And so the coalition started pressing for brand new guidelines. In 2005 then-governor Rod Blagojevich finalized the pay day loan Reform Act, that was supported by both the Community Financial Services Association—a national trade group for payday lenders—and the Egan coalition. It codified a few of the rules that were subverted, requiring more hours between loans and more underwriting that is thorough.
But there was clearly a loophole. The law established a regulatory regime that governed payday lenders whose loans had regards to 120 days or less. Loan providers, DeLaforgue claims, merely began loans that are writing longer terms than that.
Outside the 120-day restriction, they dropped underneath the advertising associated with customer Installment Loan Act (CILA), which governed non-real-estate customer loans as much as $40,000. The requirements for lending under CILA were never as stringent than those for the new law that is payday it put no caps on interest levels and needed no underwriting.
“We don’t recognize that the industry that is entire so effectively morph into this other item,” claims DeLaforgue—but that is what took place. Continue reading