THE MONETARY IMPACT OF ACORN CAMPAIGNS

:
A Ten Year Retrospective, 1995-2004
By Lisa Ranghelli

NOVEMBER 2006

ACORN
Association of Community Organizations for Reform Now

www.acorn.org

Table of Contents
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 NOTE ON METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 TEAM EFFORTS – CREDITING CAMPAIGN ALLIES . . . . . . . . . . . . . . . . . . . . . . . . . .3 CAMPAIGNS TO INCREASE WAGES OF LOW-INCOME WORKERS . . . . . . . . . . .4 PREDATORY LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 EARNED INCOME TAX CREDIT (EITC) AND TAX PREPARATION . . . . . . . . . . . 11 LOAN COUNSELING AND CRA AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . .12 HOUSING DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 LOCAL INFRASTRUCTURE AND PUBLIC SERVICES . . . . . . . . . . . . . . . . . . . . . . . .14 BUDGET CUTBACKS AVERTED OR RESTORED . . . . . . . . . . . . . . . . . . . . . . . . . . .15 METHODOLOGIES APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

About ACORN (www.acorn.org)
ACORN – the Association of Community Organizations for Reform Now – is the nation’s largest community organization of low and moderate income families, with more than 300,000 families organized into neighborhood chapters in over 110 cities around the country. Since 1970, ACORN has been taking action and winning victories on issues of concern to our members. Our priorities include better housing for first time homebuyers and tenants, living wages for low-wage workers, more investment in our communities from banks and governments, and better public schools. ACORN achieves these goals by building community organizations that have the power to win changes – through direct action, negotiation, legislation, and voter participation. For more information, go to www.acorn.org.

About the Author
A draft of this report was written by Lisa Ranghelli in consultation with key ACORN staff. Camellia Phillips and Piper Stannard completed and edited the final version. Lisa Ranghelli is a consultant to foundations and social justice organizations and conducts research, documentation, planning and evaluation of social and economic change strategies from her home office in Western Massachusetts. Prior to becoming a consultant, Ms. Ranghelli was Deputy Director of Public Policy at the Center for Community Change. She can be reached at lisa@ranghelli.com.

THE MONETARY IMPACT OF ACORN CAMPAIGNS : A Ten Year Retrospective, 1995-2004

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Executive Summary
The Association of Community Organizations for Reform Now (ACORN) has been building organizations and developing leadership among low and moderate income residents in neighborhoods throughout the United States for thirty-five years. During that time, ACORN chapters have worked individually and collectively to organize innovative grassroots campaigns on a number of critical issues. While these victories have been documented in various publications, they have rarely been quantified in a way that demonstrates the scale of wealth redistribution ACORN has achieved. Whether getting more cops on the street, putting more money into the pockets of workers, or reducing crippling debt for homeowners, ACORN has and continues to redirect resources from public and private institutions to families and communities across the country. PUTTING A DOLLAR VALUE ON COMMUNITY ORGANIZING This report attempts to document and quantify ACORN victories for a recent ten year period, from 1995-2004. By no means exhaustive, it does convey a real sense of the breadth of ACORN victories, as well as the monetary impact of some of ACORN’s most ambitious and groundbreaking campaigns, such as its work on predatory lending and living wages. Examining just this ten-year slice of ACORN’s activism yields impressive numbers. OUTCOMES Using a range of issue-specific methodologies, a conservative estimate puts the total monetary value of ACORN victories for the last decade at $15 billion, or an average of $1.5 billion per year since 1995. In some instances, these are one-time gains, but in many cases – as with long-term systemic changes to lending practices and wage structures – benefits will accrue to homeowners, workers and their families for years to come. Issue Living and Minimum Wage Increases Predatory Lending EITC and Tax Preparation Loan Counseling and CRA Housing Development Local infrastructure and public services Budget cutbacks averted/restored TOTAL Monetary Benefits $ 2,237,645,466 $ 6,265,776,423 $ 8,036,546 $ 6,099,012,514 $ 33,559,000 $ 350,254,300 $ 226,230,000 $15,220,514,249

Categorized by issue area, these totals encompass the estimated monetary benefits of some of ACORN’s major campaigns between 1995 and 2004, including: • Passage of 11 living wage ordinances, and minimum wage increases in Illinois, Massachusetts, Florida, New York, and the City of San Francisco. • Legislation limiting predatory lending in Massachusetts, New Mexico, California, New York and New Jersey, and improvements in federal regulations. • Agreements negotiated with some of the nation’s largest subprime lenders, including Household Finance, Wells Fargo Financial, and CitiFinancial, to change abusive practices and provide direct financial assistance to borrowers trapped in harmful loans. • Fee reductions on high-cost tax Refund Anticipation Loans sold by H&R Block, the biggest commercial tax preparation company in the country. • Helping 5,000 low-income households claim the Earned Income Tax Credit (EITC) and receive free tax preparation in 2004 alone.
1

THE MONETARY IMPACT OF ACORN CAMPAIGNS : A Ten Year Retrospective, 1995-2004

Executive Summary

CONT’D

• Mortgages with below-market interest rates, no points and no private mortgage insurance, made to 54,949 low and moderate income homebuyers counseled by ACORN Housing Corporation. • Development of 408 units of affordable housing in Dallas, Little Rock, Phoenix and Chicago, and ownership and management of an additional 700 units of affordable housing in New York City. • Improvements in services to low-income communities throughout the country, including rental assistance programs and housing trust funds, local hiring agreements, better city services, funding for schools, healthcare access, and utilities payment assistance programs. • Prevention of major budget cuts to critical programs like state and local education funding, federal housing funds, public transit, and city and county employee’s jobs. IMPACT AND IMPLICATIONS It is rare that a community organization that spends its time in the trenches, fighting for social and economic justice every day, has the time to step back and look at its accomplishments. However, to be an effective movement for change, we need to be able to document our wins and assess where our impact is greatest. ACORN has attempted to do this, on a modest scale, using limited resources. The results are significant: more than $15 billion in benefits to low and moderate income communities across the country in only a decade. Already, since the research began for this report, ACORN has won even more improvements for its low and moderate income constituency that have yet to be quantified. What this report gives us is just a glimpse at the impact – and the very real monetary value – of grassroots community organizing on the local, state, and national levels.

THE MONETARY IMPACT OF ACORN CAMPAIGNS : A Ten Year Retrospective, 1995-2004

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Note on Methodology
The methodology for estimating the monetary impact of ACORN victories varies from issue to issue. If the methodology can be described briefly and simply, it is included within the section for that issue area. If it is more lengthy and complicated, the methodology for an issue is included in the appendix. In general, the methods used are appropriate to each issue, drawing on the knowledge of ACORN staff or others who are experts in the field. Some victories were won exclusively by ACORN chapters, while others were the result of coalition efforts at the local, state or national level. The extent of ACORN involvement is taken into consideration when measuring impact. The methodologies use conservative assumptions, erring on the side of caution. Given the limits of resources, time, and institutional memory, this calculation of ACORN accomplishments is necessarily incomplete, and is intended to provide a reasonable estimate of impact, rather than a conclusive number.

