Predatory lenders are financial companies that take advantage of Alabama's extremely weak laws in the consumer finance area. These companies usually have an offfice in every "strip mall" in Alabama. In Alabama, on loans over $2,000.00, there is no numerical limit on the interest rate that these businesses can charge. Likewise, there is very little regulation on pawnshops, rent-to-own centers, check cashing outlets, and catalog sales stores, since their transactions are not considered loans. Pawnshops are allowed to charge an annual interest rate of 300% on all their transactions. Rent-to-own centers charge an effective interest rate as high as 600 to 700%. Check cashing outlets and catalog sales stores have been charging consumers interest rates up to 1000% on what they call a "deferred presentment." This is outrageous!

An excellent article on predatory lenders by Leah K. Glasheen appeared in the June issue of The Bulletin, the MRP monthly magazine. The article clearly points out that predatory lending is "indeed a national crisis." AARP (American Association of Retired Persons) has led the fight to stem the growth of predatory lending in this country. From cases handled by our firm, I know firsthand that predatory lending practices can, in fact, lead consumers to financial ruin as pointed out in the article. The article, which zeroed in on predatory mortgage lending, stated:

"Predatory lenders pressure house-rich, cash-poor individuals – many of them older, into getting loans that use their houses as collateral. The loans, made by lending institutions often engaging in deception or outright fraud, come with high fees and interest rates.

"Predatory lending is a national crisis,' U.S. Housing and Urban Development Secretary Andrew Cuomo said in April at a forum in Atlanta, one of five fact-finding sessions the government has held on the problem.

"Usually homeowners who wind up with a bad loan wanted the money for home repairs. Ironically, say MRP Foundation Litigation lawyers Nina Simon and Jean Constantine-Davis, a loan can endanger their ability to keep their home, the financial asset most essential to older people. Some 80 percent of those age 65 or older own their houses."

I have found that MRP is on the cutting edge of consumer issues and their influence brings a great deal of weight to the table of public opinion. As you know, predatory loans are made to individuals with less-than-perfect credit and are called subprime loans. The corporations that deal in such lending practices prey on minorities, the poor, and the elderly. As pointed out in the article, subprime lending is growing rapidly around the country. In the mortgage industry alone, $175 Billion in loans were made in 1998.

I sincerely hope that MRP will continue its good work on behalf of all consumers, and especially the elderly. While MRP's article focused on mortgage loans, the problems caused by payday loans, title loans and the like are equally as bad if not worse. I, for one, appreciate the efforts of the MRP and its leadership. Alabama politicians have taken this group for granted over the years. I predict with a great deal of confidence that those days are over. MRP members will be a political force in this year's elections and that is good news!

Jere Beasley is a former Alabama Lieutenant Govemor, who is a consumer advocate, practicing law in Montgomery.