Brighter Futures Start with HOPE.Dear Chairman Brooks:

HOPE Submits Opinions 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 “National Banks and Federal Savings Associations as Lenders” Docket ID: OCC-2020-0026 RIN 1557-AE97

Please find underneath the feedback regarding 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 institution that is financial policy institute that delivers affordable economic solutions; leverages private, public and philanthropic resources; and partcipates in policy analysis to satisfy its mission of strengthening communities, building assets, and enhancing everyday lives in economically troubled areas payday loans New York throughout Alabama, Arkansas, Louisiana, Mississippi and Tennessee. Throughout the last 25 years, HOPE has created over $2.5 billion in funding which has benefited a lot more than 1.5 million people.

Because of the experiences of our users, described herein, our company is concerned that the OCC proposition will increase, instead than alleviate, the burdens of high-cost financing within our region. In most five Deep South states, high-cost loan providers, such as for example payday and vehicle name loan providers, are usually saturating our communities. For instance, in 2017 in Tennessee, there have been over 1,200 pay day loan storefronts, a lot more than McDonald’s and Walmart places combined. 1 when it comes to charges drained by payday and automobile name loan providers, Mississippi, Alabama, Louisiana, and Tennessee have been in the most notable ten states, and high-cost loan providers strain a lot more than $1.6 billion each year from low-income borrowers within these four states. 2

These loans have now been specially harmful in the period of COVID-19, magnifying the crisis that is financial. 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 our users’ relationship with predatory loan providers, specially at the same time when individuals are straining to produce ends talk with reduced costs and requiring monetary cushions to keep house to remain safe. This is certainly especially 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 considering that 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 now have additionally seen exactly how portions of people’s COVID monetary relief, such as for example stimulus repayments, was reduced by portions of the funds likely to payday loan providers instead of fundamental requirements.

Currently, there is certainly a minumum of one high-cost lender in every state within 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 costs, along with the prepared help of partnering banks. We observe that up to now, these plans include just FDIC-supervised banking institutions. But, the OCC proposition may start the door for national banking institutions to enter partnerships that are such well.

The Proposal Exacerbates the Harms Experienced by HOPE’s Users

HOPE’s concerns concerning the harms among these loans aren’t hypothetical. HOPE users are caught by loans facilitated by rent-a-bank partnerships, placing their success that is economic in 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 economically susceptible, we all know the alternative to be real. Folks are perhaps not being harmed by the lack of the loans supported by the OCC proposition; rather, it’s the presence of extra cost this is certainly 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, increase, OppLoans, EasyPay Personify, or NetCredit through the rent-a-bank arrangement. This might be a number that is concerning. Individuals stuck into the rent-a-bank loans are people on fixed incomes getting security that is social impairment advantages, veterans, pupils, instructors, and employees at hospitals, fastfood places, as well as cash advance stores.

From our users’ experiences, at the least three key themes of harmful financing techniques emerge:

  • Despite claims into the contrary, rent-a-bank loans are likely to people who curently have credit. Individuals with rent-a-bank loans have actually other kinds of credit rating outstanding during the exact same time, often at far lower expenses compared to those charged by rent-a-bank loan providers. As you exemplory instance of a frequent pattern, one debtor had a few outstanding customer loans and bank cards, aside from the high-cost rent-a-bank loans.