HOPE Submits Responses 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: feedback on Proposal вЂњNational Banks and Federal Savings Associations as LendersвЂќ Docket ID: OCC-2020-0026 RIN 1557-AE97
Please find underneath the reviews associated with 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 providing you with affordable economic solutions; leverages personal, public and philanthropic resources; and partcipates in policy analysis to meet its objective of strengthening communities, building assets, and enhancing life in economically troubled areas throughout Alabama, Arkansas, Louisiana, Mississippi and Tennessee. During the last 25 years, HOPE has produced over $2.5 billion in funding which has had benefited significantly more than 1.5 million people.
Because of the experiences of our users, described herein, our company is worried that the OCC proposition will rather add to than relieve, the burdens of high-cost financing within our area. In most five Deep South states, high-cost loan providers, such as for example payday and vehicle title loan providers, are usually saturating our communities. For instance, in 2017 in Tennessee, there were over 1,200 pay day loan storefronts, a lot more than McDonaldвЂ™s and Walmart places combined. 1 with regards to charges drained by payday and vehicle name loan providers, Mississippi, Alabama, Louisiana, and Tennessee have been in the most truly effective 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 already been especially harmful in the period of COVID-19, magnifying the economic crisis. payday loans in Illinois HOPE people paid over $54,000 to rent-a-bank loan providers within the last ninety days alone. This staggering quantity shows the hefty burden of our usersвЂ™ relationship with predatory lenders, especially at the same time whenever people are straining to produce ends talk with reduced costs and needing monetary cushions to keep house to keep safe. This will be specially real for lower-income households into the Deep Southern, where in states like Mississippi, Alabama, Tennessee, and Louisiana over fifty percent of households earning $35,000 have seen income loss because the pandemic. 3 For Ebony households, that are disproportionately targeted by predatory lenders, significantly more than 1 in 2 in all of our Deep South states have similarly skilled loss in work earnings. We now have additionally seen exactly how portions of peopleвЂ™s COVID economic relief, such as for example stimulus repayments, happens to be reduced by portions of the funds likely to payday loan providers in the place of fundamental requirements.
Currently, there clearly was one or more high-cost lender in every state within the Deep South region making these loans through the bank partnership arrangement. See Appendix. The OCC proposal advances the dangers that more high-cost loan providers will draw out extra costs, along with the ready help of partnering banks. We notice that to date, these plans include just banks that are FDIC-supervised. Nevertheless, the OCC proposition may open the doorway for nationwide banks to enter such partnerships as well.
The Proposal Exacerbates the Harms Experienced by HOPEвЂ™s People
HOPEвЂ™s concerns in regards to the harms among these loans are not hypothetical. HOPE users have now been caught by loans facilitated by rent-a-bank partnerships, placing their financial success at risk and so irritating our objective to construct wide range among low-income communities and communities of color within the Deep South. While rent-a-bank loans are hailed as available credit for the financially susceptible, we understand the contrary to be real. Individuals are perhaps not being harmed by the absence of the loans sustained by the OCC proposition; instead, it’s the existence of extra high-loan price loans that is the issue. 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 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. Individuals stuck within the rent-a-bank loans are individuals on fixed incomes getting security that is social impairment benefits, veterans, pupils, instructors, and employees at hospitals, junk food places, and also pay day loan stores.
From our usersвЂ™ experiences, at the least three key themes of harmful financing practices emerge:
- Despite claims into the contrary, rent-a-bank loans are likely to individuals who have credit. People who have rent-a-bank loans have actually other kinds of credit outstanding in the time that is same often at lower expenses compared to those charged by rent-a-bank loan providers. As you exemplory instance of a frequent pattern, one debtor had several outstanding customer loans and bank cards, aside from the high-cost rent-a-bank loans.