Lutherans in Minnesota

Economic crises increase work load for LSS financial services

There is no shortage of indicators of the harshness of the American economy
currently. But in human terms, Lutheran Social Service of Minnesota (LSS) can
lay out some facts and figures that are chilling.

“The LSS financial counseling services doubled to 5,000 cases in 2005,” said
Darryl Dahlheimer, the program director for Lutheran Social Service’s
Financial Counseling. “By 2008 it had more than doubled again, with well over
10,000 cases.”

What causes such gigantic leaps upward in need? As expected, the reasons
are legion. But some are traced back to public policy changes.
For instance, there has been a long-standing assumption that all
professionals involved in financial industries would abide by the Fiduciary
Duty of Care, sort of a best practices code for those involved in financial
work. For example, it was assumed that, if an insurance agent wrote a wildly
inappropriate policy for some- one who is in desparate need or is vulnerable,
they were in violation of this code of ethics. This Fiduciary Duty of Care
provided some protections against bad actors and a predatory market.

In the 1990s the mortgage brokers had themselves written out of the
Fiduciary Duty of Care. Until 2006, these brokers could write any mortgage
they wanted and then simply claim no responsibility.

In 2006, LSS, in cooperation with Attorney General Lori Swanson’s office,
worked to change this loophole, making mortgage brokers again responsible
for their behavior.

“One of the reasons I am so proud of LSS is our participation in advocacy,”
explained Dahlheimer. “LSS was a strong player in efforts to document
fraudulent mortgage practices. We stand up for consumer protections at the

In addition to advocacy, LSS provides credit counseling for those people who
have gotten themselves into a level of debt from which they will never
extricate themselves — they are making payment only on their interest, never

Until the 1970s usury laws, based on the Judeo-Christian heritage, were in
place in all states. These restrictions were overturned by the courts,
according to Dahlheimer, because of free commerce concerns. Unethical
behaviors quickly became evident.

“Sometimes the best we can do is make sure people don’t fall prey to ‘rescue
scams,’” Dahl- heimer explained. “We give people a realistic conversation
about what is possible.”

Counselors initiate conversations about a debt management plan. LSS credit
counselers can then begin working with all creditors about reworking the
interest rates. Payment takes place through LSS, ensuring that all payments
take place.

“Good people end up in a bad situation with a single mistake,” Dahlheimer
said. “Universal default means a late payment to one credit company can
cause default on all, pushing interest rates up as high as 35 percent.”

“Martha” in Hector, Minnesota, was informed of the program by a local
banker. Through the LSS program, the family discontinued the use of credit
cards, and payed off their debt. “I hope I can encourage others in this
situation who need this service [to participate]. The people are very respectful
and considerate.”

Dahlheimer encourages action before crisis. “LSS’ reputation for trust is well
earned, both with Lutherans and non-Lutherans,” he said. For information or
to contact a counselor, call 888/577-2227.