Financial Literacy Classes Aim to Combat Credit Scams

Apr 20, 2012

Michigan may be officially out of the Great Recession, but its aftermath continues to affect millions of people here and across the country.  Today, the Federal Reserve Bank of Chicago kicks off its 10th annual “Money Smart Week” in mid-Michigan.  It’s a public education program offering nearly two dozen financial literacy classes in the city of Lansing. 

Many Americans struggle with credit problems.  Using it wisely and repairing it when it gets damaged is just one focus of the week’s activities.

Eric Schertzing has seen a lot of empty houses in his time...about 100 just this week.  He’s the Ingham County Treasurer and chair of the county Land Bank, a public entity that buys, renovates and re-sells tax foreclosed properties.  It’s one of a handful of regional agencies working in tandem with the Federal Reserve’s “Money Smart Week” initiative.

This is the program’s 10th year in Michigan, and organizers today face a financial landscape barely imagined just five years ago.  Schertzing says the recent recession hurt a lot of people’s credit scores.  

“Even the brilliant people that thought they knew how to make money that handed us the housing crisis that we’re just starting to get over in this country; the most brilliant, highest paid minds did us in,” says Schertzing.  “So how is the average person really going to stand up against that?”

Schertzing says it begins with your own financial awareness.  He’s seen some signs that may suggest people are adjusting to a “new normal.”  Schertzing says lately, more people are considering home ownership.

“When we talk to local realtors, when we look at the sales activity at the land bank, we’re certainly seeing more buyers,” he notes.  “But whether that’s an indication that the credit markets have improved or become more workable for them, we don’t know.”

Senior research associate Martin Lavelle with the Detroit branch of the Federal Reserve Bank of Chicago says when it comes to terms and standards for residential mortgages, the credit markets are still pretty tight. But buying a car seems to be a little easier.  Lavelle says lenders are casting a bigger net to catch more customers.

“Some of our auto dealership contacts and auto industry contacts within our district are indicating that the customer base is widening, that financing is being offered to a wider range of consumers with credit scores over the last couple years,” says Lavelle.

But the economy has also fostered a climate ripe for predatory lending. 

“For many years, we took pride that we didn’t have any of those places along our corridors, and all of a sudden, they’ve just popped up all over,” says Peggy Vaughn-Payne. 

Vaughn-Payne is the executive director of the Northwest Initiative, a non-profit community development agency in Lansing.  Each Thursday, volunteers coordinate a free food distribution.  Today, they’re unloading a cache of bread, milk and fruit from a flatbed pickup.

Payne says about a third of northwest Lansing’s residents fall below the federal poverty level.  It’s a cyclical phenomenon that permeates through generations.

Outreach assistant Johnathon Bailey says most of his clients don’t have solid money management skills...and that makes them vulnerable to manipulation.

“For example, we just finished a free tax service, and they’ve come in from filing their taxes where they were going to get a $300 or $400 return, and were paying $300 or $400 to do it,” Bailey says.  “Those who don’t have and are in need are usually willing to succumb to the predatory type of practices that some of these businesses out there use in order to sustain their life.”

The Northwest Initiative wants its clients to get the right message about money.  In conjunction with Money Smart Week, staff members will sponsor a workshop on financial literacy and credit repair next Tuesday.

Financial experts and consumer advocates say people who know what questions to ask about their own financial health are better able to find products and services that are right for them.  Lansing’s Money Smart Week workshops are meant to provide a forum for those questions and answers.  The workshops begin Saturday and run through the 28th.