Team Efforts – Crediting Campaign Allies
We know that many of the victories discussed in this report came out of campaigns where a range of allied organizations – other community groups, faith leaders, unions, progressive elected officials, and others – contributed to the victory. It is obviously difficult to assign precise percentages of “credit” when discussing how these victories were won, but ACORN recognizes that many of these campaigns would not have been successful without the contributions of other organizations. We have limited this report to campaigns where it is generally acknowledged that ACORN played a leading role, but certainly even in these cases credit and praise need to be shared.

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Campaigns to Increase Wages of Low-Income Workers
LIVING WAGE ORDINANCES ACORN began fighting for living wage ordinances in 1994, and 10 years later ACORN chapters can take credit for winning living wage ordinances in 11 cities: New York City, St. Paul, Minneapolis, Boston, Oakland, Chicago, Cook County (IL), Detroit, Denver, St. Louis, and Sacramento. The ACORN Living Wage Resource Center has assisted numerous other living wage campaigns in the last decade. It is fair to say ACORN’s leadership in this area has contributed significantly to the national living wage movement. Economist Stephanie Luce, in her book Fighting for a Living Wage, estimates roughly 250,000 workers nationwide benefit from a living wage ordinance, averaging $2 per hour in increased wages. Based on a 30 hour work week, or 1,500 hours worked per year, the total amount of increased wages going to workers nationally comes to $750,000,000 annually. ACORN-led campaigns represent close to 30 percent of the total new wages won by covered workers. # workers affected 72,224 250,000 Total new annual wages $216,672,000 $750,000,000

Living Wage Campaigns 11 ACORN living wage ordinances: All living wage ordinances (1231):

MINIMUM WAGE INCREASES ACORN’s recent focus on citywide and statewide minimum wage increases as a potentially more beneficial and more easily enforced way to increase wages is resulting in even greater monetary benefits for workers. ACORN has won a citywide increase in San Francisco, as well as statewide minimum wage increases in Illinois, Massachusetts and Florida. In New York, ACORN worked closely with the Working Families Party in a successful effort to win an increase. To find the monetary value of these wage increases, for each city or state, economists calculated the impact on workers’ income. These methodologies typically estimate impact for workers currently earning below the new minimum wage, who would receive an increase to the new rate, and those who are already earning above the new minimum wage, but would experience a ripple effect from the wage floor being raised. A detailed description of these calculations for each location is included in the Methodologies Appendix. According to calculations performed by various economists for each city or state, the total new annual wages are: Minimum Wage Increase Massachusetts 2001 $5.25 - $6.752 San Francisco 2004 $6.75 - $8.50 Illinois 2004 $5.15 - $6.50 4 Florida 2005 $5.15 - $6.155 New York 2005 $5.15 - $7.15 TOTAL WORKERS AFFECTED/NEW WAGE DOLLARS City or State Effective Date Number of Estimated Total of Workers New Annual Wages 287,088 $ 235,796,2203 55,740 $ 108,468,629 806,000 $ 875,600,000 854,793 $ 415,000,000 1,200,000 $ 930,000,000 3,203,621 $2,564,864,849

1

As of December 2004. The Massachusetts increase was phased in over two stages. 3 Unlike the other state analyses, the Massachusetts calculation does not include ripple effects of those workers just above the minimum wage who received a wage boost as well. 4 The Illinois increase was phased in over two stages. 5 The Florida increase will be indexed to inflation.
2

THE MONETARY IMPACT OF ACORN CAMPAIGNS : A Ten Year Retrospective, 1995-2004

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Campaigns to Increase Wages of Low-Income Workers
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Discounting for ACORN’s secondary role in the New York State victory, through the end of 2004 we can say ACORN has won $2 billion in new annual wages for minimum wage workers. For workers in Florida, the amount will continue to rise annually as it is pegged to inflation. STATE EITC INCREASES Finally, ACORN has successfully increased the earnings of low-wage workers by allowing them to keep more of what they make. In Massachusetts, ACORN led a coalition that won an increase in the state Earned Income Tax Credit (EITC) in 1999, from 10 percent of the federal credit to 15 percent, or a 50 percent increase. According to the State Department of Revenue, close to $21 million additional dollars went into the pockets of low-income taxpayers annually after the increase was implemented. MA Tax Year Number taxpayer claims 2000 268,000 2001 272,000 Rise in amount claimed after increase took effect: Total amount claimed $39,723,440 $60,696,906 $20,973,466

Massachusetts state tax expenditure data indicate this amount is increasing over time. The State Office of Administration and Finance projects that in 2005 it will pay out $27 million more in earned income credits than in the year before the EITC increase was enacted: $69 million in Fiscal Year 2005, compared to $42 million in expenditures in FY 2001 (numbers are in 2003 constant dollars).6

6

All State EITC figures were provided by the Massachusetts Budget and Policy Center. 5

