HOPE Submits Remarks Opposing OCC Real Lender
Please find underneath the remarks for the Hope Enterprise Corporation / Hope Credit Union/Hope Policy Institute (HOPE) as a result to your OCC Notice of Proposed Rulemaking, National Banks and Federal Savings Associations as Lenders, HOPE is a credit union, community development institution that is financial policy institute that provides affordable monetary services; leverages private, public and philanthropic resources; and partcipates in policy analysis to satisfy 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 created over $2.5 billion in funding which has benefited significantly more than 1.5 million people.
offered the experiences of y our users, described herein, we have been worried that the OCC proposition will increase, instead than alleviate, the burdens of high expense financing within our area. In most five Deep South states, high price loan providers, such as for example payday and vehicle name loan providers, happen to be saturating our communities. As an example, in 2017 in Tennessee, there have been over 1,200 cash advance storefronts, a lot more than McDonaldвЂ™s and Walmart places combined. 1 when it comes to charges drained by payday and vehicle name loan providers, Mississippi, Alabama, Louisiana, and Tennessee are in the most effective ten states, and cost that is high empty a lot more than $1.6 billion each year from low earnings borrowers during these four states. 2
These loans have already been specially harmful at that time of COVID 19, magnifying the crisis that is financial. HOPE people paid over $54,000 to lease a bank loan providers within the last few 3 months alone.
This staggering quantity shows the hefty burden of our peopleвЂ™ relationship with predatory lenders, especially at the same time when individuals are straining in order to make ends talk with reduced expenses and requiring monetary cushions to keep home to keep safe. This really is specially real for low 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, significantly more than 1 in 2 in all of our Deep South states have likewise skilled loss in work earnings. We’ve additionally seen just just how portions of peopleвЂ™s COVID economic relief, such as for instance stimulus re payments, happens to be reduced by portions of the funds likely to payday loan providers instead of fundamental requirements.
Currently, there is certainly a minumum of one high expense loan provider in just about 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 cost that is high will draw out extra charges, along with the ready support of partnering banks. We observe that up to now, these plans include just FDIC supervised banking institutions. Nevertheless, the OCC proposition may start the entranceway for nationwide banking institutions to enter partnerships that are such well.
HOPEвЂ™s concerns concerning the harms of the loans aren’t hypothetical. HOPE users have already been caught by loans facilitated by lease a bank partnerships, placing their financial success in danger and so frustrating our objective to construct wide range among low earnings communities and communities of color into the Deep South. While lease a loans are hailed as available credit when it comes to economically vulnerable, we understand the contrary to be real. Individuals are maybe perhaps not being harmed by the absence of the loans supported by the OCC proposition; rather, it’s the existence of extra high loan price loans that’s the problem. 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.