Association of Community Organizations for Reform Now, known
as “ACORN,” is in the news again and conservative politicians are going for the
jugular vein. They smell blood and sense an opportunity to keep the
ultraliberal, left-wing “scoundrels” at bay. That is because of a now infamous
videotape depicting a prostitute and her pimp allegedly receiving counseling
from an ACORN representative about how to break the law.
Even liberals, progressives and independents are appalled.
Accordingly, politicians on both sides of the aisle are scampering to denounce
the grassroots, community group and cut off its federal funding.
ACORN has offices in 110 cities and is the largest
neighborhood-based, antipoverty group in the country. I had an opportunity to
observe ACORN close up and personal in the late 1980s. At the time I was a
volunteer advisory council member for the Atlanta Mortgage Consortium. I was
the only mortgage banker on the council.
The consortium was formed in reaction to a series of
articles in the Atlanta Journal-Constitution depicting intentional
redlining by mortgage lenders in the African-American neighborhoods. The
newspaper published statistical evidence, alleging that banks systematically
eliminated minority, mostly African-American, families from obtaining home
Reacting to claims of discrimination, a group of Georgia
banks formed and funded the consortium that specifically targeted the
African-American districts of Atlanta. Its objective was to make low-interest
loans in the minority areas of Atlanta. Most applicants had little savings,
tainted credit and salaries below the mean income level. They were previously
renters and sought to buy modestly priced homes.
Those of us with credit-underwriting experience, were
willing to accept relaxed underwriting standards to get disadvantaged
applicants into homes and atone for the sins of discrimination that was
prevalent in Atlanta's banking community at the time. But ACORN and the other
community groups were also represented on the advisory council and pushed for
more lenient benchmarks that would include all applicants. Their contention was
that everyone deserves to own a home regardless of their income level or credit
history. Moreover, they said that low-income families lacked the opportunity to
compile savings and should receive down-payment help.
The groups chipped away at the underwriting standards and
got most applicants qualified. They counseled new homeowners about their
responsibility to make timely payments, maintain their homes and understand how
homeownership was different than a rental arrangement. They even intervened
when payments were missed and tried to get the homeowners back on track.
But borrowers had difficulty making the payments and
defaults began to mount. Nevertheless, the banks were willing to accept
double-digit foreclosures for the greater good of the program. Then the
unexpected occurred — subprime lending.
The consortium was unable to compete with low documentation
loans, no documentation loans, stated and unverified-income loans, and loan
applicants that were buying homes much larger than they could possibly afford.
Consequently, the consortium was no longer needed and shut its doors.
Although ACORN and the community groups pushed hard to
further their own agenda, I never saw them alter documents, misrepresent loan
applicants’ income or do anything illegal. Rather, they believed that the
means, albeit loud and aggressive, justified the end.
And while many of its detractors would like to see ACORN
disbanded, the organization has championed liberal causes for almost 40 years.
They are a voice for those without a voice and take to the streets when no
other avenue of recourse is available to them.
So before politicians rush to judgment, it is important to
allow ACORN to investigate the misdeeds depicted in the video clip. Bertha
Lewis, its CEO says, "We have all been deeply disturbed by what we've seen
in some of these videos.”
Hence, it is appointing an independent auditor to
investigate the situation.
“We will go to whatever lengths necessary to
reestablish the public trust,” Lewis says. And furthermore, “We must get this
process right, so the good work can go forward.”
Jerry Chautin is a volunteer SCORE business counselor,
business columnist and SBA’s 2006 national “Journalist of the Year” award
winner, tenonline.org/sref/jc1bio.html. He is a former entrepreneur, commercial
mortgage banker and business lender.