TACOMA, Wash.- The practice of franchised payday loans extended through a CUSO run by Harborstone Credit Union here and a Salt Lake City firm, Capital Finance, is gaining new support this month with four CUs – three in Oregon and at least one in Utah debuting a turnkey package. Harborstone officials said the CU on Payday program, which they claim is growing in part because of heightened national concern over the payday problem, is poised to expand in more Western states including California, Arizona as well as Washington State. Under the low-rate program which started in 2001 at the $565 million Harborstone, all of the underwriting and loan processing is handled through the CUSO administered by Capital, which also runs a Salt Lake City phone center for applications. Officials at Harborstone admit CU on Payday is not meant to be a money maker, but they insist the program does provide a mechanism to add new members and offers the "alternative to store-front payday lenders" amidst growing pressure for CUs to step into the payday vacuum. The three Oregon CUs to start offering "CU on Payday," said Harborstone, include Rogue FCU of Medord, Chetco FCU of Harbor and Oregon Community CU of Eugene. In Utah, Mountain America FCU of West Jordan said it plans to start CU on Payday within two weeks though actual implementation may not take place until some time in January. Another Utah CU, the $90 million USU Community of Logan, said it has been signed up with Harborstone five months but it is still working on loan documentation. "It is going to happen with us but we first have to satisfy the attorneys," explained Dennis Child, president/CEO of the 16,000-member USU adding the service is needed in his college town which also has a sizable Latino community. "We feel we need to reach the unbanked." Rogue in Medford said it is pleased with the service which began with 20 loans in October and now has a total of 52. In a press release, Rogue noted that both "members and nonmembers can apply for short-term loans at participating branches, over the phone, by fax or online" and the service "offers a fast, easy and confidential way for you to obtain a payday advance in a known and comfortable environment." Like other CUs, Rogue notes in fine print that the program is provided by CU on Payday, but "Rogue Federal Credit Union is not the lender." All of the participating CUs also state that the loan rate varies depending on size and terms but are in the 9-12% range for every $100 borrowed by members and $15 for non-members. Harborstone said it plans to drop the rate to 10% in January. Chetco said it would be charging 12% noting that the APR on a $700 loan for 30 days is $84 "for an annual fee of 146%' which is still well below the 300-500 charged by the payday shops. Rogue in its promotion also noted that "there are no credit checks performed and CU on Payday's fees are lower than other traditional payday lenders in the area." In some CUs, CU on Payday kiosks are situated in individual branches, said Harborstone officials. Edward Seidenberg, senior vice president of Harborstone and president of the CU on Payday, forecast more CUs would be signing up next year in Washington State and in Arizona as well where the CUSO has been endorsed by the Arizona Credit Union System. The Web site for the program is www.cuonpayday.com. -

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