900 licences have been applied for. These rules cover Automobile loans, Mortgage Lenders, Post-dated Check Lenders, and several other supervised lenders. Note that the license fee is currently $400.
The Commission suggested that the supervised lenders should be able to acquire a $25,000 bond for $250 per year.
The Commission stated that they want to impose a $25,000 bond to assure honest and fair operations by supervised lenders. They said that the reason the bond amount been placed at $25,000 is because they have had 2 of 5 lenders unable to refund overcharged interest charges. They were unwilling to provide details of the 5 companies because specific charges had not been filed. They were also unwilling to name industries or the reasons for the overcharges.
A representative of the Mortgage Lenders Association made the comment that the Commission should keep in mind that any restrictions to enterring the business could be construed as being exclusionary and/or anti-competive. The Commission's response was to consider additional methods to assure honest and fair operations.
One alternative suggestion was to require audited financial statements showing $25,000 of working capital.
Another suggestion was to base the application on net worth, however, this was rejected because a member of the audience said that whenever this requirement had be made in the past, it had been subsequently consistently rejected through legal process.
Tom Mills of ReadiCash made the comment that it is not easy for small business to obtain a $25,000 bond and that perhaps the bond should be calculated as a percentage of business.
The members of the Check Holders Association may be interested in finding out the availability and cost associated with acquiring a $25,000 surety bond.
If you do not know how to get one, you can call Pat Ballis, 888-973-2323 ext 6124 (Mesirow Financial). Pat has been writing Pay Day Loan Surety Bonds for his check cashing customers who have expanded their business to include the Payday Loan service. Mesirow is a full service Insurance Agency specializing in insuring check cashing and pay day loan operations. They are located at 321 N. Clark Street, Suite 1200, Chicago, IL 60610.
A request for 3 business days notice on record availability was made by Janice Clark.
No comments were made on Rule 12 with respect to the Check Holders Association.
These comments were provided by:
Dave Boal
303-741-9031 dave@paydayplus.com