ACORN Sets Sites on Wells Fargo

Bank calls organization a nuisance

May 8, 2003

By ANNE LINEBERRY

The Association of Community Organizations for Reform Now (ACORN) staged demonstrations at several Wells Fargo locations across the country, deriding what it called predatory lending practices by the corporation.

In a written statement, ACORN outlined its concerns about Wells Fargo, including claims that the financier’s Home Mortgage Disclosure Act (HMDA) data does not clearly reflect Well’s actual subprime lending activity. Other claims by the consumer advocacy group included accusations of “predatory lending” in the form of hidden fees and the issuance of “live checks.”

At the bank’s New Mexico headquarters in Albuquerque Monday, Wells representatives agreed to meet with a person claiming to have been hurt by the bank’s lending policies, according to both sides of this dispute. ACORN activist Matthew Henderson said the meeting didn’t result in any meaningful results, other than the bank representatives faxing a letter to bank executive officials. He said ACORN would continue to “bring them to the table” in order to get resolution.

“We did the best we could,” said Pamela Chavez, a media spokesperson for the bank.

She seemed perplexed that ACORN would take such draconian measures to be heard. She said that the bank is always available to help customers. “It doesn’t take a demonstration,” she said.

Henderson and Chavez agreed that the bank offered to deal with the customers’ issues on a case-by-case basis.

“It’s only good business for us to listen to our customer’s concerns and address them,” Chavez said. But, she added, ACORN’s individual demonstrators refused to give any information such as their own name or their mortgage handler’s name so that she could further assist them.

Henderson said the offer didn’t address ACORN’s concerns, mainly that Wells Fargo as a whole sanctioned predatory lending policies that needed to be addressed and corrected on a nationwide scale.

One such practice detailed by ACORN’s press release relates to the issuance of ‘live checks,’ which are mailed to potential customers. Once the person cashes the loan check, they are likely to encounter enticements to roll that loan into a debt consolidation package with their residence as collateral.

ACORN calls this practice “predatory lending.”

“That is just a ridiculous statement,” a Wells Fargo Financial spokesperson responded. “We don’t give credence to anything ACORN says.”

Judy Corcoran is the communications director for Wells Fargo Financial division, which is a subsidiary of WFC Holdings Corp. She categorized the live check as a marketing opportunity that furthers the ability of Wells Fargo to “build a relationship” with customers. She emphasized the truth-in-lending boxes and the clear nature of the disclosure information included with the checks.

“We loan to people who have a need for credit and the ability to repay,” she said.

Corcoran also said that Wells Fargo’s forclosure rate was extremely low. She said that the company utilizes a “tangible benefits test” before issuing loans to a customer. The bank, she added, has no intention of altering their business and marketing practices.

ACORN’s communications coordinator, David Swanson, said that Monday’s protests are just the beginning. The group intends to employ “a wide range of tactics” designed to encourage reforms, he said, using “whatever works.”

Previously, ACORN took aim at Household International; employing tactics which included picketing the company’s officer’s residences, the grassroots organization said. Household eventually changed its practices and agreed to refund millions of dollars in overcharges to its customers. Household was purchased in March by British mega-giant HSBC Holdings Plc.

“They may be surprised that those tactics may not work with Wells Fargo,” Corcoran said.

For Wells Fargo, this campaign adds a new layer to the recent spate of negative publicity about squabbles with California regulators over its mortgage lending practices.

Friday, the state’s Department of Corporations revoked Well’s prime-lending subsidiary’s state mortgage lending license. For now, Wells Fargo Home Mortgage will continue to produce loans in California in spite of the license revocation because a court ruled that only the Officer of the Currency Comptroller has regulation jurisdiction over the Home Mortgage subsidiary, because it is part of a national bank. Arguments are still being heard in the case, which was prompted by Well’s charging interest on mortgages earlier than California’s Department of Corporations allowed.

This issue is another of ACORN’s rallying points against the banker.

Swanson says ACORN is “coming after them in a major way now.”

At Wells Fargo Financial headquarters in Des Moines, Iowa, Corcoran seemed unphased. “They’re a nuisance right now,” she said, “that’s all they are.”

Anne Lineberry is MortgageDaily.com‘s editor. She previously worked as an online editor/producer for DallasNews.com and on the Metropolitan desk for the print edition of The Dallas Morning News. Emaill Anne at AnneLineberry@MortgageDaily.com