“One wonders if most Americans are even aware that this kind of crap happens in this country. “
Most people haven’t a clue.
FR Posted on Tuesday, October 21, 2008 1:33:20 PM by Columbo
In 2005, the Leadership for a Changing World awards program named Bruce Dorpalen, Director of Housing Counseling ACORN Housing, as a national finalist. Their reason for honoring Dorpalen: "In 1985, to address the issue of mortgage redlining in low-income and minority neighborhoods, Bruce Dorpalen and a team of ACORN community leaders negotiated a community reinvestment agreement with a Philadelphia bank.
This agreement changed the way mortgages were underwritten, recognizing the income, savings, and credit of lower-income borrowers and eliminating barriers to qualifying for a mortgage."
In 1997, the National Housing Institute also credited ACORN with inventing a new mechanism for underwriting very low income mortgages: "ACORN Housing Corporation developed an innovative financing mechanism previously nonexistent in the marketplace by convincing Fannie Mae to tailor its underwriting criteria to meet homesteaders' needs. Local banks could then write the mortgages and be able to sell them to Fannie Mae."
ACORN, by use of protest, pressured banks to sign into this newly designed low-income lending scheme: "The ACORN convention in New York in 1992, the "ACORN-Bank Summit," was organized to hammer out deals with giant banks like Continental, First Fidelity, Mellon, PriMerit, and Chemical. Representatives signed agreements to establish programs for low- and moderate-income people to qualify for mortgages in their communities. Citibank, the nation's largest bank, did not participate.
In response, the conventioneers held a lively action at Citibank's downtown Manhattan headquarters, and won a meeting to negotiate for similar programs. The meeting also led to increased Fannie Mae and Freddie Mac funding from the secondary mortgage market to ACORN neighborhoods. These efforts led to billions of dollars of primary and secondary mortgage money flowing into ACORN communities over a period of several years." --SNIP--
The large National banks signed "Affordable Lending Alliances" with ACORN and Fannie during the late 1990-s and the early 2000's including $35 billion from J.P. Morgan Chase,WAMU, and $100 Billion from Citigroup. Also see: http://www.acornhousing.org/TEXT/mortgage1.php Conclusion: ACORN invented the low-income mortgage mechanism that brought our lending market to the brink of collapse. By use of political pressure ACORN forced private institutions to abandon their previous lending standards and enter into ill-advised agreements with both ACORN and Fannie Mae.
What is still unknown and needing investigation is the profit ACORN may have realized from counseling their low-income clients into these loans which were then sold to Fannie Mae. Also needing investigation is the use ACORN made of its political arm to pass favorable housing initiatives, including its sister organizations like the New Party and the Working Families Party.