 Texas Payday Borrowers 2009 Texas Auto Title Borrowers Majority are years old with incomes of $35,000 or less More likely than general population to have credit score below 620 and no credit cards. Source: Texas Appleseed analysis of 2009 FINRA Financial Capacity Survey

4 Current Market Standards Banks – FDIC 2005 examination guidelines : 6 rollovers – FDIC Suggested Standards: 36% rate cap with 90 minimum term Credit Union – NCUA: 28% interest plus $20 fee (charged once per 6 months) – TCUC: 18% interest plus $20 fee (charged once per 180 days) Texas Licensed Lenders – Licensed and examined by OCCC – $20 fee/18% interest or $10 fee/$4 per $100 borrowed per month – Must consider borrower ability to repay the loan on-time Payday and Auto Title Lenders – Jan. 1, 2012: Licensed and examined by OCCC – Under CSO model, 10% rate cap, no fee cap – City ordinances in Dallas and Austin: 3 rollover/4 installment limit; 20% of monthly income; each payment must reduce principal by 25%.

5 Emerging Lending Approaches Bank/Credit Union – FDIC Pilot: Amarillo National Bank; First Convenience Bank – REAL Solutions: Fort Worth City Credit Union Nonprofit – Lender Partner: Family Services of Greater Houston – Nonprofit Lender: Foundation Communities Finance Company – Progreso Financiero – Community Loan CenterEmployer Partnership

6 Taking New Models to Scale 1.Basic standards for affordable credit to support fair competition in the small-dollar lending market. 2.Increasing participation of banks and credit unions in the small dollar loan space. 3.Replicating local nonprofit models. 4.Expanding models that can have statewide impact.

7 Ann Baddour Senior Policy Analyst Texas Appleseed


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