THE MONETARY IMPACT OF ACORN CAMPAIGNS : A Ten Year Retrospective, 1995-2004

Predatory Lending
During the last several years ACORN has successfully tackled predatory lending by targeting specific lenders, affecting industry wide practices, reforming state and federal laws and regulations, and helping individual homeowners seek relief. In some cases ACORN has worked alone, and in many cases ACORN joined with other allies; in every case, ACORN played a crucial and necessary role to curb abusive practices. Included below is a brief summary of some of the most significant changes, with estimates of the savings to borrowers. These estimates give a sense of the scale and cumulative impact of ACORN’s organizing around predatory lending. Putting them together, and taking into account some overlap in the numbers, we can reasonably say that, as a result of specific ACORN campaigns and victories – as well as changes in laws, regulations and industry practices which ACORN and its allies were a crucial part of securing – borrowers are saving at least $5.6 billion a year, and have benefited from $636 million in one-time payouts due to lawsuits and other compensatory actions. Detailed calculations are contained in the appendix, and are based primarily on the methodology developed by Eric Stein in his report, “Quantifying the Economic Cost of Predatory Lending.”7 FINANCED CREDIT INSURANCE This predatory practice bundles into the loan a single-premium credit insurance product that – unlike most insurance products, which are paid on a monthly basis – adds the total premiums for the life of the policy into the loan amount. This practice requires borrowers to pay interest on this amount for the life of the loan.8 ACORN, working alongside other partner groups around the country in a hard fought effort, succeeded in virtually eliminating financed credit insurance in the U.S. First, individual companies were induced to stop including it in loans. Then ACORN and allies paved the way for its demise by getting the state of California to outlaw financed credit insurance through legislation passed in 2001 and put into effect in 2002. Finally, the federal government followed suit when the Federal Reserve Board issued a rule change relating to the definition of points and fees under the Homeownership and Equity Protection Act (HOEPA). ACORN played a considerable role in all of these efforts and can take significant credit for the savings to borrowers. The savings to California borrowers alone is striking, demonstrating how critical the California victory was in overturning this predatory practice nationally. In California, which had 20% of the country’s total loan volume in 2000, the savings amount to a staggering $420 million annually. Stein estimates conservatively that borrowers nationally will save $2.1 billion a year by being spared this abusive practice. FEDERAL REGULATION ACORN and many fellow advocates won a collective victory when the federal Treasury Department’s Office of Thrift Supervision (OTS) changed the regulations for the Alternative Mortgage Transaction Parity Act (AMTPA). Under the regulatory change, effective July 1, 2003 lenders must abide by state laws that restrict or forbid prepayment penalties. For the prior 10 years the federal AMTPA law had been interpreted as pre-empting state laws intended to curb prepayment penalties. Thirty-five states have restrictions or outright bans on prepayment penalties. Stein estimates that nationwide, prepayment penalties cost borrowers a total of $2.3 billion each year. Reducing his figure by 20%, to account for the fact that only 35 states have bans or restrictions, results in an annual savings of $1.84 billion.

7

8

Eric Stein, “Quantifying the Cost of Predatory Lending,” A Report from the Coalition for Responsible Lending, July 25, 2001 (revised October 2001). According to Stein, “Financing credit insurance is equivalent to financing five years of utility or grocery bills over 15 or 30 years. Purchasing credit insurance in this way makes no sense since it is consumed and can be paid for every month, just like other insurance policies, thereby avoiding unnecessary interest payments and equity stripping” (p6).

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Predatory Lending

CONT’D

STATE LEGISLATION ACORN played a major role in winning laws that curb predatory lending in the following states: Massachusetts, New Mexico, California, New York and New Jersey. The losses suffered by borrowers in these states due to predatory lending practices has been significant. According to conservative estimates by Stein, based on loan volume data from the year 2000, the costs of predatory lending to borrowers in one year among all five states was $2.9 billion, including the cost of financed credit insurance. The laws enacted vary from state to state in the extent to which they curb predatory practices, and it is unlikely that any of them completely eliminates the estimated $3 billion in losses. However, we estimate substantial savings to borrowers in terms of limits on fees and penalties. After using several different methods to calculate savings on fees and penalties (see Methodologies Appendix for details), we estimate conservatively that borrowers in the five states together are saving more than $436 million annually. OTHER STATE CAMPAIGNS In addition to winning state legislation that reduces or eliminates abusive terms and conditions of borrowing, several ACORN chapters have also secured legal protections for homeowners against real estate fraud. Through deceptive transactions, homeowners unknowingly risked losing their homes and the equity invested in them. The total estimated savings to homeowners who, thanks to ACORN, avoided foreclosure and unscrupulous real estate practices in Minnesota, New Mexico, and Maryland is $8.5 million. Examples of other state campaigns: • Minnesota homeowners were being persuaded by unscrupulous lenders to sell their home and then buy it back under a rent-to-lease arrangement. Several hundred families each year were losing not only their homes but as much as 50% of the equity they had accrued. Whereas the goal of predatory lenders is usually to extract equity from the borrower’s home, the clear goal of foreclosure rescue scams is to seize both the equity and the home. These companies target homeowners facing foreclosure and promise to save their home. Instead, the lender gains ownership of the home for much less than its actual value and then evicts the family and sells the home for its real value. ACORN compelled passage of a state law designed to curb such practices. While homeowners throughout the state were affected by this scam, most of the cases were concentrated in Hennepin and Ramsey County. In 2004, there were a total of 1,750 foreclosure sales in these two counties. Prentiss Cox, the former Assistant Attorney General in Minnesota who prosecuted many of these scams, estimates that 10-15% of foreclosured homeowners got taken by these scams. While most homeowners who were taken by these scams had $50,000 or more in equity, we are using a conservative figure of $30,000 in equity saved. Thus, using very conservative figures, we estimate that every year this law saves over 200 families from this scam and protects over $6 million of their equity. • In New Mexico, in addition to getting a comprehensive anti-predatory lending law passed, ACORN has tackled appraisal fraud, whereby homes are assessed at triple their actual value. Unsuspecting purchasers end up buying homes at inflated prices and are saddled with predatory mortgages they cannot afford, leading to foreclosure and loss of the home. ACORN persuaded the Federal Housing Administration (FHA), which insures some of these mortgages, to institute a moratorium on foreclosures of FHA-insured homes—thus saving ten homes to date. ACORN also got Fannie Mae to buy twenty foreclosed houses and return them to their owners. ACORN staff estimate the total savings to homeowners of these two actions at $500,000. • In Maryland, ACORN also took on the practice of flipping, and was able to help 100 families save their homes, at an estimated benefit of $20,000 per home, or $2 million total.

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Predatory Lending

CONT’D

LAWSUITS AGAINST HOUSEHOLD FINANCE Beginning in 2000 ACORN ran an aggressive national campaign to combat predatory lending practices by Household Finance,9 one of the nation’s largest subprime lenders. One outcome of that campaign was ACORN’s victory in a class-action settlement with Household that was valued for the court at $150 million in payout to borrowers, including $72 million allocated for a Foreclosure Avoidance Program (FAP) and $3 million for the Fresh Start Program. As part of the settlement, Household also agreed to end the sale of financed credit insurance and other similar products, stop deceptive sales practices that included hiding points, fees, or prepayment penalties charged on a loan, and end billing practices which encouraged borrowers to fall behind on their high-rate second loans. The Foreclosure Avoidance Program, which modifies loans that were unaffordable to borrowers, is already making a difference in homeowners’ lives since ACORN won the settlement. In 2004, 4,900 Household borrowers received reductions in their interest rates, drawing down $29 million in assistance from Household through FAP. This example from Minnesota clearly demonstrates the immediate relief borrowers experience through FAP: Denise Slattery is a single mother who had a first mortgage with Household at 10.9% interest and a second at 21.75%. Her combined mortgage payment was over $2,000 a month. She struggled to make ends meet and financed much of her daily expenses on credit cards. Through the Foreclosure Avoidance Program, Household wrote off the second mortgage entirely and permanently fixed the remaining balance of her first at 3.5% interest. Her monthly payment was reduced to $881, saving her more than $1,100 per month. Under the Fresh Start program, Household customers who lost their homes to foreclosure and have not since bought another house, are eligible for new purchase loans with favorable terms, such as a 6.5% interest rate, and flexible qualifying guidelines. In addition, ACORN was directly influential in the successful pursuit of a multi-state lawsuit against Household by Attorneys General in every state, resulting in a settlement of $484 million in direct compensation to borrowers. During the Household campaign, ACORN also helped hundreds of borrowers in several states get thousands of dollars back from Household in fees, credit insurance, significant loan modifications, and in some cases refinances into better loans. FEE REDUCTIONS ACORN’s campaign against Household, as well as campaigns against other lenders, forced these companies to change several abusive practices, including the charging of excessive fees. • Household Finance lowered the points it charged borrowers from 7.7% of the loan amount to 5%.10 This reduction applies to all loans from 2002 forward, resulting in an average yearly savings of $405 million to borrowers. • In 2002, Wells Fargo Financial charged customers 10% of the loan in points. By 2004 they had reduced this to 4%, resulting in average annual savings of $213 million to consumers. • CitiFinancial, the consumer finance unit of Citigroup, lowered its fees from 5% to 3% in 2003, resulting in annual savings to borrowers of $268 million.

