Title: How We Survive: Predatory 'Mending' #40-09 October 07, 2009

" One more this week on making contact. There's an entire institutional framework of financial institutions. Pitchers low income people. And it's very different. From the financial institutions that the rest of people in the United States have access to almost every one in the US does business with the banks but the business of borrowing isn't always fair."

" Whether you're in the market for a house -- have no credit at all. Financial institutions can hit you with high -- bad loans and unexpected outcomes."

" On this addition we continue our series how we survive. This week lenders who do things differently and people who avoid becoming prey in the financial market. Tom Andrews tells it."

" And nineteen Arabia and desist making contact the program connecting people. Out of ideas and important information."

" My -- in June AK a mixture of an eleventh child for California. -- sickest have club but I mean I love roots music so it's more like -- have spoken. -- you get any instrumentalists. Yet. It's. Horrible to listen to wear gloves. -- tape."

" It's just been doing today is about to tell the story of how something called panda is helping him -- gathered tens of thousands of dollars of debt. I tend is kind of like a community savings account. A small group of people each put in a certain amount of money every month every month -- one of those people get all the money. There's no interest -- but it means that when it's your turn to get paid you'll be getting a large sum of cash that you can use to cover a big expense. Makes sense well let's hear how Luna ended up in attend. The so. You're gonna to a car accident -- her insurance and."

" To a thirteen thousand dollars and then after that I mean -- worse -- to this vocational portrait schools. And goes to pick -- wanted to be so when I dropped out of the school like this for me to do or no record 20000. Dollar bill. And Dan I used get appreciate the other I was able to handle credit cards so I have like -- couple managed. Bridges basically for like 35000. Dollars and the nineteenth. After it fell for a couple years from the united life. Three -- job from those slaves. Hustling never can that I -- a household name. Post collecting command -- stuff from usually even I was borrowing money from Omar relative -- it. My friends and he's got to reform -- motion. I wouldn't know what to do for both home mom mom came to this information plan. She's -- relaxed those issues. Here's flush -- when I don't want analysis subsequent foods -- I got on their whole movement of some wonderful. Approve 400 -- Dorsal lull participants through phase of participants. Sort when -- approve 400 paper 400. You're ready get the chance to your beautiful -- wants. So we're gonna close to -- thousand dollars did you hear that I got close to let them both from dollars."

" When moon just turn came to collect like all of those before him and after him he got the entire sum of money in the -- and a nine 600 dollars. -- god will provide. Keep in mind over the life of the -- each person is putting in 9600 dollars to. So there's no profit involved but with that lump sum Angel was able to pay off most of the money he owed from his car accident."

" Please give me your money -- harmed or were ordered its troops for me to put in the bank to set live before and hasn't really worked out this. You know -- money in the bank. We're Mimi young I mean all of us are gonna go by this new jordans and came out and emergency. Votes for me is better -- because. I don't how the money. Yet but when I get it or Goran OK what I have to say and take care what I have to take it. He's basically an emergency loan where you have no interest in all the money to you today and -- all the money you got out of remains. I don't surely you can do my bank to -- when you -- for like. Thousand dollars you behave badly 3000 dollars -- from the interest."

" Not tam day is done all over the world and goes by many different names it's called seems to -- in some West African Caribbean and Latin American cultures. Koreans call it gay and in India there's something similar called a shift funds. As immigrant communities grow around the US so is the popularity of community savings schemes. Luna has done several -- has since he got involved in his first one more than three years ago. Besides helping him pay off his dad's being part of lefthander has helped him become more responsible."

" The maiming moral world where my money was from -- make sure you're like of these to have the money -- to implement bound Lucas. I don't wanna be the person to know what he showed us a lot of people -- and to pander to pay for third through your kids' college. Waiting each. -- baptism. You know you can't really let me let go alumni and -- looked and the sort of marked because this flag you're rip. How rappers talk to a street credibility. Pleasure credibility list they're like I feel like everybody should embrace. More things -- found or revise these relate to people controls their money not someone on Wall Street."

" Yeah."

" Yeah it's. Drive through almost any low income neighborhood in the United States and you'll see science for check cashing and payday loans. Locals come to these places for quick access to cash or to send money overseas. Advocates say the high fees at these places are one more obstacle in the way of climbing out of poverty. But Andrew styles -- has more about one new business that's cleaning up the image of check pacers' one customer at a time."

