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GEORGIA LAWMAKERS EXAMINE TITLE LOANS

By Ann Hardie

The Atlanta Journal-Constitution

RISMEDIA, August 1 (KRT) Sharon Jones of Lithonia, Ga., was difficult to hear Thursday, but her words spoke loudly as she described her dealings with a title pawn company.

In testimony before state lawmakers, the soft-spoken Jones detailed how she paid $1,365 on a $500 title loan --- and still owed as much as she borrowed two years ago.

"I've already paid for the loan twice," said Jones, 54, adding that her monthly government disability check provides only enough to cover the high interest on the debt.

Jones' story clearly was moving to several senators considering major changes to an industry that serves people with credit problems, but at annual interest rates as high as 300 percent.

"That is just uncalled-for," state Sen. Bill Hamrick (R-Carrollton) said following testimony before the Banking and Financial Institutions Committee. The committee he chairs is considering legislation following an Atlanta Journal-Constitution series earlier this year that examined the title pawn industry and other aspects of lending in Georgia.

At the hearing, Hamrick called for state oversight of the title pawn industry. He said Jones' story, which he characterized as "a clear case of abuse," may point to the need to limit how long consumers can be expected to pay triple-digit interest before their money is applied to the principal.

"I sense that we're finding some common ground," Hamrick said, noting that title pawn operators and consumer advocates alike have expressed some agreement in this area and on state oversight.

Where the two camps still are at odds is on how high interest rates on loans backed by car titles should be allowed to be. "I think that is an area where we have to keep digging," Hamrick said.

A draft bill he circulated to committee members for consideration would place regulation of title pawn operators under the state banking department and cut the interest allowed on a $500 loan, for example, almost in half.

At Thursday's hearing, title pawn operators again made their case that reducing the interest rates --- currently capped at 25 percent per month for the first three months and 12.5 percent each month thereafter --- would threaten their industry.

"Please don't put us out of business," John Robinson, an executive with Savannah-based TitleMax, implored Sen. Steen Miles (D-Decatur). Miles has introduced legislation that would lower the interest rate to 60 percent a year, the rate allowed on most consumer loans in Georgia.

Her bill also would require title pawn operators to refund to borrowers any money left over if their cars were repossessed and sold. Georgia is one of the few states that allow title lenders to keep all the proceeds after the debt has been paid off.

Similar measures have been introduced in the House, which held a hearing on the issue earlier this month in Gainesville.

Sharon Jones, the title pawn borrower, said Thursday she would like to see the industry reformed, but not shut down.

In May 2003, she borrowed $500 from a TitleMax store against the title to her 1995 Chevrolet Beretta. Jones said she needed the money to cover the tag and insurance on the car. "It was a bad decision on my part," Jones said. "I would never do it again."

Copyright 2005, The Atlanta Journal-Constitution