Business Models Debt Relief Industry

Wells Fargo Bragging About Supporting Credit Counseling, But…

A recent press release from Wells Fargo caught my eye. The title was “Wells Fargo Increases Commitment to Credit Counseling Nonprofits by 35% to $12.4 million in 2011” but upon closer inspection all Wells Fargo was really doing was increasing funding by 35% in 2011 for nonprofit housing counseling.

The obvious question is if Wells Fargo really finds value in the assistance they get from nonprofit credit counseling agencies why are they not also making a similar increase in the support they provide credit counseling groups through fairshare funding for the debt management plan.

Currently the fairshare funding from Wells Fargo is sitting at 6% and has been stagnant for some time. That’s not a big show of support. I think what we’d really like to see is an increase in the fairshare funding by the same amount and push that 6% up to 8%.

I applaud Wells Fargo’s increase in support for housing counseling but it looks like from the press release the commitment may only be for 2011.

As part of the statement from Wells Fargo, they said:

“At Wells Fargo, we share the desire of many non-profit agencies to help as many Americans as possible achieve and sustain the dream of homeownership,” said Jon R. Campbell, executive vice president and head of Wells Fargo’s Social Responsibility Group. “Yet public funding for credit counseling is becoming more scarce, while considerable demand remains. Wells Fargo is expanding its financial support for credit counseling services so that help will continue to be available for individuals and families in need of assistance, especially given the unprecedented demand brought on by challenging economic conditions.”

And again, I applaud their increase in funding but I can’t wrap my head around their admission that funding for credit counseling is becoming more scarce and families need help but then to not increase funding where people need it most, to deal with their problem debt.

Added Mary Coffin, executive vice president, Wells Fargo Home Mortgage Servicing, “At a time when our country is still working through the effects of a historic downturn in the housing markets and high unemployment, Wells Fargo believes it’s critical to continue to support the work of these non-profit agencies. Experience has shown us that their coaching and counseling can have a dramatic impact on helping individuals and families become more successful homeowners through better management of their finances.”

It is a bit intriguing that the increase in funding for nonprofit credit counselors is not being all funneled through the National Foundation for Credit Counseling. Wells Fargo breaks down their additional commitment in 2011 like this:

  • Grants: $1.25 million or $250,000 each for the following five nonprofits: Alliance for Stabilizing our Communities (a coalition that includes three groups–the National Council of La Raza, National Urban League, and National Coalition of Asian Pacific American Community Development), Housing Partnership Network, National Community Reinvestment Coalition, HomeFree-USA, and National Foundation for Credit Counseling, Inc(R).
  • Training: $3 million to NeighborWorks(R) America to support “train-the-trainer” scholarships for local counseling agencies to attend industry counseling standards training.
  • Funding for Counseling Service: $1.2 million increase for approved housing agencies to help extend home preservation services through comprehensive face-to-face credit counseling and mortgage payment assistance. The program provides a Web-enabled portal for counselors to transmit necessary documents required to successfully provide assistance to customers with mortgage modifications.

From the breakdown provided the bulk of the money is not going to traditional credit counseling nonprofits groups nor is it being directed to help people deal with their problem debt which in turn can provide homeowners with some relief.

Come on Wells Fargo, show your commitment to nonprofit credit counseling groups by increasing your fairshare by the same amount. After all, you already admitted families are in trouble.


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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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