HOPE Submits Opinions Opposing OCC Real Lender
Please find below the commentary regarding 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 just a credit union, community development institution that is financial policy institute providing you with affordable monetary solutions; leverages personal, public and philanthropic resources; and engages in policy analysis to meet its mission of strengthening communities, building assets, and increasing everyday lives in economically distressed areas throughout Alabama, Arkansas, Louisiana, Mississippi and Tennessee. During the last 25 years, HOPE has produced over $2.5 billion in financing which has had benefited significantly more than 1.5 million people.
Provided the experiences of our users, described herein, we have been worried that the OCC proposition will rather add to 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, are generally saturating our communities. As an example, in 2017 in Tennessee, there have been over 1,200 loan that is payday, significantly more than McDonald’s and Walmart places combined. 1 when it comes to costs drained by payday and automobile name loan providers, Mississippi, Alabama, Louisiana, and Tennessee come in the very best ten states, and cost that is high strain a lot more than $1.6 billion each year from low earnings borrowers during these four states. 2
These loans have already been especially 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 amount shows the hefty burden of our people’ relationship with predatory loan providers, specially at any given time whenever individuals are straining in order to make ends talk with reduced costs and needing monetary cushions to remain house to keep safe. This really is specially real for low income households when you look at the Deep South, 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 lenders, a lot more than 1 in 2 in each of our Deep South states have likewise skilled loss in work earnings. We have additionally seen just exactly how portions of people’s COVID relief that is financial such as for instance stimulus re re payments, was reduced by portions of the funds planning to payday loan providers in place of fundamental requirements.
Currently, there is certainly a minumum of snap the link now one cost that is high in almost every state when you look at the Deep South area making these loans through the bank partnership arrangement. See Appendix. The OCC proposition advances the dangers that more cost that is high will draw out extra charges, along with the prepared support of partnering banks. We notice that up to now, these plans include only FDIC supervised banking institutions. But, the OCC proposition may start the doorway for nationwide banking institutions to enter partnerships that are such well.
HOPE’s concerns in regards to the harms of the loans aren’t hypothetical. HOPE users have already been trapped by loans facilitated by lease a bank partnerships, placing their economic success at risk and therefore frustrating our objective to construct wealth among low earnings communities and communities of color when you look at the Deep South. While lease a loans from banks are hailed as available credit when it comes to economically susceptible, we all know the alternative to be real. Individuals are maybe maybe not being harmed because of the lack of the loans sustained by the OCC proposition; instead, it’s the existence of extra high loan price loans that’s the issue. If promulgated by this guideline, the expansion of those high price loan services and products will further exacerbate the monetary stress of low earnings borrowers into the Deep South.