ACORN versus Predator
The American mortgage crisis and recent collapse has left the world questioning how to reform our institutions. I spoke to Wade Rathke—founder of ACORN, Association of Community Organizations for Reform Now, and long time champion for low-income folks in the U.S.—about his new book Citizen Wealth, predatory practices, how the American system needs to reform, and lessons Canada should learn from our neighbour's mistakes.
Amy: Prior to the mortgage crash was ACORN working on subprime lending for its members?
Wade: We were trying to stop predatory practices in subprime lending. We did not say that there should not be any subprime lending, because frankly some of our people, whether it’s in Canada or here, have challenging credit circumstances. So, sometimes for them to be credit-worthy a subprime lender is the only alternative, and it’s when it gets to be predatory then it’s a problem. It helps people that have a little damage in their credit. But what happened that went so wrong about subprime lending in the U.S. was not only did it become predatory, but the loans were not based on affordability. So they were just trying to push loans onto people, in some cases people who did not even need to be in subprime instruments but could have qualified for regular mortgages. Too many of these loans were based on stated income, income you can’t document from Canada Revenue. In some cases you need a stated income loan, if you’re a tipped employee or self-employed and don’t have employment records in the same way that you might have from the magazine. That whole market now is dried up because the subprime selling system credit doesn’t exist in the same way.
Amy: How is ACORN dealing with this fallout from this outsourced lending and from foreclosures?
