Wells Fargo & Co. has launched an educational program to help subprime borrowers keep their credit in good standing, even as it faces a possible class-action lawsuit over its lending practices and as Congress considers tighter limits on exotic loans.
Wells Fargo’s “Steps To Success” program includes free access to credit records and bilingual “financial literacy” advice to borrowers who take out subprime loans with the bank.
A spokesman for consumer advocacy group ACORN told the Associated Press that it’s cheaper for Wells Fargo to give away free credit reports than “to compensate people for the excessive interest rates that they charged in the past.”
ACORN — The Association of Community Organizations for Reform Now — is supporting a lawsuit that alleges the bank charged subprime borrowers exorbitant fees and interest rates. The suit, filed in San Francisco Superior Court, seeks class-action status to represent borrowers dating back to December 1999. Wells Fargo said the lawsuit is unfounded.
North Carolina Congressman Brad Miller, a Democrat whose subprime lending bill HR 1182 stalled in the House Committee on Financial Services last year, told the AP that its prospects are better next year. Democrats are taking control of Congress, and Rep. Barney Frank, D-Mass., is likely to become the committee’s new chairman.
“I believe in the power of redemption and if (Wells Fargo) is willing to sin no more, I welcome that,” Miller said. “But more still needs to be done to protect consumers from hidden fees and other abuses.”
Stephanie Christie, head of Wells Fargo Home Mortgage’s retail subprime lending business, said the “Steps To Success” program is evidence of the company’s “strong commitment” to responsible lending principles.
“It demonstrates how we want to work with our customers every step of the way to help them achieve their personal and financial goals through sustainable home ownership,” Christie said in a statement. “With Steps To Success, our customers will know that we will work with them to create solutions if they have less-than-perfect, or not-well-established credit, or have other reasons to choose a nonprime loan.”
This week the New York attorney general’s office announced an agreement with Countrywide Home Loans Inc. in which the company will compensate minority borrowers who were allegedly given high-cost loans and implement a $3 million consumer education program.