Brighter Futures Begin with HOPE.Dear Chairman Brooks:

HOPE Submits Opinions Opposing OCC Real Lender

September third, 2020

2, 2020 september

Acting Comptroller for the Currency Brian Brooks 400 7th St SW Washington, DC 20219

Re: commentary on Proposal “National Banks and Federal Savings Associations as Lenders” Docket ID: OCC-2020-0026 RIN 1557-AE97

Please find underneath the reviews regarding the Hope Enterprise Corporation / Hope Credit Union/Hope Policy Institute (HOPE) in reaction into 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 monetary solutions; leverages private, 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. Throughout the last 25 years, HOPE has produced over $2.5 billion in funding that features benefited significantly more than 1.5 million individuals.

Because of the experiences of your users, described herein, we have been worried that the OCC proposition will rather add to than alleviate, the burdens of high-cost financing inside our area. In most five Deep South states, high-cost loan providers, such as for example payday and car name loan providers, are generally 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 areas combined. 1 regarding costs drained by payday and vehicle name loan providers, Mississippi, Alabama, Louisiana, and Tennessee have been in the most effective ten states, and lenders that are high-cost a lot more than $1.6 billion on a yearly basis from low-income borrowers in these four states. 2

These loans have now been especially harmful in the period of COVID-19, magnifying the financial meltdown. HOPE members paid over $54,000 to rent-a-bank loan providers within the last ninety days alone. This amount that is staggering the heavy burden of our users’ relationship with predatory loan providers, specially at the same time when individuals are straining in order to make ends talk with reduced costs and requiring monetary cushions to keep home to remain safe. This really is 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 seen income loss because 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 likewise skilled lack of work earnings. We’ve additionally seen exactly how portions of people’s COVID economic relief, such as for instance stimulus repayments, is reduced by portions of the funds planning to payday loan providers as opposed to fundamental needs.

Currently, there was a minumum of one lender that is high-cost 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 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 entranceway for nationwide banking institutions to enter such partnerships as well.

The Proposal Exacerbates the Harms Experienced by HOPE’s Users

HOPE’s concerns in regards to the harms of the loans aren’t hypothetical. HOPE users have already been caught by loans facilitated by rent-a-bank partnerships, placing their economic success in danger and so irritating our objective to create 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 realize the contrary to be real. Individuals are maybe not being harmed by the lack of the loans sustained by the OCC proposition; instead, it will be the existence 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, Rise, OppLoans, EasyPay Personify, or NetCredit through the rent-a-bank arrangement. This is certainly a number that is concerning. Individuals stuck within the rent-a-bank loans are individuals on fixed incomes getting security that is social disability advantages, veterans, pupils, instructors, and employees at hospitals, take out places, and also cash advance stores.

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

  • Despite claims towards the contrary, rent-a-bank loans are likely to those who curently have credit. Individuals with rent-a-bank loans have other forms of credit rating outstanding in the time that is same often at lower expenses compared to those charged by rent-a-bank loan providers. As you illustration of a frequent pattern, one debtor had a few outstanding consumer loans and bank cards, in addition to the high-cost rent-a-bank loans.