- Associated Press - Wednesday, March 2, 2016

JACKSON, Miss. (AP) - Some Mississippi lenders could have been put out of business under federal rules expected in coming months, but lawmakers are reconfiguring the state’s laws to allow small loan companies, payday lenders and title pawn lenders to continue business.

Senators voted 38-11 Wednesday to approve Senate Bill 2409, which would change rules for payday and title loan lenders. The measure moves to the House for more work. Senators Wednesday also gave final passage to House Bill 1511, which rewrites the small loan laws, sending it to Gov. Phil Bryant to sign or veto.

While consumer advocates aren’t fighting the small loan bill, they say the Senate bill carries unfairly high interest and allows lenders to charge 10 percent late fees and other default fees.

“This bill keeps borrowers in a debt trap and it keeps Mississippi families struggling to deal with the consequences of an unscrupulous industry that lacks fairness and equity,” Charles Lee, consumer protection director for the Mississippi Center for Justice, said in a statement.

The federal Consumer Financial Protection Board is expected to announce new rules that would bar payday lenders and title lenders from continuing to operate as they currently do, barring the use of auto titles or checks as collateral and mandating extended repayment periods.

“What we’re offering here today is a much better product,” said Senate Banking and Finance Committee Chairwoman Rita Parks, R-Corinth.

For example, on traditional payday loans under $500, consumers will get four to six months to pay off a loan instead of the typical two weeks. Interest rates could be up to 25 percent a month, or more than 300 percent a year. For amounts ranging from $500 to $2,500, borrowers would get six to 12 months to pay off loans at the same interest rate.

Lee said he’d asked sponsors to cut the interest rate to 20 percent per month and remove origination and late fees.

Parks and other supporters argue the lenders provide a needed service to borrowers who can’t qualify for lower interest rates charged by small loan companies, credit card companies or banks.

“Without the access, many of these people would have to turn to unregulated lending, predatory lending if you will,” Parks said.

Some consumer advocates have raised questions about the $2,500 lending cap, noting it pushes into traditional territory of small loan companies but charges much higher fees. Parks argued few people would borrow that much. Sen. David Jordan, D-Greenwood, said the total price of credit is unconscionable.

“The only difference between this bill and Jesse James is you just need a horse,” Jordan said.

For the small loan companies, lenders could make loans of up to $4,000 at a 59 percent interest rate. Because closing fees and early interest repayment are abolished, the effective interest rate will stay the same, even though the current face value is 36 percent.

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Online: Senate Bill 2409: http://bit.ly/1T99Tcf

House Bill 1511: http://bit.ly/1T9aaf2

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Follow Jeff Amy at: http://twitter.com/jeffamy. Read his work at http://bigstory.ap.org/author/jeff-amy

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This story has been corrected to show that Sen. Jordan’s first name is David, not Robert.

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