Predatory lending is a persistent threat to the material well-being of millions of Washingtonians. The economic hardship of the last four years has worsened this threat, forcing many to use credit to meet short term obligations like rent, groceries, and utility payments. People shouldn't have to go into debt to put food on the table.
Payday lenders intentionally target marginalized communities to market loans to struggling households. The promise of quick money is swiftly dashed by the reality of triple digit interest rates and debt people cannot repay with the income they have. Payday loan creditors are most common in low income communities, taking away wages and locking people in a cycle of debt.
Similarly, Home Equity Sharing Agreements (HESA) are unregulated, deceptive, and predatory contracts that mislead consumers into thinking they are taking out a loan, rather than selling their home equity. Homeowners count on using their home equity to buy a new house, pay for end-of-life care, or fund retirement, but find themselves trapped in a downward spiral that often results in bankruptcy, foreclosure and eviction.
This session, lawmakers have the opportunity to protect Washingtonians from predatory lending. HB 2083 would cap payday loan interest rates at 36%, which is the gold standard already implemented by several other states. HB 2081 would bring HESA under the definition of a mortgage loan to ensure the same protections for consumers as traditional mortgages. These common-sense bills would ensure lenders are subject to existing mortgage loan regulation and bring our consumer protection policy into alignment with nationwide best practices.
Unfortunately, predatory companies have hired teams of lobbyists to fight against these common-sense bills that would protect consumers. As the policy committee deadline approaches next week, remind lawmakers what's at stake for consumers in our state.
