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Virginia CUs in forefront of payday loan alternatives
RICHMOND, Va. (1/15/08)--Several Virginia credit unions are in the forefront in offering payday loan alternatives to the state’s consumers. Virginia legislators have filed more than a dozen bills to either repeal the 2002 law that allowed payday lending in Virginia, reform it, or place a cap on the annual interest rate on the loans at 36% ( Jan. 14). Langley FCU, a $1.2 billion asset, Newport News, Va.-based institution, is providing low-cost cash advances to members, mirroring similar advances offered by nonprofit organizations and churches in several states to help alleviate the burden of high debt inflicted by the payday loan industry. One of the first credit unions to offer payday loan alternatives in the state, Langley has seen its cash advances surge to 600 to 800 a month now, from 100 to 200 a month in 2004. Queen of Peace Arlington FCU, a $1.3 million asset, Arlington-based credit union, doesn’t have the financial capability--nor do many alternative lenders--to advertise its services as frequently and widely as payday lenders do, said Daniel Morrisey, manager for Queen of Peace. The Jubilee Assistance Fund was created by two Richmond-area United Methodist churches who partnered with Virginia United Methodist CU, a $21.3 million asset, Glen Allen-based institution. The churches raise money and then put it into a savings account at the credit union. The account can be used as collateral to back small loans to church members. The Jubilee Assistance Fund also requires borrowers to obtain financial counseling from the credit union. Jubilee organizers hope that some day the program can serve as a model for churches nationwide. The Virginia Credit Union League has not taken a stance on the payday lending issue and has no plans to do so because the dispute over the issue doesn’t affect credit unions, Lewis Wood, league spokesman, told The Washington Times.
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