ACORN Sets Sites on Wells Fargo

The Association of Community Organizations for Reform Now announced its study of Wells’ refinance loans in 42 metropolitan areas showed “a huge racial and economic disparity between the company’s prime mortgage lending and its higher-cost subprime lending.”

Based on these findings, ACORN members called on the Fed Tuesday to oust Wells CEO Richard Kovacevich from its Advisory Council, according to the announcement.

“The Federal Reserve shouldn’t take advice from predatory lenders,” said ACORN president Maude Hurd in the announcement. “Our report shows that Wells Fargo targets minority communities and others for abusive loans. We are stepping up the pressure against Wells Fargo and we will continue to do so until they change their ways.“

“The allegation that we somehow target neighborhoods for nonprime loan products is totally false and 100 percent contrary to our ethical standards and business practices,” Wells spokesman Lynn Greenwood said in an e-mailed statement.

ACORNs study, The Runaway Stagecoach: Racial and Economic Inequality in Wells Fargo’s Subprime Lending, is reportedly based on 2003 Home Mortgage Disclosure Act data and compares the lending patterns of the bank’s subprime unit, Wells Fargo Financial, and the prime lending unit, Wells Fargo Home Mortgage.

One out of every five refinance loans made by the subprime unit is in minority neighborhoods, versus one out of every 20 by the prime lender, according to the report.

Data also revealed that 27% of refinancings originated by Wells Fargo Financial were in low and moderate-income neighborhoods, compared to 10% by the prime lender, the report said.

“The alleged research report, which was produced by an organization with a history of deliberately distorting and misrepresenting our practices and policies, is filled with inaccuracies about our practices,” Greenwood said. “This study’s methodology is so flawed and the report ignores so many important factors, such as the credit risk-based differences among our many valued mortgage customers, that its conclusions should be dismissed.”

ACORN started a campaign against Wells in May 2003 calling for the bank to straighten its lending practices. Since then, the CEO of the subprime unit resigned shortly after and ACORN has rallied and filed lawsuits against the San Francisco-headquartered bank.

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