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The two sat at the table to review the details of the testimony Thompson plans to give at the Senate hearing. "This hearing will be the first time Texas senators will be able to hear directly from victims like you," Olsen told Thompson. "It's amazing, but we might even pass tough legislation in a conservative state like Texas."
ACORN's Texas campaign is part of a national effort to make predatory lending illegal. The group has been successful at the state and municipal levels -- 10 states and municipalities, including Texas, have passed laws intended to stop or limit the practice -- but getting a federal law will be tougher. U.S. Sen. Paul Sarbanes of Maryland, head of the Senate Banking Committee, has called predatory lending a "frontal assault on homeowners" and introduced legislation to regulate the industry. Congress, however, has shown little interest in passing it. "It is hard to describe how out-gunned we are at the federal level," said Lisa Donner, director of ACORN's Financial Justice Center. "The banking industry as a whole is opposed to any form of control. We have had a lot of success at the state level, where politicians are literally closer to the people being affected." Even without tougher laws, some of the worst abusers are being taken to court. On March 21, the First Alliance Mortgage Corporation, accused by the Federal Trade Commission of cheating elderly homeowners, settled that lawsuit for $60 million. And in February, ACORN filed a class-action suit in California against Household International, Beneficial's parent company, alleging that the company deliberately misled tens of thousands of California borrowers. "It is very difficult for Household to change," said Donner. "They spend so much money on marketing that they really are forced to make it back through deception and fraud. What they need to do is stop aggressively targeting poor communities, and that would allow conventional lenders to compete effectively in the subprime market."
Although Household representatives deny any wrongdoing, they released a list of "best practices" for their branches to follow shortly after the California case was filed. The best practices include limiting fees to 3 percent of the loan value and offering easy-to-read disclosures of all terms and conditions. Donner is skeptical of the changes. She said that Household promised to stop selling single-premium credit insurance almost a year ago, but borrowers report that they are still sold the dubious product in some states. Household said that it takes time to institute changes in their 1,400 branches. "Our best practices set a standard for the subprime industry," Streem responded. "We are in the vanguard, but ACORN refuses to give us credit because we won't sign a deal with them." Sometimes lenders can be convinced to change their behavior without lawsuits or legislation. In 2000, ACORN struck a deal with Ameriquest, the largest subprime lender, after a series of noisy protests that included filling the company's national headquarters with angry borrowers. In response, Ameriquest not only committed to stopping many of its abusive practices, but agreed to partner with ACORN to make loans at discounted terms in certain neighborhoods, including some in South Dallas. "When ACORN first targeted us, we felt unfairly harassed," said Adam Bass, senior executive vice president of Ameriquest. "But ultimately we decided to hear what they had to say. We found out we could learn a lot from them, and things have improved substantially." However, ACORN has found itself on the opposite side of Ameriquest in the fight to pass anti-predatory legislation. Ameriquest, like most lenders, feels that federal laws already prohibit predatory lending, and all that is needed is better enforcement. "If we keep passing tougher laws to regulate loans," said Bass, "then fewer people will have access to credit. ACORN might argue that those people can't afford loans, but we believe it is a personal decision." Thompson doesn't feel empowered by the loan she got from Beneficial. She thinks about the music and ballet lessons she can't afford for her grandchildren now that so much of her paycheck goes to inflated mortgage payments, and she hopes that a law will be passed to protect low-income borrowers. "Looking back, I know I should have talked to a bank and asked for financial advice," she said. "But, at the same time, lenders shouldn't be able to take advantage of people in desperate situations. Beneficial cheated me out of my life savings, and they didn't even have to break the law." A version of this story previously appeared on TomPaine.com.
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