John Drake: “Predatory lending practices have become a major concern in areas surrounding military installations. This is of…”

“Predatory lending practices have become a major concern in areas surrounding military installations. This is of particular concern in the Second District of Virginia, with a very high number of payday lenders. Interest rates on these loans have been recorded as high as 780 percent. Many young servicemembers attempt to climb out of debt by adding additional debt on top of debt, which quickly becomes unmanageable. Lenders add to this by encouraging extensions of the loan through refinancing. This type of predatory lending leads to multiple issues, chief among them the loss of a security clearance. A military member lost in uncontrollable debt could be a security risk, and clearances are often revoked. This represents a national security issue. Additionally, this represents a morale issue. Individuals have a tendency to concentrate less on their jobs when they are mired in uncontrollable debt. When servicemembers are concentrating less on their mission and more on their debt, it affects readiness. To safeguard servicemembers, the conference report prohibits creditors from rolling over loan balances, charging annual percentage rates that are higher than 36 percent, including fees, and it prohibits the borrower from prepaying the loan or charging the borrower a fee for prepayment. This is a fairness issue. It has been a grave concern to our military commanders.”