" It's a sunny afternoon in east Oakland food -- neighborhood. Mexican and Central American families stroll international boulevard. And the Bart train -- overhead -- fruit Vail village and revitalization project designed to bring the somewhat greedy area back to life. There's a bakery and deli and a Mexican restaurant. The newest store front in the plaza of the five year old development has an -- community check cashing in big block letters about beyond it. Inside a man's strolls up to the counter separated from the -- by bulletproof glass. I was obviously very. Did. I honestly can't call this today. This man is a regular customer. Today he asked to buy a prepaid debit card. You'll allow them to shop on the Internet even without a traditional credit card. And he doesn't have to carry cash around. It's a new service here in fact as Jessie -- and explains it's the first one they've ever sold."

" So it's basically for those individuals that are not banked it don't have bank accounts and would like to obtain a debit card that commandment lending undercard."

" And recharge them a small fee and he stern immediately easing the current wherever discovers accepted."

" But the -- here for prepaid debit cards are much lower than your normal check cashing place. That goes for almost all of the services offered including money transfers and bill paying. Some fees could even be twice as much at check cashing stores just a couple blocks away the types of places often accused of exploiting poor people. They've been doing it for so long -- profit motives are rarely question and not even by Herbert came Donna who's worked here since they opened a few months ago."

" Honestly I never thought about there -- and so my girlfriend and a cancer check. They're tried about 3% over there and it was the first -- you -- as officials who surprised that really ties -- like ten dollars well that it has elected to something dollars."

" There are lots of reasons why people come to so called fringe financial institutions. The undocumented can't open a bank account without proof of legal residency. Others have a bad credit history or they may -- the bank fees they're unable to pay right now. About a quarter of the customers here do you have bank accounts but those banks either -- located in the neighborhood or have long lines to see a teller. Although these institutions go back more than a hundred years they really started to spread in the mid twentieth century says community development expert Dan -- said."

" Banks to started moving out of low income neighborhoods or low income neighborhoods were milling come neighborhoods became -- coming neighborhoods. With the changes in in the cities in the United States. The movement so of the suburbs. Different immigration patterns. And so the banks would move out and when they would move out to check captures. Evolved."

" Leaves and opened community check cashing in the spring of 2009. He's been studying in this so called fringe financial institutions for years and the more he learned the more he became convinced their business model was part of the problem."

" There's an entire institutional framework. Of financial institutions. Pitchers. Low income people. And it's very different from the financial institutions that the rest of people in the United States have access to. In this range of institutions. Is much more expensive. And includes only the check cashing payday lenders but. With sending money. Refund anticipation loans and intact preparation. Personal finance loans pawn shops. Rent to own. Car title loans. Sub prime credit cards and subprime debit cards. These are much more expensive and makes it much more difficult for people who out of poverty when they're dealing with these types of institutions."

" Community check cashing the business leads and started offers lower fees on most of those services. It's only one dollar to pay your utility bills here most other stores charge -- bucks. There's a 2% charge to catch a check and once a customer becomes a regular second fall to as low as one and half. Most other places charge anything up to 15%."

" There's nowhere else around it where they're gonna charts this little. And -- right now when we needed more us you know."

" Jackie came time whose brother works is a teller here lives in the neighborhood. She comes here every two weeks to cash your paycheck and her boyfriend comes once a month to wire two or 300 dollars to his family in Guatemala."

" He has a lot of -- in nineteen usually some banks don't take that. So it's easy for him just come here you know -- check really fast and get his money."

" Internal likes the speed inconvenience she gets it community check cashing her bank doesn't hammer branch in the through -- neighborhood. Leaves and says some critics -- the entire check cashing industry is villains that take advantage of the poor. And don't consider the benefits for people like can conduct."

" The have clearly. Demonstrated that there's demand for their services however. They're predatory in many situations. While some states such as New York have regulations limiting the fees charged by check -- In other parts of the country they are free to charge as much as they can get. Leads and describes the many layers of fees involved when someone wants to wire money to their family in another country."

" You may have it checks or cash a check you could charge a fee there when you send the money. You charge a fee by the company that sending the money. Then when he reaches the decimation of it's outside the country. There's a fee for converting it into the other currency there's also -- fee for the office often proven institution that receives the funds. In gives it to the person who's eventually going to have them money."

" More than two billion dollars in fees for money transfers were paid by immigrants in 2004. According to a study by the Federal Reserve Bank of Chicago. That's more than a 150 dollars per family. Community check cashing is working to keep some of that money in people's hands. Leads in his waiting for approval from the state of California so they can offer loans one of the most requested services. The plan has to offer three month loans with a seven and a half percent interest rates. Most payday lenders charged twice as much. But the store friend doesn't just provide cheap services. It gives financial literacy training to both families and small business owners. -- and says that the tendency may be don't want to ban payday lenders altogether but that's not seeing the bigger picture."

" When you eliminate this particular product. People solve a need for it. They're going to have to find it one way -- another. And often those methods could be worse so it's important when you eliminate a product like the pitting -- that you create. An alternative to."