9

10

In 2002 Household was bought by HSBC. Any fees greater than 5% of the loan amount plus any fees charged a borrower who receives no net tangible benefit are considered predatory (Eric Stein, “Quantifying the Economic Cost of Predatory Lending,” October 2001).

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Predatory Lending

CONT’D

PREPAYMENT PENALTIES Prepayment penalties trap borrowers in high-rate loans, prevent them from making the transition to conventional loans, and penalize them for paying off their debt. • As part of the settlement with states’ Attorneys General, Household agreed to lower its prepayment penalty term from 5 years to 2 years. This reduction saves borrowers an estimated $198 million each year. • In mid-2003 Wells Fargo reduced its prepayment penalty term from 5 years to 3 years, saving consumers $21.1 million annually. • In 2004 CitiFinancial removed prepayment penalties after the third year and lowered the amount it charges in the second and third year of the loan. This reduction will save borrowers an estimated $141.5 million each year. INDIVIDUAL SAVINGS TO BORROWERS ACORN pressure on Wells Fargo Financial, Ameriquest, and other lenders has resulted in thousands of dollars in savings to individual borrowers through fee and penalty refunds and waivers, loan modifications, and refinances. ACORN currently doesn’t have the capacity to total all of the savings from each city, but the following story is illustrative: Richard and Lynn Morneau have owned their home in South Minneapolis since 1984. They had a mortgage with TCF at 7.75% interest and a monthly payment of $784, including taxes and insurance. Wells Fargo Financial, with whom they already had a car loan, regularly solicited them for additional loans or to buy a vehicle which Wells Fargo Financial had repossessed. When the Morneaus decided to buy one of the vehicles from them, Wells Fargo financed it into a refinance mortgage which also paid off the Morneaus’ much lower rate TCF loan. Wells Fargo gave them a 20 year mortgage at 11.98% interest with a monthly payment of $1,950, not including taxes and insurance. ACORN Housing helped them refinance to a 7.2% rate and 30 year term, reducing their payment by $800 a month. REFUND ANTICIPATION LOANS Most tax preparation companies doing business in low-income communities promote loan products that allow the taxpayer to receive the amount of their anticipated refund immediately, rather than waiting for a check from the IRS. In reality, the delay in getting IRS payments is not that long, but these products are marketed to unwitting, cashstrapped clients, and they carry high fees. In 2004, ACORN approached H&R Block, the biggest tax prep company in the country, and the biggest marketer of Refund Anticipation Loans (RALs) and Refund Anticipation Checks (RACs). ACORN organized more than 400 actions against RALs in 2004, targeting H&R Block as the biggest seller. H&R Block and ACORN sat down to discuss the issue of the “administrative fee” the company charges for RALs and RACs. In 2003, 43 percent of electronic file customers at H&R Block received a RAL or a RAC – a total of 6,284,000 customers. The average administrative fee charged those customers was $32. ACORN succeeded in getting H&R Block to eliminate their administrative fees on all RALs and RACs starting in tax year 2005 (they were eliminated in 13 states in 2004). This will result in a savings of $200 million or more to electronic filers each year. H&R Block also agreed to improve disclosure, and to more aggressively advertise the speed of direct depositing of tax refunds, which should further reduce the number of RALs and RACs sold.

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Predatory Lending

CONT’D

Although not counted in the totals for this report, it is important to note that building on its success with H&R Block, starting in 2004 ACORN similarly pressured Jackson Hewitt, the nation’s second largest tax preparer, to improve its practices. On Tax Day, April 15, 2005, Jackson Hewitt announced that they had eliminated their application fee for RALs and RACs at their company-owned stores and had begun the process of getting their franchisees to do the same. In 2004 Jackson Hewitt had 605 company-owned stores which prepared a total of 400,000 tax returns. Reportedly 63% of Jackson Hewitt’s customers buy a RAL or RAC, which translates into 252,000 of these products sold at the company-owned stores. The typical administrative fee charged those customers was $40. Jackson Hewitt’s elimination of their application fee will result in annual savings of over $10 million to the customers at the companyowned stores. Jackson Hewitt also agreed along the lines of Block to improve its disclosures and better promote the use of free refund options. An additional issue that ACORN discussed with Jackson Hewitt was the company’s assistance in getting Santa Barbara Bank and Trust, the primary bank which Hewitt uses to make their RALs and RACs, to lower their fees. Along with the elimination of their own application fee, Jackson Hewitt announced that Santa Barbara had agreed to eliminate a $10 fee they charged for EITC refunds. In 2004, Santa Barbara made 1.58 million RALs. Nationally, EITC recipients make up 60% of all RAL customers. This would mean that Santa Barbara made approximately 948,000 RALs for EITC refunds. The elimination of their EITC surcharge will result in annual savings of about $9.5 million.

