Fresh on the heels of its successful campaign to focus publicity on the alleged predatory lending practices of Household International (the major national home mortgage lender that eventually agreed to refund a record $484 million to disgruntled borrowers), the Association of Community Organizations for Reform Now (ACORN) has launched a similar effort against Wells Fargo, which the community group claims also employs abusive practices in its sub-prime lending–i.e., higher-interest loans typically made to people with weak credit histories.
Locally, ACORN is pressing the Washington State Department of Financial Institutions to either block Wells Fargo’s proposed acquisition of Pacific Northwest Bancorp, a local commercial bank, or delay the sale until hearings can be held on Wells Fargo’s lending practices. Last week, ACORN representatives met with DFI to press their case. DFI says it will announce its position on the sale this week.
In a recent report titled “Stop the Stage Coach!” ACORN contends that two Wells Fargo affiliates, Wells Fargo Financial and Wells Fargo Funding, engaged in “consistent patterns of predatory loan terms, along with deceptive sales practices… including excessive fees, marketing through live checks, and deceiving borrowers into taking new loans which leave them in a worse financial position than they were before.”
Seattle borrower Catherine Copsey, a medical assistant, considers herself to be a victim of such practices. Copsey had strong enough credit to receive an A-rate loan from a Wells Fargo non-sub-prime subsidiary in 1992. In 2001 and 2002 she was convinced by Wells Fargo Financial to take out home equity and consolidation loans, she states; though her credit rating remained strong, Copsey says, the loan officer did not tell her that WFF was a sub-prime lender and that she could probably qualify for a lower rate from other Wells Fargo subsidiaries. The third loan included more than $15,000 in up-front fees and charges–more than 7 percent of the loan total–even though it netted her barely $20,000 (after the original two loans were paid off) and included a $6,500 five-year prepayment penalty, which precludes her from refinancing at a better rate. Overall, her monthly payments rose more than $200 a month, she says.”I trusted them,” Copsey says. “They took me to the cleaners.”
In response to The Stranger‘s inquiries, Wells Fargo issued the following statement about ACORN’s allegations: “The allegations made by the activist group are without merit. The information is inaccurate, incomplete and does not fully address any of the customer situations described in the material.”
