I can appreciate ACORN’s zeal, but I question its sincerity. Let me explain.
The Association of Community Organizations for Reform Now published a report earlier this month based on 2004 Home Mortgage Disclosure Act data that concludes African-Americans and Latinos pay more for mortgages than whites.
“Wells Fargo has been preying on communities of color and charging us higher rates and fees,” said ACORN’s national president, Maude Hurd, in a Sept. 9 press release. Jordan Ash, an attorney with ACORN, was quoted in a newspaper saying Wells Fargo “is concentrating its high-rate loans on low- to moderate-income neighborhoods and communities of color.”
Banks that make mortgage loans in certain urban areas are required by the Home Mortgage Disclosure Act to file information with the government. In the industry, the law is known by its acronym, “HMDA.” Such data now includes the annual percentage rate charged on each loan. A change in the law became effective earlier this year that requires banks to report this information, and the data has just been made public for the first time. The data, however, do not include information about income or credit history, which are key determinants in most loan pricing decisions.
ACORN’s criticism of Wells Fargo, therefore, is based on a woefully incomplete picture. It is claiming the bank is making loan pricing decisions based on race even though it doesn’t have sufficient information to fairly draw that conclusion. Anyone who looks at this knows ACORN is off base. The thing is, I am sure ACORN knows it too. This is why I question its sincerity.
Race-baiting is an effective publicity strategy. ACORN can almost always get a headline by accusing a big lender of racism. I cover banking as a journalist, but let me clarify that I am not writing this in order to defend the banking industry or Wells Fargo. I am simply pointing out the misappropriation of a lot of energy on the part of a well-known community group.
Now let me explain why I am sad about this. Racism is a real problem in this country. There are educational disparities between people of different races, which lead to income differences and differences in credit availability. ACORN has a lot of resources, energy and grass-roots support to put into real social justice efforts. But it is squandering them.
Does ACORN really think Wells Fargo lenders – or any lenders for that matter – deliberately charge blacks more than whites for the same loan? Do they really think lenders consider skin color when they price a loan? That is not going on in any widespread fashion among regulated lenders. There are very explicit laws against racial bias in lending. Do they really think regulators, who look pretty closely at loan files, are missing this?
No, Wells Fargo is not the problem. The problems are much bigger, and a lot harder to fight, than a mortgage company. The enemies are broken families and an over-burdened educational system. These are the things that keep people from getting jobs that pay good wages so they can buy a home at the best rate. The fact that people of color statistically find themselves so often the victims of broken families and poor schooling is a national scandal.
That is a real problem. Take that on, ACORN, and you will really be doing some good.
tMichaelB is the web site for Tom Bengtson, who writes about business, religion, family and politics.
Wednesday, September 21, 2005
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