LoanMe, a high-interest loan company in Anaheim, has stopped making personal loans in Wisconsin after a Times report that established links between the company and a troubled legal business that was not licensed to do so. make loans.
LoanMe no longer advertises loans to Wisconsin residents on its website, and customer service representatives have confirmed that the company recently stopped offering loans there.
Heather MacKinnon, chief legal counsel for the state’s Department of Financial Institutions, confirmed that LoanMe no longer offers loans in Wisconsin, but said regulators were not involved.
“It was a business decision of their own, not a requirement imposed on the company,” she said.
Jonathan Williams, an executive and owner of LoanMe, did not respond to calls for comment.
The company, which still lends in California and eight other states, specializes in personal loans that typically charge interest rates above 100%. Last year, the company made nearly 32,000 loans in California, the vast majority with triple-digit APRs.
The Times ran an article in September that examined the financial and operational links with J. Paul Reddam, a lending industry veteran who founded LoanMe along with mortgage lender DiTech Funding and personal lender CashCall Inc.
LoanMe, however, was able to secure a Wisconsin loan license a few months after its application in 2014 – shortly after Reddam sold the company to three close associates. Reddam has also loaned money to LoanMe and its new owners and owns another company, Ralis Services, which provides key business services to LoanMe.
Several former CashCall employees, some of whom later switched to LoanMe, said officials told them LoanMe was created specifically because of CashCall’s problems. And consumer groups had questioned whether Reddam still controlled LoanMe and whether the sale was a legal fiction.
MacKinnon previously told The Times that the department knew LoanMe was run by former CashCall executives, but the department had no reason to deny the company a loan license.
Reddam declined to comment on his links to LoanMe.
Peter Skopec, director of the Wisconsin Public Interest Research Group, applauded LoanMe’s decision to stop lending in the state.
“I think this is great news for the people of Wisconsin. One less predatory lender is a good thing, ”said Skopek, who had called on regulators to examine Reddam’s ties to LoanMe.
The withdrawal in Wisconsin comes among other issues for LoanMe and CashCall.
Reddam and CashCall are still the subject of an ongoing dispute with the Consumer Financial Protection Bureau. The office secured a judgment against the company in January, but appealed, saying a federal judge erred in not forcing the company to pay back hundreds of millions of dollars to customers for loans that violated state ceiling rates.
In July, the California Department of Business Oversight accused LoanMe of using unlicensed brokers. CashCall, meanwhile, got outside the consumer loan sector and suffered a recent legal setback.
Despite a California law that places no limit on the interest rates lenders can charge on loans of $ 2,500 and over, the California Supreme Court ruled in August that the rates on these loans can be so high that they are “inadmissible” and therefore illegal. The ruling came in a long-running case against CashCall brought by borrowers paying more than 90% interest.
The move could shake up the state’s high-cost lending industry – an industry in which Reddam and CashCall were pioneers.
Before Reddam founded CashCall in 2003, large, high-interest loans were relatively rare in California, and state regulators didn’t even track loans with rates above 100%. Today, loans at triple-digit interest rates are big business.
Last year, state-approved lenders granted $ 1.1 billion in loans at triple-digit rates. The rapid growth of the market has sparked new interest among consumer advocates and lawmakers to change the state’s loan code.
State legislature bills that would have set an interest rate cap on now unregulated loans have failed in each of the past two years, but lawmakers are likely to raise the issue again by 2019. Consumer advocates also say they could push for a electoral measure that would set a tariff ceiling.
Times writer Andrew Khouri contributed to this report.
Follow me: @jrkoren