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Saturday, September 27, 2008

How ACORN Helped The Housing Crisis Harm Taxpayers

The financial panic currently threatening global credit markets has at its heart bad mortgages. Mortgages that those who took them out cannot pay. From Washington, fingers have been pointed to greedy bankers, fat cats on Wall Street, and other handy scapegoats.

The truth is that the root cause of the mortgage mess is found in Washington and with organizations like ACORN which have long pushed and used extortion tactics to force banks to make bad loans. All the while, collecting millions of dollars in grants and “donations” from banks that paid them protection money.

“ Documents provided by internal whistleblowers, cross-checked with public records and recorded events, expose hypocritical lending recommendations tied to ACORN Housing Corporation’s agreements with major banks— agreements that end up harming consumers.“

In February 2008, economics professor Stan Liebowitz of the University of Texas at Dallas suggested:

At the crisis’ core are loans that were made with virtually nonexistent underwriting standards—no verification of income or assets; little consideration of the applicant’s ability to make payments; no down payment … From the current hand-wringing, you’d think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards—at the behest of community groups and “progressive” political forces.14

Liebowitz further pointed to ACORN’s role in the current housing “crisis” and to current advertisements highlighting its role in procuring loans without using credit scores, 100-percent financed loans, and acceptance of undocumented income.15

In the prescient 1992 New York Times article, ACORN’s longtime housing leader, Michael Shea, admitted that banks would not have adopted ultimately harmful policies “if there was no community pressure and the law,” but that those factors made “a lot of bankers see it’s in their self-interest.”16

That selfinterest— ACORN’s and modern banks’—made possible the extension of cheap credit to risky borrowers and has led directly to the modern subprime mess.

Dr. Thomas DiLorenzo of Loyola College:

... “thousands of mortgage defaults and foreclosures in the ‘subprime’ housing market (i.e., mortgage holders with poor credit ratings) . . . [are] . . . the direct result of thirty years of government policy that has forced banks to make bad loans to un-creditworthy borrowers.”12

Further, DiLorenzo argues:
The only way these borrowers could qualify for their mortgage loans (even ignoring their bad credit ratings) was to take out adjustable rate mortgages, some of which had astonishingly low first-year rates in the 3 percent range, and sometimes lower. This is what has largely fueled the subprime mortgage meltdown—the inability of thousands of subprime borrowers to afford their mortgages now that their rates have adjusted upward. Thus, the combination of the Fed’s enforcement of the CRA (with the help of political pressure groups like ACORN) and its post 9/11 monetary policy in general are the reasons for the bursting real estate bubble and the “subprime” mortgage meltdown.13

ACORN helps illegal immigrants get mortgages using “under-the-table” (untaxed and unreported) money as income. It encourages people to buy homes with no money down, who have no credit rating or documented income. It encourages people to take out interest-only loans, 40 year non-amortized loans (which means that you can reach the end of a 40 year mortgage and still owe money), and reverse mortgages. This is not responsible credit counseling. This puts ACORN on the side of the most abusive lending practices in the country, right up there with payday loans. The difference is that payday lenders are not recipients of taxpayer money.

This report by the Consumers Rights League should be read by everyone who want to know of the cozy relationship between Washington politicians with semi-criminal gangs of "activists" that live off taxpayer money and extorted contributions from banks. And it documents the insane advice given to poor people by these vampires that prey on their ignorance.

Oh, did I mention Obama's relations to ACORN?


Anonymous said...

The charges on Payday loans are less expensive than bouncing a check or paying late fees. It's also a great option for someone who doesn't want to get caught up with credit cards debts. They can also help in a tight situation, its quick, and most places are open longer hours than banks.

Anonymous said...

What I love about Payday loans is that they are meant to be short term and can help in a tight situation if you are running a little short on cash during the month.

RM_Apply said...

I was searching for some reference regarding this matter. Good thing I've found your article. Great insight.

Anonymous said...

This article is right on the money. Greedy banks didn't force home owners into NOT paying their mortgages. ACORN forced banks into making bad loans.

The terms "subprime mortgage" is just a catch phrase for a "bad credit" or "low income" loan. ACORN created those products by abusing government money, and forcing banks into writing those loans.

What's views as CHARITY is all of a sudden turned the other way, and is not being called GREED.

Hey poor people, stop blaming other people for your own failures.