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Earned Income Tax Credit (EITC) and Tax Preparation
The federal EITC is an important bipartisan poverty-alleviation strategy that gives eligible low-wage workers back some of their tax bill in the form of a refundable credit. However, many low-income families are not aware that they are eligible for the EITC or how to apply for it. At the end of 2003 ACORN engaged in a pilot project in New Orleans, San Antonio, and Miami to help families with free tax form preparation and claiming of the EITC and other eligible credits. In its first year of operation, the program yielded impressive results. By April 15, 2004, free tax preparers at the ACORN sites in New Orleans, San Antonio and Miami had seen 5,710 clients, and prepared taxes for 3,877 of them for calendar year 2003. Of this group, 1,904, or 49.1%, collected the EITC, and 771, or 19.9% collected Child Tax Credit dollars when they did their taxes. More than $3,389,800 in EITC, and more than $5,533,590 in total refunds (including Child Tax Credits, dependent care credits, refunds of overpayments, etc) flowed to low-income taxpayers through the three sites. In addition, free tax prep sites run by ACORN in New York helped another 1,354 taxpayers claim $462,088 in EITC dollars, and $1,875,236 in total refunds. Because the tax preparation at all four sites was free, participants also saved tax prep costs, which on average cost $120 per person.11 For the 5,231 people that were served, this amounts to a savings of $627,720. Thus total savings and refunds for participants equals $8,036,546. In many cases individuals had not filed taxes or received refunds in previous years, and ACORN is helping many participants secure refunds for multiple years. In Miami, for example, one-third of clients had not filed taxes the previous year. Also, at least 300 families so far have filed back years’ tax returns with ACORN assistance. However, it is important to note that probably many clients would have received the EITC without ACORN assistance, so some of the $8 million may have been recouped by taxpayers anyway. In addition, other ACORN chapters assisted with outreach for programs run by other agencies. For example, Seattle ACORN conducted outreach for the EITC program run by United Way of King County, which served 1,800 clients and helped them secure $2.2 million in EITC refunds.

11

Based on average fees charged by commercial tax preparers, including H&R Block, and drawn from the report “Picking the Taxpayers’ Pockets, Draining Tax Relief Dollars: Refund Anticipation Loans Still Slicing Into Low-Income Americans’ Hard-Earned Tax Refunds,” The NCLC/CFA 2005 Refund Anticipation Loan Report, by Chi Chi Wu, National Consumer Law Center, with Jean Ann Fox, Consumer Federation of America, January 2005. 11

THE MONETARY IMPACT OF ACORN CAMPAIGNS : A Ten Year Retrospective, 1995-2004

Loan Counseling and CRA Agreements
ACORN has negotiated agreements with banks through the Community Reinvestment Act (CRA), a federal law which requires banks to invest in low-income communities. ACORN has used this law to pressure banks to develop special mortgage programs and to offer favorable loan terms to ACORN members and ACORN Housing Corporation clients. Over time ACORN has changed the way banks do business, by getting them to change their underwriting standards. This has allowed ACORN to transform the housing market in places like Bridgeport, CT and Houston, TX, expanding homeownership opportunities previously not available to low-income communities. ACORN Housing Corporation (AHC) was established by ACORN twenty years ago to focus exclusively on helping ACORN members and other low-income families purchase their own homes by offering loan counseling services and helping buyers secure mortgages. From 1995 to 2004, AHC offices in 38 cities educated 192,144 potential buyers, counseled 137,231 clients, and assisted families in securing 54,949 mortgages, totaling over $6 billion. This $6 billion represents substantial investments in dozens of communities and wealth creation for the families accruing equity in their homes. AHC offices have also helped hundreds of families through delinquency counseling, saving them hundreds of thousands of dollars by avoiding foreclosure. In addition, ACORN has saved homebuyers more than $99 million by securing mortgages with below market interest rates, no points, and no private mortgage insurance (PMI). PMI is insurance that is paid monthly by the homebuyer but protects the lender against loss if the homebuyer defaults on their loan. PMI is almost always required when a homebuyer makes less than a 20% down payment, and the annual cost is usually between 0.3% and 0.6% of the loan amount depending on the size of the down payment, type of mortgage, and borrower’s credit.12 By sparing homebuyers the PMI requirement, ACORN has helped homeowners save more than $18 million collectively in ten years. From 1995 to 2004, annual interest savings for AHC-counseled borrowers represents over $24 million. For example, most AHC-counseled loans are a full point below the market interest rate, but for this report we calculated it conservatively using an interest rate a half point below market. To find the dollar value of these savings, we determined the monthly interest savings based on the average loan amount for an AHC-counseled loan in each year, multiplying it by 12 for the annual savings and then multiplying that by the number of mortgages AHC did in that year. Most impressive are the savings to ACORN homebuyers from securing loans with no points – almost $57 million over the ten year period. When a consumer applies for a mortgage, they usually have a broad range of financing options. Part of this financing process often includes selecting a combination of a loan interest rate and “points.” A point is an up-front fee, paid at closing, that borrowers often pay in order to secure a lower interest rate over the life of the loan. Each point is equal to 1% of the amount borrowed. For example, two points on a $100,000 loan adds $2,000 to the closing costs. AHC-counseled homebuyers, however, receive below market interest rates without having to pay points. The value of this savings to homebuyers was calculated by taking the average rate of points in a given year and multiplying that rate times the value of AHC-counseled mortgages that year – resulting in total savings to borrowers of between $3.5 million and $9.8 million annually over the ten-year period.

12

Mortgage Insurance Companies of America (MICA)

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Housing Development
ACORN Housing Corporation has also been directly engaged in affordable housing development in a handful of cities. In Dallas, Little Rock, Phoenix, and Chicago, 408 units have been developed with investments of $16,759,000. In New York City, the New York ACORN Housing Company owns and manages 700 apartments, providing lowincome residents with quality, stable housing at below market rates. For these tenants, the average monetary benefit of living in an ACORN apartment rather than finding, renting, and maintaining a rental apartment in the open New York City market, is $2,400 per year or $200 per month. This represents a total of $1,680,000 average savings per year for ACORN tenants, and $16.8 million over the last decade. Thus, ACORN housing development and management programs have benefited communities with $33.6 million in investments and rental savings.

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Local Infrastructure and Public Services
Local ACORN chapters around the country have been organizing on issues of direct concern to their members, from the proverbial “stop sign” and other infrastructure issues, to city services, transportation, housing, jobs, schools, utilities, and lending and credit issues. Data collected from close to 50 chapters, reflecting victories won in the last decade (although in most cases memory only extends back a few years), convey a sense of the local impact ACORN is having on a range of issues: Monetary Value of Wins $ 68,782,600 $ 2,321,000 $103,530,000

Issue Housing CRA/Predatory Lending Jobs Infrastructure and City Services Education Health Care Environment Utilities TOTAL

Examples of wins Rental assistance programs, rehab and repair programs, housing trust funds. Reimbursements for scammed clients, refinance of abusive loans. Hiring on school construction projects, protected union jobs. Stop signs, street lights, speed bumps, sidewalks, sewers, tear-down of abandoned buildings, increased police patrols, libraries, recreation centers, urban redevelopment. Increased funds for inner city schools, new lead teacher program. Reductions in hospital expenses for the indigent, hospital language access programs, clinic repairs, new charity care policies Canal clean-ups, fines for polluters, lead testing and remediation. LIHEAP funding and outreach, utilities rebates.

