3. Community Development Services
Credit Access Businesses (CAB)
•
Defined in Section 393.601 of Texas Finance Code
•
Offer payday and auto title loans
•
Create cycles of debt
4. Community Development Services
Previous Action
•
“Call to Action” received from United Way
Financial Stability Committee
•
Council passed Payday Lending Resolution calling
for State level action on Jan 10, 2013
•
State Legislature passed no significant regulation
this past session
6. Community Development Services
Ordinance Background
• Crafted from model provided by the Texas
Municipal League
• Other Cities have adopted similar legislation
• 6 month delay in implementation
7. Community Development Services
Ordinance Overview
•
CAB must apply for certificate of registration from
City
•
CAB must maintain records of all loans made for
three years, making them available to
inspection upon request
•
Amount of payday loan cannot exceed 20% of
borrowers monthly income
•
Amount of auto title loan cannot exceed the
lesser of 3% of borrowers annual income or
70% of value of the vehicle
8. Community Development Services
Ordinance Overview
• Installment loans may not have more than 4
installments – 25% of each installment must
be used to repay principal amount of loan
•
No renewals or refinancing of installmentpayment loans are permitted
•
Loans with single lump sum repayments may not
be refinanced or renewed more than 3 times –
proceeds from each refinance must pay at least
25% of loan principal
9. Community Development Services
Ordinance Overview
• Required to ensure borrower understands the
terms of any agreement
• CAB must provide borrowers with referral sheet to
consumer credit counseling agencies and other
financial education.
• Not more than $500 fine for each offence
