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Sunday, May 24, 2009

ACORN and the Housing Crash

My good friend Kimberly Morin has an excellent article on ACORN's promotion of the so-called "predatory" loans.

Here's a taste:
Many of the subprime mortgages were given without checking consumers’ credit scores, allowing no down payments and allowing non-traditional income to be counted as income, in other words, people who were being paid under-the-table (not paying taxes on this) were allowed to count this income when applying for a mortgage. Furthermore there were many ‘exotic’ mortgages as they are referred to in the industry, such as paying interest only for a certain number of years which builds no equity for the consumer and does not pay down the principle of the loan. On top of this it does not provide the consumer with the reality of what the payments will be when the principle payments actually kick in. This is just one type of loan that caused a lot of people to have their homes foreclosed upon; they simply could not afford the principle payments once they finally came to be.

Through the direct actions of ACORN Housing, banks were giving people who were not ‘normally’ creditworthy loans that had low interest rates at first but were adjustable. When the rates were adjusted up, the consumers simply could not afford the higher payments. The forcing of banks by groups like ACORN using the Community Reinvestment Act to give loans to people otherwise not able to receive them is a huge cause of the housing bubble and why so many have been forced into foreclosure. ACORN receives millions of dollars of taxpayer money to help people every year yet they are hurting these very people by aiding them in getting the subprime or exotic loans that have caused nothing but problems for the consumers, the banking industry and the economy overall and responsible taxpayers may now be included in this list.

The non-partisan Consumers Rights League did an extensive in-depth investigation into ACORN Housing and their mortgage practices in 2008 which they submitted to Congress recommending at the very least that Congress investigate ACORN Housing’s mortgage practices. I implore you to read their full report here: To date there has been no investigation into ACORN Housing. Maybe now that Obama is seeking to prosecute all organizations that were involved with these practices, he will read the Consumers Rights League investigation and actually have the Department of Justice perform a further investigation? Maybe someone in Congress will actually think twice before giving more money to ACORN for housing activities? Actually Michelle Bachmann(R-MN) amended the Housing Bill to disallow any groups that have been indicted for voter registration fraud from receiving any money but Barney Frank(D-MA) changed that. I think ACORN Housing being involved in the mortgage crisis would have proven a bit more substantial as a reason to disallow more funds to be steered their way.
Read the whole thing here!

1 comment:

sean said...

Consumers Rights League is a front group for the credit card industry: