In the Demoines Register:
Iowans affected by lender linked to EdwardsWhile he worked for an equity company that dealt in mortgages, those lenders foreclosed on 107 homes in the state.
He says his anti-poverty stance isn't affected.
By THOMAS BEAUMONT
REGISTER STAFF WRITER
September 27, 2007
"A total of 107 Iowa homeowners were foreclosed upon by subprime mortgage companies owned by Fortress Investment Group while Democratic presidential candidate John Edwards was associated with the equity company, court records show.Fortress foreclosures have occurred in other states, but the Iowa cases bring Edwards' tie to subprime lending to the leadoff presidential nominating state, where he has staked his political future.
Most Iowa Democratic activists interviewed by The Des Moines Register say the foreclosures by themselves do not undermine Edwards' anti-poverty message. However, some say he should have known that his tie to Fortress, which paid him $479,500 for 14 months of work, would be scrutinized in the campaign.
Some former Edwards supporters in Iowa say the Fortress link is another reminder of his personal activities and opulent lifestyle, which they find troubling.
Edwards said the focus of his public work in the past 2years outweighs any questions about his sincerity.
"If you look at the context of everything I've done since the last election, it's absolutely clear where my heart is and what I care about," Edwards said in a Register interview.
He pointed to his launch of a university policy institute in North Carolina to study poverty, overseas humanitarian work and efforts to help organize unions and raise the minimum wage around the country.
Edwards has been critical at times of subprime lenders. He said he tried to head off conflicts before going to work part time for Fortress as a consultant in October 2005.
Edwards has said subprime lenders, which target higher-risk borrowers, sometimes use predatory practices that lead to foreclosures. Last month, he severed his remaining ties with Fortress in light of foreclosures by two of its subsidiaries in hurricane-ravaged New Orleans.
A central part of Edwards' domestic campaign agenda has been to rein in predatory lending practices. He says those fuel the poverty he would work to curb as president.
Edwards says he was assured by Fortress principals before taking the consultant's job that the company's holdings included nothing that could be construed as anti-union or predatory lending.
At the time, however, the company owned Green Tree Servicing LLC, a subprime lender, and acquired a second, Nationstar Mortgage LLC, in 2006, six months before Edwards quit Fortress to run for president.
In May, Edwards contacted Fortress after learning about the first New Orleans foreclosure. He later divested his personal holdings in Nationstar. Edwards said he never invested in Green Tree.
In August, he removed the rest of the roughly $16 million he had invested in Fortress holdings. Edwards also used $100,000 of his own money to begin a charity for New Orleans homeowners after learning that 34 of them faced foreclosure from his former employer's companies.
The 107 Iowa foreclosures were filed by Green Tree and Nationstar from October 2005, to Aug. 17, 2007 - the day Edwards pledged to divest his Fortress holdings. During this period, a national subprime mortgage crisis has led to a spike in foreclosures nationally.
Edwards said he did not know about the Iowa foreclosures until his campaign was contacted by the Register.
Edwards said he has no plans to establish a charity for the Iowans with Fortress mortgages because they were not affected by Hurricane Katrina the way borrowers in New Orleans were.
Of the Iowa foreclosures, 60 resulted in Iowans losing their homes; 20 were dismissed; 27 were pending as of last week.
Edwards said he had aimed his criticism more at predatory lending practices than at subprime lenders, although "the line between the two is gray."
"I think what I have said is if subprime loans have some characteristics of predatory loans, then our national predatory lending law should deal with it," he said, referring to his proposal to deal with abusive lending practices.
That proposal includes enacting laws to curb practices such as excessive loan pre-payment fees and mortgages whose payments balloon toward maturation; establishing a commission to monitor and regulate terms of family financial services, and creating options to help keep homeowners at risk of foreclosure from losing their houses.
Iowa Democrats say Edwards' relationship with the subprime lenders was far enough removed to absolve him of any connection to the foreclosures.
"In the political arena you are always going to be scrutinized," said Neven Mulholland, a Fort Dodge lawyer who supported Edwards in 2004 and who is planning to support him in 2008.
"He wasn't being hypocritical. What he said, he meant. It doesn't mean to me he's trying to benefit or prey on the poor. Whether it's a mistake, only time will tell."
In his second run for his party's presidential nomination, Edwards is counting on a strong performance in Iowa's precinct caucuses. He finished a strong second-place here four years ago.
Recent polls in Iowa have shown the lead he held for months this year among the Democratic candidates has shrunk or disappeared.
Edwards' top rivals for the Democratic nomination also have faced scrutiny over their associations.
Last month, it was reported that Norman Hsu, one of Sen. Hillary Clinton's top donors and money-raisers, was wanted on federal fraud charges. Last spring, Sen. Barack Obama faced questions about longtime backer Tony Rezko, a Chicago businessman indicted on extortion and fraud charges.
Claire Celsi, a Des Moines Democrat who was firmly with Edwards, said connections like Edwards' to Fortress should be expected from candidates, many of whom are wealthy and whose networks include influential business people and investors.
But Celsi has turned away from Edwards because she felt that the news in March about him building a $5 million home in North Carolina, followed quickly by reports in April that he was paying hundreds of dollars apiece for haircuts, irreparably undercut his credibility on poverty.
"I didn't like some of the things I saw within the last six months," she said. "Why the heck he decided to build a 28,000-square-foot house, when his poverty is his platform, is beyond my imagination. The haircut thing just added to it."
Celsi, who now supports Clinton, added, "I just thought, he can't be that naive."
http://desmoinesregister.com/apps/pbcs.dll/article?AID=/20070927/NEWS09/709270393/1001/COMM10
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