" Right now because of the low fees they charge community check cashing his losing money. They'll have to build up a large customer base to make -- model work. But if it does the store fronts in your neighborhood could also be changing soon."

" We'll be right back. You're listening to maintain contact a production of the national radio project. If you'd like more information more for CD copies of this program please call 805295736. You can also download programs more get our broadcast. Radio project got to work. We now return to how we survive. Predatory --"

" Californians vote they hope Fairfield region as one of the nation's hardest hit by the real estate crash. It ranks fifth highest in the United States for foreclosures. During this past longest one of every seventy homes in the area felt a foreclosure according to realty -- a firm that monitors foreclosed properties. Some of these households were victim to predatory lending scams. Tina rubio takes a look at Amanda a program providing support and financial literacy so borrowers don't fall into lending traps."

" Glenn you can't -- going. To meet these blogs. Only out. And that's seven year old Jason. He's sitting on the Alaska Islam -- reading from one of his favorite books. Ain't bad I -- to me. Old previewed. I'm -- acne."

" Alba and her family who prefer not to use their last names live and the Lakewood California. She and her husband bought -- house in 1994. -- Some will make its complaint someone that was more comfortable killed it. Far I didn't think that we'd be able to own -- house -- her dreams came true. Tactics. But that dream came dangerously close to being shattered after Alba and her husband decided to refinance their house. The couple had a reasonably good credit and decent paying jobs so they spun -- alone. Elvis says they were excited when they were approved. But over time. That excitement turned to fear. But at the moment the final -- content and I if you come as we look under the impression that the loan would never increased as long as he made the minimum payments. But what ended up happening was that even though we still made the payments -- overall loan itself and it happened -- said. Ian supplement the that's because Alba and her husband wound up in an adjustable rate mortgage called an option arm -- this type of flown allows for negative amortization. In other words -- album was making the minimum payments every month the loan amount was increasing."

" Every month do you have that choice to either pay what they called the minimum payment. An interest only payment a thirty year fixed payment or. Fifteen year payment."

" Jesse Ramirez works for San Francisco based mission economic development agency -- that. She says these types of loans have bad outcomes."

" Basically. It's sold under the pretense that it's affordable so if you pay the minimum payment which most people do. They're not really even paying the amount of interest that's code for that month. And now you -- more at the end of every month you're loan balance is increase seen."

" Method works mostly with low income Latinos offering financial education. Economic counseling and overall fiscal empowerment. Do see is the program manager for menace homeownership department. She says these loans disproportionately affect people of color most of the time you'll find that."

" That let you know families who are in these types of loans. All the documentation is an eclipse the transaction was made in Spanish. And so they don't understand it was never explain to them at the negative annexation is how it works."

" Josie says double was put into a -- she essentially didn't understand and couldn't afford. The loan program with the state Atlanta. This means the -- to not require income documentation from the borrower. So basically. -- qualified for alone she shouldn't have received in the first place. Making matters worse Alba and her husband's income decreased due to cutbacks and their jobs. Eventually they began missing payments. And for closure --"

" So now there's not pay for lenders but there is. Predatory. Modification attorneys people who are on TV telling people. You know repay means 3000 dollars or for thousand dollars or 5000 dollars I'll be able to to fix here -- And the thing is that those people don't know anymore than we to date on how different contracts and we do. And the services they provide higher at lest we think that we provide and I sort of -- free."

" has -- one of the families that needed help after being given a bad loan. They reached out to Amanda after hearing about the organization direct co worker. -- and deviant -- me is -- not us I was so happy and relieved my kitchen my husband are relieved. It was like another -- income to fret that we could stay in -- home and we wouldn't have to worry about trying to find some laughs illness that has something to. But the real success story is one man is doing in their preventative work helping Latinos gain financial independence and understanding. So we."

" Out several programmes have -- the first one and the one that we're best known for. Is our business development program this is about how to start a business or how to strengthen the -- since. Especially here Spanish speaking businessperson and they -- to come to us."

" They also have the first time homeownership program where they teach people about credit and savings. There's an anti predatory lending program is -- And the meaning of -- goes beyond individuals like -- As -- season for closures and the economic drain they represented. Are ultimately about the success or failure of pull communities."

" When you -- thinking about building community how do you build community land 610 before leaving in a particular -- how to use the community when. Kids are having to be taken out of school district and being put into another school district."

" Much of the pain felt right now was caused by some unscrupulous lenders and tone -- financial institutions. Taking advantage of every -- people. With simple dreams of owning a place of their own. But some of the wounds are self inflicted. -- emphasizes that personal responsibility as part of the packets tip."

" I think we're all at one point or another guilty of doing things that we've known may be better not too bad it's. -- if everybody bears a little bit of responsibility. In this some you know -- that we."

