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HOPE Submits Opinions Opposing OCC Real Lender

Please find underneath the commentary associated with Hope Enterprise Corporation / Hope Credit Union/Hope Policy Institute (HOPE) in reaction 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 that delivers affordable economic solutions; leverages personal, public and philanthropic resources; and partcipates in policy analysis to satisfy its objective of strengthening communities, building assets, and enhancing everyday lives 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 who has benefited significantly more than 1.5 million people.

Because of the experiences of our members, described herein, we have been worried that the OCC proposition will rather add to than alleviate, the burdens of high price financing inside our region. In most five Deep South states, high expense 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 loan that is payday, significantly more than McDonald’s and Walmart areas combined. 1 when it comes to charges drained by payday and automobile name loan providers, Mississippi, Alabama, Louisiana, and Tennessee have been in the very best ten states, and high price loan providers strain a lot more than $1.6 billion each year from low earnings borrowers during these four states. 2

These loans have now been specially harmful in the period of COVID 19, magnifying the economic crisis. HOPE people paid over $54,000 to lease a bank loan providers within the last few 3 months alone.

This staggering quantity shows the heavy burden of y our users’ relationship with predatory loan providers, particularly at the same time when anyone are straining to create ends talk with reduced expenses and requiring monetary cushions to keep house to remain safe. This might be specially real for low income households into the Deep South, where in states like Mississippi, Alabama, Tennessee, and Louisiana over fifty percent of households making $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 each of our Deep South states have similarly skilled lack of work income. We now have additionally seen exactly how portions of people’s COVID monetary relief, such as for instance stimulus re re payments, happens to be reduced by portions of these funds planning to payday loan providers as opposed to fundamental requirements.

Currently, there is certainly one or more cost that is high in most state into the Deep Southern 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 costs, along with the prepared support of partnering banks. We observe that up to now, these arrangements 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.

HOPE’s concerns in regards to the harms of those loans aren’t hypothetical. HOPE members have now been caught by loans facilitated by lease a bank partnerships, placing their success that is economic in and therefore irritating our objective to construct wealth among low earnings communities and communities of color into the Deep South. While lease a loans are hailed as available credit for the economically susceptible, we realize the alternative to be real. Individuals are perhaps maybe perhaps not being harmed because of the lack of the loans sustained by the OCC proposition; instead, it’s the presence of extra high loan expense loans this is 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.