Liberty Mo. — “The payday lending industry in Missouri and the Heartland is a disaster for families and communities,” says Nancy Thompson, moderator of CBF Heartland and a consumer attorney.
For Thompson, her legal work in Des Moines, Iowa, calls her to protect the rights of consumers and assist those trapped in a vicious cycle of debt. The lack of industry regulation at the state and federal levels allows small-dollar loans to be made with an annual percentage rate as high as 435 percent in Missouri, according to Thompson.
“The payday loan industry preys on the poorest members of our communities,” Thompson said.
At its June meeting, the CBF Heartland Coordinating Council approved a partnership with local churches that seeks to offer viable alternatives to the usurious practice of predatory payday lenders. This new partnership comes as the Cooperative Baptist Fellowship has placed a sustained emphasis in recent years on advocating for payday loan reform.
Since 2013, CBF Advocacy has worked with national coalitions to advocate for “just lending” and encourage elected officials and people of faith to encourage the Consumer Financial Protection Bureau to adopt a strong regulatory rule to curtail predatory loan practices. The CFPB, a federal agency responsible for protecting consumers in the financial sector, recently released an initial rule which advocates hope will soon help to rein in the worst practices of the payday and auto-title loan industry.
The Heartland Council voted to allocate $9,000 from its Disaster Response Fund toward assisting a growing number of CBF churches in providing local assistance to the victims of predatory lenders.
“We normally think of disaster response in terms of natural events such as tornadoes, floods, earthquakes and hurricanes,” CBF Heartland Coordinator Jeff Langford said. “We are responding here to a human disaster.”
The funds are being set aside to encourage other Heartland congregations to model initiatives like University Hope, a ministry of University Heights Baptist Church in Springfield, Mo. Through the University Hope initiative, the church creates a pool of funds that are deposited into a local lending institution, and those funds become collateral to back up a loan from an individual. The working poor and those with incomes to repay a loan — but with a low credit rating — work with the church and the local lending institution.
“Because of the church, a person with a less than stellar credit is able to work with a local, reputable lending institution to get a short-term loan,” said Bob Perry, one of the driving forces behind the University Hope initiative. Through this model, the borrower is also able to rebuild a positive credit history.
CBF Heartland will provide a forgivable start-up loan of half of a cooperating CBF church’s local collateral pool up to $2,000.
“For example, if a church begins with an initial pool of $2,000 Heartland would add $1,000, explained Harold Phillips, Church Benefits Advocate for CBF Heartland. “If a church’s initial pool is $4,000, Heartland will contribute up to $2,000. Once the church’s own pool reaches $10,000 the request is that the church repays the start-up loan back to the Disaster Response Fund.”
“If the church never reaches that threshold, then the loan is forgiven. The hope is that the local church ministry grows and prospers. The return of the start-up loan to CBF Heartland will allow us to continue our disaster response capacity,” Phillips said.
To be eligible, a Heartland church must have:
- A written policy
- An agreement with a lending institution to facilitate the lending process to the person in need
- Start-up funds per the criteria outlined above
Phillips said that other CBF churches are contacting Perry about the University Hope initiative, with at least seven other Heartland churches with the resources and interest to copy and adapt the this creative model.
Langford along with a Heartland Coordinating Council member will monitor the success of this new partnership over the next year. For additional information about this partnership with Heartland churches, contact Harold Phillips at firstname.lastname@example.org.
CBF Heartland is a network of Baptist churches and Christians dedicated to inspiring leaders, transforming missions and engaging communities in the Heartland.