$ 72,214,700

$ 69,140,000 $ 23,496,000 $ 3,350,000 $ 7,420,000 $350,254,300

This total figure of $350 million should be viewed as a conservative estimate. Most of the victories included in the above tabulation occurred in the last few years, and not every single ACORN chapter is included. Turnover in staff, and lack of resources to thoroughly review all ACORN chapters’ written reports from the last decade, hinder our ability to more comprehensively quantify local wins.

THE MONETARY IMPACT OF ACORN CAMPAIGNS : A Ten Year Retrospective, 1995-2004

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Budget Cutbacks Averted or Restored
In addition to fighting for better city services, many ACORN chapters have been on the defensive, organizing to prevent major cuts to programs that benefit their members. After the most recent economic downturn, cities and states found themselves short of revenue and scrambling to close budget gaps, often at the expense of low and moderate income families. ACORN has been battling these efforts and in many cases has succeeded in averting proposed cuts or getting funds restored. Altogether, ACORN chapters have won at least $226,230,000 in funds that otherwise would have been sucked from their communities. The biggest gains were made in the following areas: • State and local education funding cuts rescinded or funds restored; • Federal housing funds restored; • Public transit cuts averted, including proposed route cuts and fare increases; • City and county employees’ jobs retained, including school social workers, crossing guards, and probation officers.

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Methodologies Appendix
Methodology for Campaigns to Increase Wages of Low Income Workers
LIVING WAGE CAMPAIGNS: To obtain estimates of workers covered, in Fighting for a Living Wage (Cornell University Press, 2004), Stephanie Luce used several methods. For some cities, academic or city impact studies were available. In a few cases, city officials gave official estimates of covered workers in newspaper reports. In other cases, Luce had an estimate of the number of contracts covered by the ordinance: in these cases, she took an average number of workers covered per contract based on estimates from other cities. For cities where she had no estimate, she used the following methods: • Estimates for ordinances passed through 1999: First, Luce compared the coverage in a city of similar size – with a similar ordinance – to the unknown cities simply by scaling by their respective populations, with population estimates taken for 1998 from the Census Bureau. This meant that for small areas with service contract ordinances (Ypsilanti Township and City, West Hollywood, Somerville, Cambridge) she took the ratio of their population to the population of New Haven (the smallest city with a similar style ordinance and an estimate for number of workers covered) and multiplied that ratio times the number of workers covered for New Haven. Similarly, for subsidy-only ordinances (such as Des Moines, St. Paul, Minneapolis, Duluth, Gary, Kankakee Co. and Santa Clara Co.) she compared them to San Antonio, and for restricted service contractor ordinances such as Milwaukee Co. and Hudson Co. she compared them to New York City. • Estimates for ordinances passed after 1999: Because she didn’t have time to repeat the method in Stage 1, she took an average of the coverage of all ordinances passed through the end of 1999. Specifically, she divided the total workers covered by 41 cities, giving her an average of 1,080 workers per city. She then used this average number for any city where we had no other means to estimate coverage. For ACORN cities, these methodologies yielded the following: Number of workers covered: New York 59,000 Boston St. Paul 192 Oakland Minneapolis 262 Chicago 2,200 400 4,080 Cook Co Detroit Denver 30 2,300 1,600 St. Louis Sacramento 1,080 1,080

TOTAL 72,224

Luce calculated the additional wages to workers as follows: 72,224 workers x 1,500 hours x $2.00/hour = $216,672,000. The 1,500 hours is based on the conservative estimate that low-wage workers do not work full time, but likely do work 30 hours a week, 50 weeks a year. The $2.00 per hour wage increase was derived by averaging wage increases across a number of affected industries for a representative city. MINIMUM WAGE CAMPAIGNS: For each city or state, an economist calculated the impact on workers’ income of an increase in the minimum wage. These methodologies typically estimate impact for workers currently earning below the minimum wage, who would receive an increase to the new minimum, and those who are already above but would experience a ripple effect from the wage floor being raised. MASSACHUSETTS: Mark Brenner, Assistant Research Professor at the Political Economy Research Institute, University of Massachusetts provided data on the number of directly affected workers and the average wage they earned prior to each phase of the two-phase Massachusetts minimum wage increase. • Brenner estimated that in 1999, the year prior to the first phase-in, 108,498 workers were earning between the federal minimum wage ($5.15/hour) and the first phase-in amount ($6.00/hr). Their average wage was $5.44/hour. Therefore we calculated 108,498 workers x $.56/hour wage increase (i.e. $6.00-$5.44) = $60,758.88. THE MONETARY IMPACT OF ACORN CAMPAIGNS : A Ten Year Retrospective, 1995-2004
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Methodologies Appendix

CONT’D

• In 2000, the year prior to the second phase-in, Brenner estimated that 178,590 workers earned between $6.00 and the next phase-in level of $6.75. Their average wage was $6.21/ hour. Therefore we calculated 178,590 workers x $.54/hour wage increase (i.e. $6.75-$6.21) = $96,438.60. • We then assumed that each worker worked an average of 1,500 hours per year (the same figure used by Stephanie Luce to calculate living wage increases). We added $60,758.88 + $96,438.60 = 157,197.48 x 1,500 hours/year = $235,796,220. • Therefore total workers benefiting equals 287,088 and total wage benefits equals $235,796,220. Unlike the other state analyses, the Massachusetts calculation does not include ripple effects of those workers just above the minimum who received a wage boost as well. SAN FRANCISCO: The value of the San Francisco minimum wage increase ($108,468,629 annually) is based on Alex Lantsberg’s calculations in Assessing the Distribution of Wage Increases and Answering Public Policy Questions Regarding a San Francisco Minimum Wage, UC Berkeley Labor Center, October 2003. According to Lantsberg: “The findings in this brief are based on an analysis of self-reported household data from the 2000 decennial census that has been adjusted for income growth and changes in industry employment through the second quarter of 2003. Calculating the figures contained in the Minimum Wage Index consisted of the following steps: • Deriving the hourly wage of census respondents based on their annual wage income and the weeks and hours worked in 1999; • Adjusting that hourly wage for income growth from 1999 to June 2003; • Isolating the San Francisco labor force and adjusting it to reflect changes in employment by industry within the San Francisco Metropolitan Statistical Area, which is comprised of San Francisco, San Mateo, and Marin Counties; and • Differentiating between the direct and indirect beneficiaries of the legislation and everyone else. Direct benefits accrue to all workers earning below the new minimum wage. Indirect benefits go to those working above the minimum wage but receiving “ripple” effect from the increase; these are calculated using the methodology used in the Reich and Laitinen report.” (Page 6) ILLINOIS: The value of the Illinois minimum wage increase is based on calculations by Ron Baiman, et al., in Raising And Maintaining The Value Of The State Minimum Wage: An Economic Impact Study Of Illinois, IUC Center for Urban Economic Development, March 2003. The study finds that 450,000 workers would directly benefit, receiving $629.5 million in extra wages. If the ripple effect to workers just above minimum is included, 806,000 workers would receive $875.6 million (page 14, Tables 10 and 11). FLORIDA: The value of the Florida minimum wage increase is based on calculations by Robert Pollin, et al. in Economic Analysis of the Florida Minimum Wage Proposal, Center for American Progress and Political Economy Research Institute, University of Massachusetts, Amherst, September 2004. • According to the study’s estimates, there are 297,951 workers in Florida who will directly benefit from a minimum wage increase. On average, they currently work 1,148 hours/year (28 hours/ week, 41 weeks/year). Assuming all these workers continued working the same number of hours per year, raising all their wages to the new minimum would produce $155 million in mandated wage increases. • In addition, Pollin et al. calculate the ripple effect of the increases in wages above the minimum that businesses voluntarily provide to some of their workers after a higher minimum wage rate is implemented. They developed a statistical technique for generating rough estimates of the ripple

