They are already stealing property from victims of Katrina. Surprise, surprise: there is a racial component.
Another Crisis in the Making: Subprime Mortgage Industry Sandbags Katrina Victims; African-Americans Hit Hardest, Says ACORN
9/22/2005 11:01:00 AM
To: National Desk, Business Reporter
Contact: Kevin Whelan, 985-960-1108; Jordan Ash, 651-503-4555; Mike Shea, 312-939-1611, all of ACORN, Web: http://www.acorn.org
ST. PAUL, Minn., Sept. 22 /U.S. Newswire/ -- ACORN, the nationwide community group, released findings today showing tens of thousands of homeowners who were displaced by Hurricane Katrina are not being offered the mortgage relief that has been highly publicized in recent weeks, and as a result could face foreclosure by the end of the year.
The group found that the subprime mortgage industry is offering suspended mortgage payments, late fee waivers, and suspension of credit bureau reporting for the month of September only, while the prime mortgage industry is granting these same relief measures, along with a moratorium on foreclosures, for 3 months, and in some cases for up to 12 months. Furthermore, the group found that most prime mortgage servicers are automatically granting relief to homeowners living in the FEMA designated disaster area; but much of the subprime industry is only offering relief to those displaced homeowners who call and request it.
ACORN also found that the subprime mortgage industry's inferior relief measures will have the greatest impact on African-American communities in New Orleans. In its analysis of the new mortgage data released this month by the Federal Reserve, ACORN found that in the New Orleans area subprime loans accounted for almost half, 46.2 percent, of all conventional mortgages made to African-Americans. In contrast, subprime loans made up just 15.8 percent of the conventional loans made to whites. In comparative terms, African-Americans were three times more likely than whites to receive a high cost subprime loan.
"The communities that suffered the most from Katrina and the ineffective government response are now receiving inferior and disparate treatment from our nation's financial system," said ACORN President Maude Hurd. "Equal treatment and a chance to get back on their feet is not too much to ask for the homeowners in our communities. Those that have more expensive loans to start with should certainly get the same consideration as other borrowers."
ACORN's findings are based on a report sent to lenders this week by its sister organization, ACORN Housing, which detailed lessons learned over the last two weeks in helping displaced homeowners to contact their mortgage servicers; and in a recent analysis of the 2004 Home Mortgage Displacement Data.
"ACORN Housing has been working hard to help homeowners displaced by Hurricane Katrina. And we have seen that subprime borrowers are not getting the same treatment," said Alton Bennett, the Chair of ACORN Housing's Board of Directors.
The unequal and disparate treatment of Katrina victims is perhaps best seen at Wells Fargo. Displaced homeowners with loans from Wells Fargo Mortgage, the company's prime mortgage channel, are being provided the automatic 90 day deferment. Displaced homeowners with loans from Wells Fargo Financial, the company's subprime mortgage unit, are only being offered relief on a case by case basis, and only if they contact the company. In 2004, the HMDA data shows that 35.6 percent of all home mortgage loans that Wells made to African Americans were through Wells Fargo Financial, while just 18.8 percent of the mortgage loans made to whites were through this subprime channel.
ACORN is demanding that the subprime mortgage industry, and particularly the Wall Street investment firms that securitize subprime loans, provide the same package of relief that most prime lenders are offering to homeowners displaced by Hurricane Katrina. This would include:
-- Immediate suspension of mortgage payments for 90 days for all, and up to 12 months on a case by case basis.
-- Waiver of all late fees for the duration of the payment suspension period.
-- No adverse reporting to credit agencies the duration of the payment suspension period.
-- Moratorium on foreclosure for the duration of the payment suspension period.