LOS ANGELES--(BUSINESS WIRE)--The National Diversity Coalition (“NDC”) today issued a letter to the CFPB, FDIC, Treasury and California State regulatory officials calling for action to protect vulnerable borrowers being victimized by predatory lending practices at Beneficial State Bank (“Beneficial”). NDC also called for Beneficial Co-Founders Tom and Kat Steyer to cease its predatory practices and remediate all damage inflicted on the over ten thousand consumer borrowers who have been subjected to Beneficial’s predatory lending program since its launch in 2017.
Specifically, NDC calls on Billionaire Presidential Candidate Tom Steyer and Beneficial to immediately take the following remediation actions:
- To cease its deceptive marketing of its sub-prime lending program as “Pre-Prime.” This causes borrowers to believe the bank has collected sufficient information and conducted sufficient underwriting to have a reasonable basis to believe each borrower is in fact “pre-prime” or on a path to be a prime borrower. NDC’s investigation has uncovered no evidence that Beneficial has created a reasonable basis to form such an opinion with respect to any specific borrower. In fact, the average FICO for borrowers at Beneficial inappropriately called “Pre-Prime” is under 580 – a score defined by Experian to apply to borrowers with “Very Poor” credit. Therefore, Beneficial must cease and desist from using such misleading promotional language intended to deceive borrowers.
- To cease its deceptive marketing of its “Potential Fees Avoided” metric which misleadingly compares its rates to theoretical pay-day lending rates, which do not necessarily reflect the next best alternative form of financing accessible to a borrower. It is disingenuous to suggest that Beneficial’s high-interest rate consumer loan actually saves borrowers any money without analyzing a borrower’s ability to access alternative sources of credit. In fact, “Pre-Prime” borrowers would not necessarily have to rely on payday lenders as the best alternative in the market. Therefore, Beneficial’s Money Saved calculation is deceptive and misleading.
- To cease targeting undocumented residents and other vulnerable populations with Beneficial’s highest rate loan program without ensuring borrowers have access to independent credit counselors prior to the closing of the loan and upon the delinquency of a loan. Beneficial must ensure vulnerable borrowers are educated and well represented in making their credit decisions and defending their rights.
- To modify underwriting guidelines for any loan programs with annual delinquency rates over 10% in today’s benign lending environment, as such levels of annual delinquencies are de facto evidence of a loan program that does not adequately ensure borrowers have a reasonable expectation or ability to repay the loan at the time of closing.
Faith Bautista, Chief Executive Officer of The National Diversity Coalition, said “Billionaire Presidential Candidate Tom Steyer made his money running a hedge fund that secured trading profits at the expense of others on Wall Street. It is not appropriate to take this same approach with low-income, minority and immigrant borrowers and to profit from high-rate loans made to America’s most vulnerable populations. The National Diversity Coalition calls on the CFPB, FDIC, and state regulatory agencies to act on behalf of vulnerable low income and minority communities and stop Beneficial State Bank’s abusive practices. The National Diversity Coalition stands ready to fight to protect these voiceless consumers from predatory lending.”
The National Diversity Coalition believes that Beneficial has an obligation to evaluate a consumer’s ability to afford the loans Beneficial makes to them, and to not make hard money loans that require foreclosure or repossession as a core form of repayment. Even presidential candidates and politically connected billionaires like Tom Steyer should be held accountable for predatory lending.
The National Diversity Coalition calls on Tom Steyer and Beneficial State Bank to immediately remediate the harm they have inflicted on consumer borrowers through their predatory practices. We also call on all relevant regulatory agencies to move quickly to ensure no further harm is inflicted on vulnerable borrowers by Beneficial.