Three weeks ago, Jamela Lott was homeless.
But today, Lott and her three young sons are living in a rented house in West Akron, thanks to the kindness of strangers because of Lott’s problems with an auto-title loan company.
Last August, the single mother of five (two children are grown), was falling behind on rent and borrowed $900 from Loan Max in Akron. She used her 2001 Oldsmobile Alero as collateral for the loan, with a lien placed on the title.
Lott made some payments, but eventually was unable to keep up. Lott said she paid $938 on the original $900 loan, but was told she owed more than $1,600 or had to face repossession of her car.
She drives to work, takes children to day care and school, and drives to night school while working on an associate’s degree.
In January, she and her sons became homeless and entered the program of Family Promise of Summit County, which provides temporary shelter to homeless families and offers assistance.
Family Promise reached out to me and said Lott was willing to share her story because of what officials say is a problem with auto-title loans causing hardships for people.
A previous column about Lott is online at www.ohio.com/betty. I wrote about consumer advocates’ belief that auto-title loans are more troublesome than payday loans. If payments are missed, the car can be repossessed and cars often are the only asset some people have.
Consumer advocates say auto-title lending doesn’t assess the borrower’s ability to pay back the loan. They believe state law loopholes allow auto-title lending in Ohio.
Legislation passed in 2008 limited percentage rates and terms that payday lenders could offer. But auto-title lenders say they are not payday lenders and operate under two other state laws — the Small Loan Act and Mortgage Loan Act.
Consumer advocates say they have been unable to convince any legislators to change the laws.
There was outrage expressed after Lott’s story was shared.
Jeff Wilhite, director of Family Promise of Summit County, said his agency has become aware of other victims of auto-title loan practices.
Wilhite said the agency wants to gather stories to share with legislators in an attempt to include auto-title lending under payday lending laws.
Letters can be sent to Family Promise, 77 W. Miller Ave., Akron, OH 44301 or by email to email@example.com.
“I’ll use some of my public service experience and connections to try to expedite that if we can,” said Wilhite, who previously worked for the city of Akron and the Akron Metropolitan Housing Authority.
Lott received offers of help from strangers to get her out of the loan problem. A donor who asked to remain anonymous offered to pay the entire $1,600 amount, plus $50 for gas.
Lott’s Family Promise case worker, Erica Ward, and I took the money to LoanMax, where workers accepted the payment and gave Ward a receipt, marking her debt as paid.
That same day, LoanMax officials said they did not want the cash.
Pat Crowley got involved as a spokesperson for the Ohio Consumer Lenders Association, an industry trade group with payday and auto-title lender members.
Crowley said LoanMax intended to write off Lott’s loan, and said Lott had not discussed anything with them since she had an attorney via Legal Aid.
In the end, attorney Harry McKeen settled with the LoanMax officials to write off Lott’s debt and return the donor’s money.
LoanMax originally wanted Lott to sign a document stating she would not take action against them or discuss the matter.
Lott was uncomfortable signing such a request and eventually the matter was dropped. McKeen was told by LoanMax there would be no negative effect on Lott’s credit (LoanMax does not report on customers to credit bureaus) and there would be no negative income tax implications for the loan payoff.
Meanwhile, Beacon Journal readers who learned of Lott’s problems sent in $1,160 in donations. They were used to help Lott accumulate a security deposit and first month’s rent for her house. The original donor contributed $325 to complete the security deposit/first month’s rent and paid $175 to get electricity turned on.
I returned the rest of the money to the donor. “I’m very excited there were so many people in the community who were willing to help her,” the donor told me. “I’m glad she’s on her way. Unfortunately, I can’t help everyone, but hopefully someday, she can pass it on.”
Glad to be home
Lott said she has been touched by the generosity of strangers.
“I’ve been crying all the time. I know that God sends people,” said Lott of her three-bedroom house she moved into last week. She has no furniture and is working on buying items and getting donations. Her kitchen has no appliances but the landlord is looking into assistance on that. She bought a crock pot this week and said she cooked spaghetti and kept the leftovers in her cold car.
“It’s beautiful to be able to come home. Thanks for helping us get our own little warm place,” she said.
Unfortunately, I was not able to return phone calls to everyone who left messages about this story.
Community Legal Aid officials said they are willing to help people who cannot afford an attorney and are having problems with auto-title lending. People may call 800-998-9454. Eligible consumers will be referred to an attorney.
A Legal Aid official said the agency wants to raise the issue with legislators about the “detrimental effect of auto title loan abuses on Ohio consumers.”
McKeen said he is working for Norma Poalson, 68, of Akron, who said she took out a $600 loan in April for a now-deceased friend who needed a chair lift. When Poalson fell behind on her payments, LoanMax rolled over her loan and gave her another $600. Poalson said she has paid about $2,200 on the loan and owes another $1,690 or faces repossession.
Another consumer, Rasheeda Jackson, said she took out a $600 loan in August and fell behind and her car was repossessed in January. To get her car back, Jackson had to pay $890, including $600 to the repossession company, which charged her storage fees and tried to ask for money to get things out of her car if she didn’t pay the full fees.
Another reader told me a story that a repossession company asked for $45 to get his belongings out of a repossessed car. He did not have the money and lost his belongings.
LoanMax, via Crowley, said they do not allow the repossession company to charge clients to collect personal belongings. Crowley said it was the first time they had heard of such policies and they immediately addressed it with the auction company. If such charges are imposed, Crowley said they would terminate their contract with the company.
Crowley said because of privacy issues, LoanMax could not comment about other specific accounts. They issued this statement:
“Loan Max consistently goes beyond what state and federal law require by providing additional disclosures to ensure their clients fully understand the terms of their service agreement. If a customer falls behind, Loan Max is always willing to work with our customers by providing additional time to pay and alternative payment plans. Although it is uncommon, if a vehicle is repossessed it is because the customer has ignored repeated attempts by the company to contact them and make a payment arrangement. Loan Max uses reputable recovery companies (typically the same companies used by other financial institutions such as credit unions and auto finance companies) but they cannot control the pricing and policies of these companies.”