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Methodologies Appendix

CONT’D

effect, based on previous experiences in the U.S. with increases in the minimum wage. Following this technique, they estimate that 556,842 workers will likely receive raises, providing nearly $260 million in wage increases. • Combining the direct wage increases as well as the anticipated ripple effect gives us a total of 854,793 workers who will receive $415 million in added wages annually. NEW YORK: The Fiscal Policy Institute report, Raising the Minimum Wage in New York: Helping Working Families and Improving the State’s Economy, January 2004, estimates that 691,000 New York State workers would benefit directly from an increase to $7.00/hour, and 509,000 workers earning just above the minimum wage also would receive a wage gain due to the so-called “spill-over” or ripple effects, which have been documented by various studies. The Fiscal Policy Institute arrived at a total figure of $930 million in additional wages, with $720 million to workers currently earning below $7.15 an hour, and $210 million to workers between $7.15 and $8.15 an hour (for the latter calculation the Fiscal Policy Institute assumed a very conservative increase of 25 cents an hour).

Methodologies for Predatory Lending
FINANCED CREDIT INSURANCE: In “Quantifying the Economic Cost of Predatory Lending” Eric Stein estimates conservatively that borrowers nationally will save $2.1 billion a year by being spared the abusive practice of financed credit insurance. He arrives at this number by multiplying the total volume of credit insurance ($4.47 billion) by the percent that is financed single-premium insurance (95%) and then dividing that number in half, because state regulators estimate that half of these products are associated with mortgages (vs. consumer debt). He determined the savings in California by multiplying the national total by 20%, which is that state’s share of the country’s total loan volume in 2000, arriving at a figure of $420 million annually. STATE LEGISLATION: Each state’s law stipulates that total fees and penalties cannot exceed a certain limit, calculated as a percentage of the loan. Stein estimates conservatively that 25% of subprime mortgage loans charge an average of 7% in upfront fees. However, if we also consider prepayment penalties, which were effectively banned in all of the above states except for California, and are included in the states’ definition of total points and penalties, this figure is likely to be closer to 50% of subprime loans. Taking the difference between 7% and the state cap, and multiplying that number by 50% of the loan volume in each state (and 25% in California), we arrive at the total savings for borrowers in each state. Cap on fees 6% 5% 5% 4.5% 5% Excess fees* 1% 2% 2% 2.5% 2% Loan Volume $49,742,511,000 $5,941,478,000 $952,688,000 $8,870,734,000 $13,247,431,000 Loan Volume Affected by Cap $12,435,627,750 $2,970,739,000 $476,344,000 $4,435,367,000 $6,623,715,500 Total Savings $124,356,278 $59,414,780 $9,526,880 $110,884,175 $132,474,310 $436,656,423

California Massachusetts New Mexico New Jersey New York

*Excess fee equals 7% minus the cap for a given state.

For comparison, we can also prorate fees and prepayment penalties based on loan volume for each state. If we take Stein’s total figure of $1.8 billion nationally in savings from exorbitant fees (as detailed in “Quantifying the Economic Cost of Predatory Lending”), and then add up the percentage of total national loan volume for each of the states, we get 20.5 + 2.9 + 3.2 + 0.5 + 4.8 = 31.9% x 1.8 billion = $574,200,000. Similarly, if we take Stein’s total figure of $2.3 billion nationally for prepayment penalties, x 11.4% (loan volume for four of the states excluding California) we get $262,200,000 total for 4 states. Using this method, the combined total in savings comes to $836,400,000.

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Methodologies Appendix

CONT’D

FEE REDUCTIONS: Household Finance lowered its fees from 7.7% of the loan to 5.0% .13 This reduction applies to all loans from 2002 forward. Based on Household’s loan volume in 2000, 2001, and 2002, we can conservatively estimate an average yearly loan volume of $15 billion. This amount, multiplied by the difference in fees of 2.7%, results in an average yearly savings of $405 million to borrowers. Wells Fargo cut its standard fees on first mortgages from 11.1% to 7.7% in August 2002. In late 2003 they cut fees again to 5%, and in January 2004 they reduced their fees a third time, to 4% . Based on available data on loan volume through third-quarter 2002, a conservative estimate of annual volume is $3 billion, multiplied by the overall reduction in fees of 7.1%, results in average annual savings of $213 million to consumers. CitiFinancial lowered its fees from 5% to 3% in 2003. Based on CitiFinancial’s loan volume of $13.4 billion in 2003, a 2% reduction in fees means the annual savings to borrowers in $268 million. PREPAYMENT PENALTIES: HOUSEHOLD: In “Quantifying the Economic Cost of Predatory Lending” Eric Stein uses a conservative industry standard that assumes borrowers have a 10% interest rate and pay penalties on their entire balance. Typical prepayment penalties are 5% (Stein uses a more conservative 4%). Penalties on Household loans are typically 6 months of interest, which is 5% on a 10% interest rate loan. Since many Household loans had higher than 10% interest rates, 5% is a decent estimate of the average prepayment penalty. Stein estimates that 44% of borrowers pay fees, and that 80% of subprime borrowers have penalties, although virtually 100% of Household customers have the penalties. The Household annual loan volume averaged over three years (2000-2002) equals $15 billion per year. So, $15 billion x 44% x 5% gives us a total in annual penalties of $330,000,000. The reduction in term is factored by assuming that an even number of the 44% of borrowers pay it off each year. In that case, the reduction in term from 5 to 2 years means that 3/5 (60%) of borrowers no longer pay the prepayment penalty. Thus, 60% of $330 million is $198 million. WELLS FARGO: Using Stein’s methodology above, we multiply loan volume of $3 billion x 80% of borrowers with prepayment penalties x 44% of these borrowers who will pay the penalty x 5% in penalties, for a total in annual penalties of $52,800,000. Assuming that an even number of the 44% of borrowers pay it off each year, the reduction in term from 5 to 3 years means that 2/5 of borrowers no longer pay the penalties. We take 40% of that number to arrive at $21,120,000 in annual savings to consumers. CITIFINANCIAL: ACORN negotiated an agreement with CitiFinancial to reduce their prepayment penalties, which were a maximum of 5% over 3 years to: 3% in the first year, 2% in the second year, and 1% in the third. Using Stein’s methodology, annual loan volume of $13.4 billion x 80% of borrowers with penalties x 44% of these borrowers that will pay the penalties x 5% in penalties equals total annual penalties of $235,840,000. As we figured above, if an even number of the borrowers paid the loan off each year, this would mean that $78,613,000 in penalties are paid by borrowers in each of the first three years. The savings from penalties paid by borrowers in the first year of the loan would be $31,445,200 due to the reduction from 5% to 3% . The savings from penalties paid by borrowers in the second year of their loan would be $47,168,000 due to the reduction from 5% to 2% . The savings from penalties paid by borrowers in the third year of the loan would be $62,886,000 due to the reduction from 5% to 1% . The total annual savings are $141.5 million.

