HOPE Submits Opinions Opposing OCC Real Lender
September third, 2020
2, 2020 september
Acting Comptroller associated with the Currency Brian Brooks 400 7th St SW Washington, DC 20219
Re: feedback on Proposal вЂњNational Banks and Federal Savings Associations as LendersвЂќ Docket ID: OCC-2020-0026 RIN 1557-AE97
Please find underneath the remarks for the Hope Enterprise Corporation / Hope Credit Union/Hope Policy Institute (HOPE) in reaction into the OCC Notice of Proposed Rulemaking, National Banks and Federal Savings Associations as Lenders, OCC-2020-0026, RIN-1557-AE97.
HOPE is a credit union, community development standard bank and policy institute providing you with affordable monetary solutions; leverages private, public and philanthropic resources; and partcipates in policy analysis to satisfy its objective of strengthening communities, building assets, and increasing life in economically troubled areas throughout Alabama, Arkansas, Louisiana, Mississippi and Tennessee. Over the past 25 years, HOPE has produced over $2.5 billion in funding which has benefited a lot more than 1.5 million people.
Because of the experiences of your users, described herein, our company is worried that the OCC proposition will enhance, instead than alleviate, the burdens of high-cost financing inside our area. In most five Deep South states, high-cost loan providers, such as for example payday and vehicle name loan providers, already are saturating our communities. As an example, in 2017 in Tennessee, there have been over 1,200 loan that is payday, a lot more than McDonaldвЂ™s and Walmart places combined. 1 when it comes to costs drained by payday and automobile name loan providers, Mississippi, Alabama, Louisiana, and Tennessee have been in the most truly effective ten states, and lenders that are high-cost a lot more than $1.6 billion each year from low-income borrowers within these four states. 2
These loans have now been specially harmful in the period of COVID-19, magnifying the crisis that is financial. HOPE people paid over $54,000 to rent-a-bank loan providers within the last few ninety days alone. This amount that is staggering the hefty burden of our usersвЂ™ relationship with predatory loan providers, especially at the same time when anyone are straining to help make ends talk with reduced costs and requiring monetary cushions to remain house to keep safe. This really is specially real for lower-income households into the Deep Southern, where in states like Mississippi, Alabama, Tennessee, and Louisiana over fifty percent of households making $35,000 have observed income loss because the pandemic. 3 For Ebony households, that are disproportionately targeted by predatory loan providers, a lot more than 1 in 2 in all of our Deep South states have similarly skilled lack of work income. We now have additionally seen just how portions of peopleвЂ™s COVID relief that is financial such as for example stimulus repayments, happens to be reduced by portions of these funds likely to payday lenders in the place of fundamental requirements.
Currently, there is certainly a minumum of one high-cost lender in every state within the Deep Southern region making these loans through the bank partnership arrangement. See Appendix. The OCC proposition boosts the dangers that more high-cost lenders will extract extra costs, along with the assistance that is willing of https://1hrtitleloans.com/payday-loans-vt/ banks. We observe that up to now, these plans include just FDIC-supervised banking institutions. But, the OCC proposition may start the entranceway for nationwide banking institutions to enter partnerships that are such well.
The Proposal Exacerbates the Harms Experienced by HOPEвЂ™s Users
HOPEвЂ™s concerns in regards to the harms among these loans aren’t hypothetical. HOPE users have now been caught by loans facilitated by rent-a-bank partnerships, placing their success that is economic in and therefore irritating our objective to construct wide range among low-income communities and communities of color into the Deep South. While rent-a-bank loans are hailed as available credit when it comes to economically susceptible, we understand the alternative to be real. Folks are maybe not being harmed by the lack of the loans supported by the OCC proposition; instead, it’s the existence of extra high-loan expense loans that is the issue. If promulgated by this guideline, the expansion of the high-cost loan services and products will further exacerbate the economic stress of low-income borrowers when you look at the Deep South.
During the period of simply the previous 90 days, 67 HOPE users had one or more loan from either Elastic, increase, OppLoans, EasyPay Personify, or NetCredit through the rent-a-bank arrangement. It is a number that is concerning. People stuck when you look at the rent-a-bank loans are individuals on fixed incomes getting security that is social impairment advantages, veterans, pupils, instructors, and employees at hospitals, take out places, as well as cash advance stores.
From our usersвЂ™ experiences, at the very least three key themes of harmful financing techniques emerge:
- Despite claims towards the contrary, rent-a-bank loans are likely to individuals who currently have credit. Individuals with rent-a-bank loans have actually other kinds of credit outstanding during the exact same time, often at lower expenses compared to those charged by rent-a-bank loan providers. As one exemplory instance of a pattern that is frequent one debtor had a few outstanding customer loans and bank cards, as well as the high-cost rent-a-bank loans.