HOPE Submits Reviews Opposing OCC Real Lender
3rd, 2020 september
2, 2020 september
Acting Comptroller associated with Currency Brian Brooks 400 7th St SW Washington, DC 20219
Re: remarks on Proposal вЂњNational Banks and Federal Savings Associations as LendersвЂќ Docket ID: OCC-2020-0026 RIN 1557-AE97
Please find underneath the remarks associated with the Hope Enterprise Corporation / Hope Credit Union/Hope Policy Institute (HOPE) as a result to your 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 institution that is financial policy institute providing you with affordable monetary services; leverages personal, public and philanthropic resources; and partcipates in policy analysis to meet 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 have benefited a lot more than 1.5 million individuals.
Provided the experiences of your users, described herein, we have been worried that the OCC proposition will increase, instead than alleviate, the burdens of high-cost financing inside our area. In every five Deep South states, high-cost loan providers, such as for example payday and vehicle name loan providers, happen to be saturating our communities. As an example, in 2017 in Tennessee, there have been over 1,200 pay day loan storefronts, significantly more than McDonaldвЂ™s and Walmart places combined. 1 with regards to charges drained by payday and automobile name loan providers, Mississippi, Alabama, Louisiana, and Tennessee come in the utmost effective ten states, and high-cost lenders empty a lot more than $1.6 billion each year from low-income borrowers within these four states. 2
These loans have already 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 3 months alone. This amount that is staggering the hefty burden of your usersвЂ™ relationship with predatory loan providers, especially at the same time when individuals are straining which will online payday AK make ends talk with reduced costs and requiring monetary cushions to remain house to remain safe. This can be especially real for lower-income households within the Deep Southern, 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 lack of work earnings. We now have additionally seen exactly how portions of peopleвЂ™s COVID monetary relief, such as for instance stimulus repayments, is reduced by portions of these 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 when you look at the Deep Southern area making these loans through the bank partnership arrangement. See Appendix. The OCC proposition advances the risks that more high-cost lenders will draw out extra costs, along with the prepared support of partnering banks. We observe that up to now, these arrangements include just FDIC-supervised banking institutions. Nonetheless, the OCC proposition may start the entranceway for nationwide banking institutions to enter such partnerships as 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 financial success at risk 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 realize the contrary to be real. Individuals are maybe not being harmed by the lack of the loans supported by the OCC proposition; instead, it will be the existence of extra cost that is high-loan that is the situation. 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 a minumum of one loan from either Elastic, Rise, OppLoans, EasyPay Personify, or NetCredit through the rent-a-bank arrangement. This really is a concerning quantity. Individuals stuck into the rent-a-bank loans are individuals on fixed incomes getting social protection or impairment benefits, veterans, pupils, instructors, and employees at hospitals, junk food places, as well as cash advance stores.
From our membersвЂ™ experiences, at the least three key themes of harmful financing techniques emerge:
- Despite claims into the contrary, rent-a-bank loans are likely to those who have credit. Individuals with rent-a-bank loans have actually other forms of credit outstanding in the exact same time, often at far lower expenses compared to those charged by rent-a-bank loan providers. As you exemplory case of a pattern that is frequent one debtor had a few outstanding customer loans and charge cards, as well as the high-cost rent-a-bank loans.