by Richard Prior
Staff Writer
Predatory lenders could probably lay claim to being the true practitioners of the world’s oldest profession, harking back to the time consumers traded in tusks.
And they’re flexible enough to do some of their best work during two phases of the economy.
When it’s robust and when it’s anemic.
“I think some of it has to do with the upturns and downturns of the economy,” said Lynn Drysdale, consumer fraud attorney with Jacksonville Area Legal Aid.
“You notice this when there are upturns because there’s so much more money out there,” she explained. “Then you notice it when there are downturns because people are looking for alternative sources of income.”
Drysdale participated in an announcement March 12 that the City had given Legal Aid a $250,000 grant to fight predatory lending in Jacksonville. The money would help pay for three full-time attorneys to work on the project over the next year.
Those attorneys are Drysdale, Laura Boeckman and April Charney. They will be assisted by Fadia Gatlin.
“You’re looking at loans that probably start out with an interest rate somewhere around 290 percent,” Drysdale said. “Around 300 percent is where your payday loans start. And these are the lower limits.”
Predatory lenders may be distinguished by their aggressive marketing techniques and high fees, which can lead borrowers into a growing cycle of indebtedness.
They tend to target the young, the elderly, people in the military and the desperate.
“If you go up the Mayport corridor, you see all of the ‘Buy Here, Pay Here’ car places,” Drysdale said. “Payday lenders particularly like to target the military. They know when the monthly checks are coming in.
“They know they can go to a (commanding officer) if the payments aren’t made.”
Predatory mortgage lenders tend to target the elderly more than any other group, she said.
“The elderly aren’t thinking about (taking out a new mortgage) until they’re approached,” said Drysdale. “A big part of predatory lending is the aggressive marketing.
“Mortgage brokers, mortgage lenders or home improvement contractors do their homework. They do the research. They look for pockets of the community where there are elderly people living.”
Mortgage loans, to be secured by the borrowers’ homes, can provide the highest return for predatory lenders.
“The finance company sells other products that are unnecessary or maybe high, and they include this with the mortgage principal,” Drysdale said. “The same thing can happen when you go to buy a car.
“I mention those two types of loans because the consequences can be so great if you’re unable to pay them. If you don’t pay your mortgage, you lose your home and the equity in it. And if you don’t pay the car loan, you lose your vehicle.”
Those fees escalate when lenders add unnecessary products, perhaps a buying club, that the borrower believes are required.
“Sometimes, the interest rate you’re given on both products is not related to your credit worthiness,” said Drysdale. “Instead, it reflects some consideration going back and forth, third-party kickbacks, between the lender and the actual entity that’s funding the loan.”
The money that gets siphoned out of the community because of predatory practices is “a big drain” on the local community, she said.
The Earned Income Tax Credit is an opportunity for families to get tax refunds from the federal government. And they’ll get to keep most of it if they let the right people handle the paperwork, said Drysdale.
“Part one of Jacksonville’s Prosperity Campaign is the City is offering to do free income tax returns, particularly targeted toward people who may be eligible for this Earned Income Tax Credit,” she said. “I think the mayor’s take on that was the money stays in the community. It buys homes, it creates savings accounts, it buys education.”
The second part of the Prosperity Campaign is “financial literacy,” Drysdale said.
“We’ve been working with the Division of Consumer Affairs, going around to all the community planning and advisory committees, doing presentations and telling the heads of those groups that we’ll come out to any community group,” she said. “We will go to any neighborhood association, any civic group, church group.
“We want to make ourselves available to go out and speak to anyone. If we just sit downtown, we are not going to get the point across.”
Drysdale also hopes private firms will stay involved.
“In Jacksonville, we are very fortunate to have a private Bar that is deeply committed to the concept of doing pro bono,” she said. “I’ve been working in the legal services community for 15, 16 years. It’s always been that way.
“We have private attorneys that have become involved in some of our larger cases pro bono, and we would like that to continue with what we’re doing.”
Potential clients, or those who would like to help Legal Aid, should call Drysdale at 356-8371, extension 306. They may also call Fadia Gatlin at the same number, extension 307.