HOPE Submits Remarks Opposing OCC Real Lender
September third, 2020
September 2, 2020
Acting Comptroller of this Currency Brian Brooks 400 7th St SW Washington, DC 20219
Re: reviews on Proposal “National Banks and Federal Savings Associations as Lenders” Docket ID: OCC-2020-0026 RIN 1557-AE97
Please find underneath the reviews of this 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 lender and 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 distressed areas throughout Alabama, Arkansas, Louisiana, Mississippi and Tennessee. Throughout the last 25 years, HOPE has created over $2.5 billion in funding that features benefited significantly more than 1.5 million people.
Because of the experiences of our members, described herein, our company is worried that the OCC proposition will rather add to 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, are usually saturating our communities. As an example, in 2017 in Tennessee, there have been over 1,200 pay day loan storefronts, a lot more than McDonald’s and Walmart areas combined. 1 when it comes to charges drained by payday and vehicle name loan providers, Mississippi, Alabama, Louisiana, and Tennessee come in the very best ten states, and lenders that are high-cost a lot more than $1.6 billion every year from low-income borrowers within these four states. 2
These loans have now been especially harmful in the period of COVID-19, magnifying the crisis that is financial. HOPE people paid over $54,000 to rent-a-bank lenders within the last ninety days alone. This amount that is staggering the hefty burden of our people’ relationship with predatory lenders, especially at the same time whenever individuals are straining in order to make ends talk with reduced expenses and requiring monetary cushions to keep house to remain safe. This is certainly specially true for lower-income households into the Deep Southern, where in states like Mississippi, Alabama, Tennessee, and Louisiana more than half of households making $35,000 have seen income loss because the pandemic. 3 For Black households, that are disproportionately targeted by predatory loan providers, a lot more than 1 in 2 in all of our Deep South states have likewise experienced lack of work earnings. We now have additionally seen just how portions of people’s COVID relief that is financial such as for example stimulus repayments, happens to be reduced by portions of these funds likely to payday loan providers in the place of basic requirements.
Currently, there clearly was one or more lender that is high-cost every state within the Deep Southern area making these loans through the bank partnership arrangement. See Appendix. The OCC proposition escalates the dangers that more high-cost loan providers will draw out extra fees, along with the assistance that is willing of banks. We http://www.autotitleloansplus.com/payday-loans-mn/ recognize that up to now, these plans include just FDIC-supervised banking institutions. Nonetheless, the OCC proposition may start the entranceway for national banking institutions to enter partnerships that are such well.
The Proposal Exacerbates the Harms Experienced by HOPE’s Users
HOPE’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 thus irritating our objective to create 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 when it comes to economically susceptible, we realize the contrary to be real. Folks are perhaps not being harmed because of the lack of the loans supported by the OCC proposition; instead, this is 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 members had a minumum of one loan from either Elastic, increase, OppLoans, EasyPay Personify, or NetCredit through the rent-a-bank arrangement. This really 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 benefits, veterans, pupils, instructors, and workers at hospitals, junk food places, as well as pay day loan stores.
From our users’ experiences, at the very least three key themes of harmful financing practices emerge:
- Despite claims into 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 rating 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 charge cards, as well as the high-cost rent-a-bank loans.