Payday and title loan regulation in Houston

From Nonsequiteuse, who got the following email in her inbox:

Where payday lending comes from

Proposed City of Houston Lending Ordinance
Presentation to Council Committee
Tuesday, February 5, 2013

The City of Houston Legal Department has proposed new regulations for credit access businesses, commonly referred to as payday loan or title loan institutions. The lending practices employed by these various businesses are currently subject to only limited state regulations. Because of such limited regulation and in spite of a borrower’s best intentions, there are those that suffer financial setbacks after they obtain credit and have difficulty repaying their financial obligations. Proposed changes to Chapter 28 of the City of Houston Code of Ordinances would establish minimum business practices for these institutions in hopes of substantially curtailing the likelihood of borrowers becoming trapped in a cycle of debt.

The proposed ordinance will be considered at the Housing, Sustainable Growth and Development Committee meeting on Tuesday, February 5, 2013, 10 a.m., in the Council Chamber on the second floor of City Hall, 901 Bagby, Houston 77002. Public comment is welcome in person or in writing.

To review and comment on the proposed ordinance, visit, Payday Loans (Chapter 28). For questions contact Larry Schenk at or 832.393.6447.

See also this press release from CM Wanda Adams. I’m very glad to see the city taking action on this. While it is the case that bills to regulate payday lending have been filed again in the Legislature, there’s no reason to believe any of them will pass, for the payday lending industry has strong defenders of its system working for them. While state or even federal action would be best, there’s no question that a local ordinance can be effective and can get enacted quickly, though of course the payday lenders won’t go without a fight here, either. I noted before an effort by the city of San Antonio to take action against payday lenders. Seeing this made me check up on that, and I’m pleased to see that their ordinance was passed in September. If Houston follows suit, they will join San Antonio, Austin, and Dallas in taking steps to curb the abuses on this industry. These are small steps, but every step forward is a good thing. I urge Council and Mayor Parker to follow through on this.

Two side items to note. One is that the Texas Fair Lending Alliance, which was involved in that San Antonio effort, is the main clearinghouse for the fight in the state legislature. Get involved with them if you want to be a part of this. Two, that Ordinance Feedback link is a reminder that Council has a pretty full agenda ahead of itself. In addition to payday lending, other issues on the horizon are Mobile Food Units, i.e., food trucks; Chapter 42, the density and development code; and Off Street Parking, for which Eating Our Words has an update. Got to pay attention to this stuff, it has at least as much effect on your daily life as what’s going on in Austin and DC.

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5 Responses to Payday and title loan regulation in Houston

  1. Houstonian says:

    Thank you for highlighting this important issue and for sharing what is happening in different cities. I want to clarify though, that the Houston ordinance is not the same as the ones that have passed in Dallas, Austin, and San Antonio. The proposed ordinance in Houston has much weaker regulatory standards and does not have the approval of the local Fair Lending Alliance as it currently stands. It is being presented as a backdoor way to influence the state legislature to act as a model passing in the state’s largest city. However, the advocates are ready for their fight in Houston, too.

    It is important that we keep in mind that the root of why we are looking for payday and auto title lending regulation, and that is that the majority of borrowers are not able to pay back their loans on time, thus a cycle of debt. If we are going to support regulation, we need to ensure that addresses the core issue and leads to loan products that are designed to both be successful for lender and borrower.

  2. brennan griffin says:

    I happen to work for an organization that is part of the Texas Fair Lending Alliance, and I know we don’t support the Houston ordinance as it is proposed. It does not provide the same strong protections for borrowers that the Dallas, Austin, San Antonio, and El Paso ordinances do. I’m sure an official spokesperson will be in touch later nut I

  3. Janis Monger says:

    Look for Texas Appleseed board member Mark Wawro and our policy analyst Ann Baddour at today’s Houston City Council meeting. They will both testify and can provide reasons why this draft ordinance does not go far enough. Also have fact sheets and latest data on payday/auto title lending in Houston. – Janis

  4. Ross says:

    The intent may be good, but cities should not be able to regulate business any further than location and life safety. Regulation of business practices should be limited to the State, and uniform.

  5. Pingback: The cities versus the payday lenders – Off the Kuff

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