Source: Fathers Building Futures Press ReleaseBreaking Vicious Cycle of Predatory Lending for the Most at Risk
Albuquerque, NM | February 20, 2017 –
In the true spirit of collaboration and to aid in disrupting the vicious cycle of predatory lending, the To Stop a Predator Loan Fund was created as a pilot in establishing a way for Fathers Building Futures, a local nonprofit, to assist formerly incarcerated parents with intervention strategies for debt repayment paired with rigorous financial education. These at-risk clients would typically not have access to secured credit that could aid them with paying off previously acquired consumer debt.
Through a grant funded by Wells Fargo and in partnership with WESST, the pilot program is for graduates or current participants of Fathers Building Futures, who are deemed at-risk and or underbanked and possess previously acquired debt that consists of payday loans, medical debt, utility debt, etc. According to Emet Ma’ayan, co-founder and interim executive director of Fathers Building Futures, “One of the poorest segments of our population are the families who cycle through incarceration,” said Ma’ayan. The first of the two recipients of this program are both fathers who sought out a Pay Day Loan in order to buy a car for a job and the other to pay for first/last month rent for his apartment. Both were living at half-way houses and required to come up with fast cash to pay for these items in order to get on their feet.
Participants are screened; provided very detailed financial education which includes spending awareness, budgeting, establishing a bank account and good banking habits, increased success living within a budget, and debt payment planning; and are paired with financial mentors with the goal of clients being empowered to negotiate a payoff balance. Selected recipients do this through a peer lending model in which they will pay back into with a small interest rate in order to fund the loan so more clients can access the help in breaking the cycle of predatory lending. “They never would have gotten out otherwise. Participation in this program moved clients from paying an annual interest rate of 155% and not making a dent in the principle amount. Now with this fund, clients will pay off the debt within 10 months and all that’s required is an additional 10% contribution of the total loan amount to be invested back into the fund. Fathers Building Futures will have a sustainable model with funds returned for the next participation cohort,” says, Ma’ayan “We’ve been partnering with Fathers Building Futures since its inception,” said Wells Fargo Regional President Lisa Riley, who added that Wells Fargo welcomes the opportunity to provide mentorship and banking support to the clients of the organization so they can get back on their feet, open bank accounts, gain financial knowledge, and reduce their debt-to-income ratio in order to start saving for homes. “We see this as the next step in the equation to end poverty.” “We applaud Wells Fargo for supporting this unique program,” said Agnes Noonan, President of WESST. Too many New Mexicans are drowning in high interest debt that severely constrain economic opportunity.”
About Fathers Building Futures – Fathers Building Futures is a social enterprise with a mission to ensure parents and families experiencing barriers from incarceration have the best opportunities for stability — emotionally, socially and financially. Fathers are trained in a business of their choice: Auto Detailing, Mobile Power Washing and Custom Woodworking. These services are available to all eligible persons regardless of race, gender, age, disability, or religion. Fathers Building Futures started as a program of PB&J Family Services, a 501(c)3 serving New Mexico as the only child abuse and neglect, prevention and treatment program with the unique focus of education and support for the whole family. For more information, visit www.FathersBuildingFutures.org.
About Wells Fargo – Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,600 locations, 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 42 countries and territories to support customers who conduct business in the global economy. With approximately 269,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 27 on Fortune’s 2016 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.