13

Any fees greater than 5% of the loan amount plus any fees charged a borrower who receives no net tangible benefit are considered predatory (Eric Stein, “Quantifying the Economic Cost of Predatory Lending,” October 2001).

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Methodologies Appendix

CONT’D

PREDATORY LENDING TOTAL: Thus, the total monetary value of ACORN predatory lending campaign wins was compiled as follows: Wins providing annual savings to borrowers Financed Credit Insurance State Legislation Federal Regulation Other State Campaigns (Minnesota) Fee Reductions: Household, Wells Fargo & CitiFinancial Prepayment Penalties: Household, Wells Fargo & CitiFinancial Total Value Per Year One-time payouts or negotiations ACORN Settlement with Household Finance Attorneys General Settlement with Household Finance Other State Campaigns (New Mexico and Maryland) Total One-time Value Total Value of All Predatory Lending Wins Annual savings $2,100,000,000 $436,656,423 $1,840,000,000 $6,000,000 $886,000,000 $320,620,000 $5,629,276,423 Value $150,000,000 $484,000,000 $2,500,000 $636,500,000 $6,265,776,423

Methodology for Loan Counseling and CRA Agreements
The monetary value of AHC-counseled mortgage savings was calculated as follows:
Year # of Mortgages Avg Loan Avg Market Amt Int. Rate Avg Mo Pmt at Mo Pmt at .5 Annual interPoints Market Rate pts below est savings PMI Savings Points Savings

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 TOTAL

3,107 3,209 3,336 3,842 5,601 9,416 5,224 5,431 6,570 9,213

$82,169 $87,111 $88,182 $94,337 $108,468 $104,616 $96,386 $108,158 $123,467 $145,049

8.38 7.93 7.60 6.94 7.44 8.05 6.97 6.54 5.83 5.84

1.8 1.8 1.7 1.1 1.0 1.0 0.9 0.6 0.6 0.7

$625 $635 $623 $624 $754 $771 $640 $686 $727 $855

$596 $605 $593 $586 $717 $735 $607 $651 $688 $809

$1,072,288 $765,897 $1,156,010 $838,618 $1,201,761 $882,525 $1,726,595 $882,525 $2,466,680 $1,822,588 $4,091,440 $2,955,193 $2,006,016 $1,510,561 $2,296,010 $1,762,218 $3,057,415 $2,433,535 $5,052,409 $4,009,009 $24,126,624 $18,067,473

$4,595,383 $5,031,706 $5,000,978 $3,986,870 $6,075,293 $9,850,643 $4,531,684 $3,524,437 $4,867,069 $9,354,355 $56,818,417

Average annual rates and points from Freddie Mac website: http://www.freddiemac.com/pmms/pmms30.htm

Methodology for Housing Development
For units in New York City owned and managed by the New York ACORN Housing Company, Inc., we have attempted to analyze the monetary benefit of living in an ACORN apartment rather than finding, renting and maintaining a rental apartment in the open New York City market. Towards this end, we inventoried approximately 100 of the 700 apartments currently own and managed by New York ACORN Housing Company. The apartments inventoried are actually on the higher end of ACORN’s rental income scale, so one could extrapolate that the savings calculated below are even greater for the better part of the ACORN Housing inventory in New York City. Of the 700 total apartments, approximately 25% are one bedroom, 50% are two bedroom, and 25% are three bedroom.
20

THE MONETARY IMPACT OF ACORN CAMPAIGNS : A Ten Year Retrospective, 1995-2004

Methodologies Appendix

CONT’D

To calculate the monetary value of savings to ACORN tenants, we begin with the rents charged for brand new apartments rented in 1994/1995 in Brooklyn New York, with starting rents as follows: 1994/1995 2004/2005 % % of income/rent % of income/rent ACORN 1994/1995 2004/2005 % change income income change 1994/1995 2004/2005 Apartments rent rent One bedroom 369 475 29% 15358 21953 29% 29% 26% Two Bedroom 443 550 24% 17766 20725 24% 30% 32% Three Bedroom 514 630 23% 23998 28366 23% 26% 27% % income to rent Incomes – rent Rent** – ACORN stabilized rents stabilization One bedroom 480 652 36% 38% 36% Two Bedroom 589 799 46% 40% 46% Three Bedroom 707 959 41% 35% 41%
** For calculation purposes, we are making an assumption that the starting rents in the open market were higher than the ACORN rents. This is based on HUD Fair Market rents for that period.

Trying to compare in the most conservative manner what the increases are like in a rent stabilized apartment where the landlord takes every possible increase he/she can as compared to ACORN that takes increases to cover expenses and always keeps in mind the limited increases in income for low-income families the savings would be as follows: ACORN 1994/1995 Rent stabilized 1994/1995 480 589 707 Difference 111/month 146/month 193/month Multiplied out by # of MHANY apartments (est)- for 1 year 233,100 613,200 405,300 1,251,600 ACORN rent 2004/2005 One bedroom Two bedroom Three bedroom Total 1 year 475 550 630 Rent stabilized rent 2004/2005 652 799 959 Difference 177/month 249/month 329/month Multiplied out by # of MHANY apartments (est) 371,700 1,045,800 690,900 2,108,400

One bedroom
Two bedroom Three bedrooms Total 1 year

369 443 514

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ACORN
Association of Community Organizations for Reform Now ACORN National Operations 2-4 Nevins Street Brooklyn, NY 11217 718-246-7900x201 skest@acorn.org ACORN Organizing and Support Center 1024 Elysian Fields Avenue New Orleans, LA 70117 504-943-0044 communications@acorn.org

www.acorn.org

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