Monday, February 18, 2008

Chase Bank Pays Acorn to Help Reach Borrowers in Default

Mish's Global Economic Analysis, a blog devoted to economic and financial issues, posted an article today about methods now being resorted to by banks in order to reach hard-to-contact buyers in default on their payments.

Many borrowers don't trust their lenders and don't respond to efforts to contact them. In order to reach cagey borrowers, banks are now looking for creative ways to package their written communications to borrowers, packaging them to look like wedding invitations or other innocent material. Wells Fargo even offered $250 gift cards to borrowers in order to induce them to contact the institution, which bespeaks the level of desperation of lenders with hundreds of millions to billions of dollars worth of non-performing mortgages on their books.

Some banks are using grassroots community groups such as Acorn and its subsidiary Acorn Housing, to reach recalcitrant borrowers. Chase Bank now sends letters on Acorn letterhead and pays Acorn to leave its door hangers at the homes of unresponsive borrowers. Chase pays Acorn $50-$70 dollars for every person found, according to Mish's article.

Is Acorn also receiving money from Countrywide Financial,too? The organization has announced an agreement with Countrywide, billed prominently on Acorn's home page, to help borrowers avoid foreclosure.

I thought Acorn was here to help our most disadvantaged citizens find minimal decent housing and afford heat and power, but now it looks like Acorn is given to helping greedy lenders recover their losses and to helping borrowers stay in houses that go pretty far beyond the minimum.

Note to poster "Dave", who commented on my previous post on this matter: Acorn and Acorn housing are essentially the same organization. Go to the Acorn home page, and you will see that the parent organization is advertising its efforts on behalf of borrowers being foreclosed.

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