HOPE Submits Reviews Opposing OCC Real Lender
September third, 2020
September 2, 2020
Acting Comptroller associated with Currency Brian Brooks 400 7th St SW Washington, DC 20219
Re: responses on Proposal “National Banks and Federal Savings Associations as Lenders” Docket ID: OCC-2020-0026 RIN 1557-AE97
Please find underneath the commentary associated with the Hope Enterprise Corporation / Hope Credit Union/Hope Policy Institute (HOPE) in reaction 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 economic solutions; leverages private, public and philanthropic resources; and partcipates in policy analysis to satisfy 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 created over $2.5 billion in funding which includes benefited a lot more than 1.5 million people.
Offered the experiences of your users, described herein, our company is worried that the OCC proposition will rather add to than alleviate, 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 name loan providers, already are saturating our communities. For instance, in 2017 in Tennessee, there have been over 1,200 pay day loan storefronts, significantly more than McDonald’s and Walmart places combined. 1 when it comes to costs drained by payday and automobile name loan providers, Mississippi, Alabama, Louisiana, and Tennessee come in the most effective ten states, and lenders that are high-cost a lot more than $1.6 billion each year from low-income borrowers during these four states. 2
These loans have now been especially harmful in the period of COVID-19, magnifying the financial meltdown. HOPE people paid over $54,000 to rent-a-bank loan providers within the last ninety days alone. This amount that is staggering the hefty burden of your users’ relationship with predatory lenders, especially at any given time when individuals are straining in order to make ends meet with reduced costs https://cartitleloans.biz/payday-loans-in/ and requiring monetary cushions to keep house to keep safe. This is certainly 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 considering that 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 earnings. We now have additionally seen exactly how portions of people’s COVID relief that is financial such as for example stimulus repayments, was reduced by portions of the funds planning to payday loan providers in the place of fundamental requirements.
Currently, there was a minumum of one lender that is high-cost every state into the Deep Southern area making these loans through the bank partnership arrangement. See Appendix. The OCC proposition boosts the dangers that more high-cost loan providers will draw out extra charges, along with the assistance that is willing of banks. We notice that up to now, these plans include just FDIC-supervised banking institutions. But, the OCC proposition may start the doorway for nationwide banks to enter such partnerships as well.
The Proposal Exacerbates the Harms Experienced by HOPE’s People
HOPE’s concerns in regards to the harms among these loans aren’t 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 wide range among low-income communities and communities of color into the Deep South. While rent-a-bank loans are hailed as accessible credit when it comes to economically susceptible, we realize the exact opposite to be true. Individuals are perhaps not being harmed by the absence of the loans supported by the OCC proposition; instead, it will be the existence of extra 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 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. This is certainly a concerning quantity. Individuals stuck within the rent-a-bank loans are individuals on fixed incomes receiving social safety or impairment benefits, veterans, students, teachers, and employees at hospitals, take out places, and also pay day loan shops.
From our users’ experiences, at least three key themes of harmful lending techniques emerge:
- Despite claims towards the contrary, rent-a-bank loans are likely to individuals who curently have credit. People who have rent-a-bank loans have actually other forms of credit outstanding during the time that is same often at far lower expenses compared to those charged by rent-a-bank loan providers. As one exemplory instance of a frequent pattern, one borrower had a few outstanding consumer loans and charge cards, as well as the high-cost rent-a-bank loans.