Nursing home payday lenders scrutinized
More than 90 nursing homes in Missouri regularly make payday loans to their employees at high interest rates, a BBB study released Monday shows.
The state allows lenders to charge up to a 1,950 percent annual percentage rate (APR) on two-week payday loans, the highest allowed among the 43 states that have either banned or set APR caps on payday loans, according to a study from the St. Louis Better Business Bureau. The other seven states have no APR caps.
Officials at the nursing homes told the BBB that payday loans were made to employees and that the loan amount plus interest and fees were deducted from the employees’ next paychecks.
Two allied groups of 62 nursing homes hold payday loan licenses.
Principals in the two groups are James Lincoln (president of Health Systems and N&R) and Judy Lincoln, Sikeston; Mathias P. Dasal, Eldon; Gary Crane, Rogers, Ark.; and Timothy Drake, Pascagoula, Miss.
Don Bedell, of Sikeston, is president and director of Rapid Payday Loans, which has licenses at his Health Facilities Management homes.
In 2006, then-Gov. Matt Blunt said nursing homes would no longer be allowed to make payday loans to their employees, and the Department of Health and Senior Services has been in negotiations with the nursing homes since then.
In April, the department and nursing home owners agreed to allow the parent company of nursing home subsidiaries to hold a payday loan license and to conduct payday loan operations at the nursing homes that it owns, according to the BBB. The agreement changes very little about the system, the BBB said.
The study also found that Missouri’s lax laws have attracted several out-of-state lenders, including 34 online payday loan companies, and that the average cost of payday loans to borrowers with five or more loans in Missouri is $317 million, second only to California.
“Payday loans are very, very expensive for what you get,” said Michael Ferry, executive director of Gateway Legal Services, which provides legal aid for the poor in Missouri.
The BBB said it sent copies of the study to all Missouri legislators.