HOPE Submits Remarks Opposing OCC Real Lender
3rd, 2020 september
2, 2020 september
Acting Comptroller of this Currency Brian Brooks 400 7th St SW Washington, DC 20219
Re: commentary on Proposal вЂњNational Banks and Federal Savings Associations as LendersвЂќ Docket ID: OCC-2020-0026 RIN 1557-AE97
Please find underneath the responses regarding the Hope Enterprise Corporation / Hope Credit Union/Hope Policy Institute (HOPE) as a result towards 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 that delivers 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 distressed areas throughout Alabama, Arkansas, Louisiana, Mississippi and Tennessee. During the last 25 years, HOPE has created over $2.5 billion in funding that includes 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 lending 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. For instance, in 2017 in Tennessee, there have been over 1,200 loan that is payday, significantly more than McDonaldвЂ™s and Walmart areas combined. 1 when it comes to charges drained by payday and vehicle name loan providers, Mississippi, Alabama, Louisiana, and Tennessee have been in the very best ten states, and high-cost loan providers strain a lot more than $1.6 billion each year from low-income borrowers during these four states. 2
These loans have now been specially harmful at that time of COVID-19, magnifying the economic crisis. 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 your usersвЂ™ relationship with predatory loan providers, especially at any given time whenever individuals are straining which will make ends talk with reduced expenses and requiring economic cushions to remain home to remain safe. That is specially real for lower-income households into the Deep South, where in states like Mississippi, Alabama, Tennessee, and Louisiana over fifty percent of households making $35,000 have seen income loss because the pandemic. 3 For Ebony households, that are disproportionately targeted by predatory loan providers, significantly more than 1 in 2 in all of our Deep South states have likewise skilled loss in work earnings. We’ve additionally seen exactly 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 planning to payday loan providers in place of fundamental requirements.
Currently, there was one or more high-cost lender in every state into the Deep Southern area making these loans through the bank partnership arrangement. See Appendix. The OCC proposition advances the dangers that more high-cost loan providers will draw out extra charges, along with the prepared support of partnering banks. We recognize that up to now, these plans include just banks that are FDIC-supervised. Nonetheless, the OCC proposition may start the doorway for nationwide banking institutions to enter such partnerships as well.
The Proposal Exacerbates the Harms Experienced by payday loans Indiana HOPEвЂ™s People
HOPEвЂ™s concerns in regards to the harms among these loans are not hypothetical. HOPE users have already been caught by loans facilitated by rent-a-bank partnerships, placing their success that is economic in and therefore irritating our objective to construct wealth among low-income communities and communities of color when you look at the Deep South. While rent-a-bank loans are hailed as available credit for the economically susceptible, we all know the contrary to be real. Folks are perhaps not being harmed because of the lack of the loans sustained by the OCC proposition; instead, it’s the existence of additional cost that is high-loan that is the difficulty. The expansion of these high-cost loan products will further exacerbate the financial strain of low-income borrowers in the Deep South if promulgated by this rule.
During the period of simply the past 90 days, 67 HOPE users had a minumum of one loan from either Elastic, Rise, OppLoans, EasyPay Personify, or NetCredit through the rent-a-bank arrangement. This might be a concerning quantity. Individuals stuck within 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 membersвЂ™ 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 those who currently have credit. Individuals with rent-a-bank loans have actually other kinds of credit rating outstanding during the time that is same often at lower expenses compared to those charged by rent-a-bank loan providers. As you illustration of a frequent pattern, one debtor had a few outstanding customer loans and bank cards, as well as the high-cost rent-a-bank loans.