Minneapolis (June 25) – Members of the nation's largest community organization of low and moderate income families, the Association of Community Organizations for Reform Now (ACORN), are campaigning… Minneapolis (June 25) – Members of the nation's largest community organization of low and moderate income families, the Association of Community Organizations for Reform Now (ACORN), are campaigning nationwide for an end, they say, to abusive lending practices by the giant home mortgage lender, Wells Fargo Mortgage.
At 5:45 p.m. yesterday, some ACORN members gathered to protest outside of selected Wells Fargo offices here in the Twin Cities and in over 15 other cities across the United States. Others intend to visit offices of the Controller of the Currency (OCC) and of the Federal Reserve Board to demand that the well known financial institution be punished for alleged lending misconduct.
ACORN spokesperson in the Minneapolis area, Becky Gomer, indicated that one of their groups yesterday was scheduled to meet with a senior vice president from the Federal Reserve Bank of Minneapolis.
According to ACORN, Wells Fargo uses fraud and deception to trap homeowners into mortgages with high interest rates, excessive fees, and harmful terms.
ACORN cited the cases of a number of families, they argued, who had been lied to by Wells Fargo about the conditions of their loan and were refinanced (at higher rates) out of a good loan they had at a much lower interest rate with a different lender.
The head of the local arm of ACORN summed up the organization’s discontent.
"Wells Fargo has been doing outrageous things in our neighborhoods. They thought they could get away with it. We are putting them on notice that they can’t," said Minnesota’s ACORN President Shada Buyobe-Hammond. "We see what they are doing. We are serious about defending our communities.
"Wells Fargo can expect no peace until our members are satisfied that they are ending abusive lending practices and taking steps to repair the damage already done. We are going to visit the regulators to urge them to look hard at Wells' practices," she said.
Buyobe-Hammond added: "The OCC needs to pay attention to Wells' sub prime lending – some of which happens directly out of lenders they regulate.
"And the Federal Reserve Board should show that it intends to use its authority to protect borrowers from abusive loans by holding public hearings on Wells’ plans to purchase Pacific Northwest Bancorp and not let that purchase go ahead until Wells has cleaned up its act."
Predatory lending occurs when loan terms or conditions become abusive or when borrowers who would qualify for credit on better terms are targeted instead for higher cost loans.
In an October, 2000 ACORN report on predatory lending in the United States, African Americans who refinanced, were more than four times likely than White homeowners to receive a sub-prime loan while Latin Americans were twice as likely.
But in the Twin Cities, African American homeowners who refinanced their home are 5 times more likely than White homeowners to receive sub-prime loans, higher cost loans for borrowers who do not have easy access to the lending market. Latino American homeowners are twice as likely.
Sub-prime lenders accounted for 41 percent of all refinance loans made to African American households, seventeen percent for Latinos; but just 8 percent for White homeowners.
Even when a comparison is made among White, African Americans and Latinos of comparable income, Black people came out the worst – one out of every six refinanced loans received by upper-income Black homeowners was a sub-prime, one in nine for upper income Latinos and one in 25 for upper income White homeowners.
Low and moderate-income Black homeowners received 2 out of every 3 sub-prime loans and half of the refinanced loans. On the other hand, 17 percent of all refinanced loans to lower income Black homeowners were su