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Florida newest turf in lending hostilities

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© St. Petersburg Times, published May 9, 2001

BRANDON -- Protesters clustered outside the corporate office, holding signs and shouting lines like "Predatory lender. Criminal Offender!" and "Black or poor. We pay more!"

Inside, corporate executives stayed well hidden, protected by rooftop security agents and grim-looking police on the property's perimeter.

Big city conflict? Bad movie plot?

Not Tuesday morning. Household International, a huge financial company based in Prospect Heights, Ill., and a big lender to lower-income customers, chose to hold its annual shareholders meeting in its bland-looking Brandon facility.

And a rapidly expanding community activist group called ACORN -- Association of Community Organizations for Reform Now -- showed up to protest Household's abusive lending practices in the nation's poor neighborhoods.

[Times photo: Stefanie Boyar]
Members of the consumer group ACORN protest Household International's lending practices at its Brandon facility Tuesday.

While ACORN members were set to protest at Household offices in nine other cities, the streetside Brandon activists awarded Household its gleaming gold, stuffed (loan) "Shark of the Year" award.

Inside Household's annual meeting, an ACORN-backed resolution asked company shareholders to support a plan tying Household's executive pay to any progress made in reducing lending practices that prey on the poor. Like nearly all shareholder resolutions opposed by management at annual meetings, this one lost. But a point was made.

Brandon, that fresh sprawl east of Tampa of new housing, nondescript office parks and stretches of just-finished strip malls, seems an unlikely site for ground zero of a national ACORN protest campaign against Household.

If Household thought it could hide from ACORN in Brandon's look-alike streets, the company almost succeeded. ACORN shipped more than two dozen protesters from New Orleans via overnight bus in order to appear bright and early outside Tuesday's annual meeting site. But a second bus -- this one full of ACORN protesters heading north from Miami -- got lost and missed the morning show.

So there we all were. A big, profitable Illinois company with a rising stock price trying its best to ignore a peaceful protest group made up of folks of modest means shipped in from elsewhere.

Even Brandon deserves its 15 minutes of fame.

At the heart of the Household-ACORN conflict is the issue of predatory lending -- lenders that target unsophisticated elderly, minority and poor homeowners for repeated refinancings.

Typically, these loans include high interest rates, poorly disclosed closing fees, prepayment penalties and add-on credit insurance expenses. Just as often, Household pitches lower monthly payments on its loans because they exclude the home insurance and real estate taxes the borrower previously paid all at once.

Combined, these extra costs and misleading pitches often get borrowers in financial trouble and threatened with foreclosure on their homes.

Just ask Margaret Dickens of St. Louis, or Hattie Mitchell of New Orleans or Rudy Tachias of Albuquerque, N.M. They were among the angry Household customers to tell their loan stories, bullhorn in hand, at the Brandon protest.

Dickens was paying about $1,500 a month to keep her 7.5 percent mortgage and a few high-interest loans current. Then Household Finance (like Beneficial Finance, a consumer finance unit of Household International) started calling with an offer to consolidate her bills.

Household's hard sell gave Dickens a new first mortgage at the much higher interest rate of 12.5 percent. Then Household added $5,190 in points to her closing costs and charged her $5,700 for a single-premium credit life insurance policy that would pay off the loan if Dickens or her husband died. She also took out a home equity loan at a whopping 22 percent interest.

Dickens says she trusted Household and did not read all the papers that spelled out such wildly overpriced loans.

Household says everything it charged was spelled out in those papers.

"We clearly believe we aren't predatory lenders," Household International spokesman Craig Streem told the Associated Press.

Thank goodness, we "sophisticated" mortgage borrowers don't have to wrestle to find, comprehend and battle such draconian terms in our own loans. Most of us would not have read all that fine print when closing on a loan -- even if we had the time to do so.

Dickens paid $11,600 in charges on top of a $65,300 loan. Now she is stuck in a spiral of increasing debt.

Household, on the other hand, had a banner 2000. And Household chief executive William Aldinger was paid $32-million in total compensation last year.

It all sounds fair. If this were the 18th century.

Consumer finance companies don't like the now-popular term "predatory lender." But then most customers who may not have perfect credit would no doubt take exception to the name lenders call their business niche: "subprime lending."

As for ACORN, it's a growing force. One we'll be hearing more of in Florida.

ACORN's been around for 31 years, building strength in the Northeast and Midwest, where community activism has strong roots. Politically, the group's organized at the state level and has no qualms marching into swank lobbying offices in Washington, D.C., when pressing a point (as it did in March with Household).

ACORN's focus on predatory lending has helped prompt congressional hearings and spark local legislation. In North Carolina, New York, Massachusetts, Washington, D.C., Chicago and just last month in Philadelphia, laws have been passed toughening the rules on predatory lending. Fees are capped and cities cannot do business with predatory lenders.

Now ACORN's stretching into portions of the notoriously non-activist Southeast, including Florida.

ACORN set up an office in Miami several years ago and more recently expanded to Fort Lauderdale. It has an eye on Tampa Bay. But ACORN protesters had to be shipped into Brandon from afar to make some noise outside Household's Brandon office.

At Tuesday's protest, ACORN's Lanny Roy of New Orleans led the bullhorn cheers. "Household Finance . . . you're no good . . . don't rip off our neighborhood!" An ACORN member dressed in a full-length shark costume gyrated to the shouts.

Inside Household's annual meeting, asset manager Julie Goodridge was preparing to make her statement presenting the shareholder resolution backed by ACORN and another activist group. Just to enter the building, Household had demanded two forms of identification from her.

Of the nearly 350 people at the shareholders meeting, the vast majority were Household employees who worked in the company's Brandon facility.

"I have to tell you, I have never in my life been to such a hostile shareholder meeting," said the Harvard-educated Goodridge, president of Boston's Northstar Asset Management, which specializes in placing client money in "socially responsible" investments.

Earlier this year, college "Spring Breakers" showed up in Florida for a week of protest training by the Ruckus Society. Their target: Citigroup's predatory lending business.

Now ACORN has discovered Household International in Brandon.

Predatory lending's not going away tomorrow. But change is in the air. And -- surprise -- Florida finds itself new turf in the battlefield.

- Robert Trigaux can be reached at or (727) 893-8405.

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