Acorn plans Wed. Fed protest

The national housing group, Acorn, is demonstrating on Wednesday at Federal Reserve Banks in more than a dozen cities to pressure the federal regulator to crack down on predatory lending by subprime mortgage companies.

Acorn, or the Association of Community Organizations for Reform Now, is also rolling out a new program to assist subprime borrowers facing foreclosure. Twenty-nine of the nation's large subprime lenders, including Ameriquest, New Century Corp., Wells Fargo & Co. and others have agreed to restructure existing mortgages for homeowners who request assistance from Acorn because they are struggling to make their payments, said Chris Leonard, the campaign director for Massachusetts ACORN.

The lenders agreed with Acorn to negotiate a new payment plan under an existing subprime mortgage, he said.

Acorn said the Federal Reserve, one of the nation's top three regulators for the financial industry, has powers to regulate subprime lenders under the Home Ownership & Equity Protection Act of 1994.

Acorn's recommendations for new regulations include: explicitly barring lenders from selling mortgages that homebuyers cannot afford; eliminating prepayment penalties on subprime mortgages; limiting the use of stated-income mortgages that do not require borrowers to provide proof of their earnings; and require lenders to escrow taxes and insurance when calculating the monthly payments.

Subprime mortgages generated record foreclosure actions against Massachusetts homeowners in 2006, and other states including Georgia and Michigan are also experiencing increases in foreclosures.

The Home Ownership Act gives the Fed "the power to make regulations that affect the entire lending industry," Leonard said. He said the protest would be held at the Federal Reserve Bank of Boston's office on Atlantic Avenue at 10:30 a.m. on Wednesday.
(By Kimberly Blanton, Globe staff)