Brighter Futures Start with HOPE.Dear Chairman Brooks:

HOPE Submits Reviews Opposing OCC Real Lender

3rd, 2020 september

2, 2020 september

Acting Comptroller regarding 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 of this 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 institution that is financial policy institute that delivers affordable monetary services; leverages personal, 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 throughout Alabama, Arkansas, Louisiana, Mississippi and Tennessee. During the last 25 years, HOPE has produced over $2.5 billion in funding who has benefited a lot more than 1.5 million people.

Because of the experiences of your users, described herein, our company is worried that the OCC proposition will rather add to than relieve, the burdens of high-cost lending inside our area. In every five Deep South states, high-cost loan providers, such as for example payday and vehicle name loan providers, seem 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 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 come in the very best ten states, and lenders that are high-cost a lot more than $1.6 billion on a yearly basis from low-income borrowers within these four states. 2

These loans are 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 few ninety days alone. This staggering quantity shows the hefty burden of our people??™ relationship with predatory loan providers, specially at any given time when individuals are straining in order to make ends talk with reduced costs and requiring economic cushions to remain house to remain safe. It is specially real 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 Ebony households, that are disproportionately targeted by predatory lenders, 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 relief that is financial such as for example stimulus repayments, was reduced by portions of the funds likely to payday loan providers in place of fundamental requirements.

Already, 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 https://onlineloanslouisiana.com/ 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 banks that are FDIC-supervised. Nevertheless, the OCC proposition may start the doorway for nationwide banking institutions to enter partnerships that are such well.

The Proposal Exacerbates the Harms Experienced by HOPE??™s People

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 success that is economic in and therefore irritating our objective to construct wealth 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 understand the alternative to be real. Folks are maybe not being harmed because of the lack of the loans sustained by the OCC proposition; instead, this is the existence of extra cost this is certainly high-loan that is the difficulty. If promulgated by this guideline, the expansion among these high-cost loan items will further exacerbate the monetary stress of low-income borrowers into the Deep South.

During the period of simply the previous 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. That is a concerning quantity. Individuals stuck within the rent-a-bank loans are individuals on fixed incomes getting security that is social impairment advantages, veterans, pupils, instructors, and employees at hospitals, junk food places, and also pay day loan shops.

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

• Despite claims to your contrary, rent-a-bank loans are likely to individuals who currently have credit. People who have rent-a-bank loans have actually other kinds of credit outstanding at 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.