Memphis religious leaders combat ‘sin’ of predatory lending
The Shelby County Interfaith group representing 35 congregations plans to ask the Memphis City Council and Shelby County Commission to approve ordinances limiting fees and interest rates charged on home loans and requiring penalties for violators.
Similar ordinances in other parts of the country have been overturned because local governments generally lack power to regulate interest rates and other banking concerns.
But the pastors aren’t willing to wait on politicians.
Gov. Phil Bredesen’s administration decided not to pursue comprehensive predatory lending legislation this year, citing a federal ruling that pre-empts state laws.
Part of the pastors’ strategy involves a public relations campaign, tentatively dubbed “The Dirty Dozen,” identifying the county’s worst predatory lenders and attempting to shame them into amending their ways.
The pastors say Memphis’ financially illiterate population is being victimized by home repair scam artists, unscrupulous lenders, even lawyers who aggressively urge families to jettison their debt by filing for bankruptcy.
“It is a public embarrassment,” SCI organizer Gerald Taylor said Thursday. “Something’s going on in the culture of the city, the legal profession, in the realty industry and the lending industry that has impacted us dramatically.”
The group will ask SCI delegates to consider the legislative and public relations campaign on March 11.
A draft of the ordinance would legally stick the label “High Cost Lender” and the more onerous “Predatory Lender” on any firm that makes at least 10 home loans a year with fees and interest that reach certain benchmarks.
Lenders could avoid the stigma and penalties by submitting a plan to discontinue such practices.
The ordinance also would require third-party counseling for any borrower taking a high-cost loan and would prohibit home repair contractors from taking a direct payment from any loan dispersal.
SCI also plans to meet next month with legislators in Nashville, saying they haven’t given up on hopes for a state law.