Oak Brook Financial

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If annual interest rates as high as 500 percent don't deter you from a payday loan, consider this: You could end up in court.

WW has learned that Oak Brook Financial, one of Oregon's largest payday lenders, filed about 4,500 small-claims cases since 2003 in Multnomah County alone. That works out to an average of more than three cases filed each day of the year. Advance America, another large Oregon payday loan company, has filed only seven small-claims cases in Multnomah County since 2003.

On July 7, the president of Oak Brook, Steve Hanson, wrote an op-ed in The Oregonian that cites a 2004 Oregon Department of Consumer and Business Services study showing only 3.5 percent of payday loans are written off for default. The purported conclusion: This is a consumer-friendly industry where people borrow responsibly at reasonable rates.

But legal records suggest a different conclusion. Writing off a loan for default is the last resort for lenders, which means they have already exhausted every method of payment collection. One of those methods is filing a small-claims case, which costs the filer $51.50 for claims up to $1,500 and $98.50 for higher claims up to $5,000. After 30 days trying to collect a debt, Oak Brook files a case, Hanson says. It also files small-claims cases for bounced checks. Hanson says defendants lose about two-thirds of the time, either by court judgment or default if they don't respond.

"A claim is just one of the methods we use to collect a debt, like a telephone call," Hanson says. "You can't reach any conclusion based on the number of small-claims cases."

But Angela Martin, director of the Economic Fairness Coalition for the labor-backed group Our Oregon, says Oak Brook's record of litigation shows the payday loan industry is a "system that sets up people to fail." Apparently at the rate of more than three a day.

07.18.2006 at 09:00 Reply

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Oak Brook FinancialI love how self-righteous moralists bemoan payday loans and yet are perfectly happy to have their schools and economic development paid for with lottery dollars. The lottery now generates 1/12 of Oregon's 12 billion dollar budget. Who are the majority of people playing the lottery in smokey bars across the state??? People who can't afford it. So while the state is sucking billions of dollars out of poor people through the lottery they pass a law putting payday lenders out of business because these lenders are preying are poor people? You've got to be kidding me. —Christopher

07.19.2006 at 09:00 Reply

Oak Brook FinancialIt is even worse in the business of mortgage brokerage. Poor people are encouraged to sign a promissory note to repay an amount of money that far exceeds the rental-justified valuation of residential property. The county tax assessor, and his/her constituency (along with the bond issuance community), will just giddily view the higher property valuation as if it somehow represents wealth (rather than debt) and ignore the horrible and near-lifetime burden of debt on the gulible person that signs on the dotted line.Any law to deal with Payday loans that is drafted neutrally, that is without the precise word "payday", would necessarily also include loans for overpriced homes. The isolation on the interest rate itself is not sufficient to exclude such broader application of a general law dealing with the relationship between lender and borrower.I could also note car loans, where I would argue that the purchase money security interest of the lender should be confined exclusively to recovery of the car itself. That is, if upon repossession a car sells for 5 grand, but a the loan documents show a debt of 10 grand, that the lender should be confined to receiving the 5 grand from the sale of the car and to NOT collect on the 10 grand. Otherwise the loan for the purpose of buying a car becomes instead just an excuse to obtain a promissory note, one that is hardly indistinguishable from a payday loan.Imagine that the IRS offsets your Social Security payments, administratively and without even a court decision, to cover a private promissory note you had once signed early in life to obtain a significantly overpriced residence.—Ron Ledbury

11.15.2006 at 09:00 Reply

Leanna

Ok lets get a little prespective here. No one in the goverment or in these watch dog groups have ever not had enough money to cover there medication or pay their bills. They dont understand what it is like working for a payday loan company where I can bring a little relief and happiness to a elderly person who couldnt afford to get their medication for the month with out my help or for the father who because of payday loans no longer has to worry how he will get his power turn back on in the winter. For them this service is worth the $16 to $20 on the hundered borrowed for 14 days. Because lets be realistic thats what it really is, it is a dollar amount to borrow a dollar amount of course. $ 16 to $20 for 100 dollars for 14 days( less then an overdraft fee)and if the check is returned we work with the customer.

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Oak Brook Financial