" Founders -- just working on the front lines to help humanity survive and grow. One person went business at a time."

" Even if it's one or two or if you are a handful allies that where affect -- it's very rewarding. And we're gonna keep doing it until we can make give more than not."

" In the current economic crisis. More -- finding it harder to cover the cost of basic needs. During the Great Depression the federal government established a safety net of poverty programs. But some say the government's way of determining who's in need could use another elect. Our immediate concession intern -- in my ten me went to San Francisco's homeless advocacy project which she used to work. To find out more about applying for government services. What's your current livings. -- That's -- he's a thirty something year old resident of San Francisco. He's talking to groups of benefits counselor from the homeless advocacy project. They're sitting down at the methadone clinic and San Francisco General Hospital filling out an application to get supplemental security income are SSI. Does apply for it before at this time -- help."

" What -- she's taking risks we'll be -- and yeah. -- those of you and the first time in the Social Security Administration determined that I was not disabled enough to qualified. He has been living on the streets since he was fourteen and in that time he's been abused and sexually assaulted many times. He's applying for SSI based on post traumatic stress disorder depression and personality disorder and they'll. SSI is known as a safety net for people who are disabled blind are of retirement age. But in order to get an SSI check you need to be pork as determined by federal standards. The Social Security Administration says you are ineligible if you have more than 2000 dollar it's. And the general rule is than any assets that can be liquidated into cash count towards the island -- you can keep your car your home and so again SSI. But you stop getting the checks if you save the money to buy those things. In other words advocates say SSI can provide stability but never the opportunity to change economic circumstances in the long run."

" There is unfortunately an inaccurate and outdated and measure. That is used to assess what it actually takes families in order to meet their basic needs."

" That's Jenny -- program manager at insight center for community economic development. She says that eligibility requirements for programs like SSI are based on US consumption patterns from half a century ago. That's -- the federal poverty guidelines were created and."

" This particular measure was developed in the early 1960s. Based on 1950s food consumption data which showed that family spent a third of their after tax income on food. That methodology unfortunately has not changed and yet consumption patterns among families and individuals have changed. The problem there is that the federal poverty guidelines really under estimate the income that's needed."

" This underestimation of the cost of living impacts the working toward dramatic and the federal poverty guideline is used as the eligibility determination for about eighty different social programs not just -- so what happen."

" And is as you have. Families and individuals face seeing increasing costs for their basic goods. And yet when they seek assistance they're actually shut out. The problem is that they're still struggling so they make too much to qualify for certain supports. And yet not enough in order to meet their basic needs on their own. China another chance wanna change the way government assistance is made available they want poverty prevention. Our first policy proposal would be that we want to make a shift the paradigm shift away from discussing poverty. And more towards discussing economic security. And more specifically speaking replacing the federal poverty guidelines one with a measure that's geographically specific the federal poverty guidelines on the same. Throughout the continental US. And it also needs to look at more than just food folks need more than just food in order to divide they need housing they need health care transportation and child care."

" China and her colleagues at insight have been doing advocacy for about a dozen years at the state local and federal level to trying to redefine federal poverty guidelines. And that -- is starting to pay up. In 2009. The measuring American poverty act was proposed in congress that would update the federal poverty guidelines. China says if passed it would be groundbreaking."

" The federal poverty guidelines would be recalculated. Based on -- methodology. And designed by the National Academy of Sciences. It would also call for it. A calculation of a decent living standard. There. Has -- for many years been a lot of local and even state wide support and recognition. That the federal poverty guidelines need to be updated but this is really the first time. That we've seen legislative movement at the federal level content to update those guidelines."

" China says that there are some local and statewide programs that are looking beyond the federal poverty guidelines in creating eligibility requirements. In 2008 the mayor of New York City came up with a new equation to -- poverty in the metropolitan area. Massachusetts has another example."

" Our Massachusetts partner. Actually was able to successfully. -- the asset limit for Medicaid in Massachusetts from 2000 to 10000 dollars. So that need a huge difference for seniors there in terms of accessing that very vital resource."

" But there's still a lot of work to be done to move from safety nets to poverty prevention on a national -- John says this approach would be cheaper and better for the economy in the long run."

" Preventative measures. Are much cheaper than reactive measures. And as a society and as an economy. We would benefit more if we'd focus more of our efforts on providing this necessary preventative care and making sure that our families and seniors had enough to meet their basic needs."

" In the meantime Bruce Gordon keeps working on getting dug some much needed relief turning. For making contact and meg in my ten."

" That's it for this edition of making contacts. Bush CD copy of this program for others and our how we survived series called the national radio project at 800. 5295736. Or even get our podcasts at radio project data origin. Thanks for listening to making contact."