Democratic presidential candidate John Edwards, who has called homeownership "the foundation of the American dream," said Friday he will divest his holdings in funds linked to lenders that have foreclosed on Hurricane Katrina victims.
"I will not have my family's money involved in these firms that are foreclosing on people in New Orleans," he told the Associated Press.
Edwards has reported $29.5 million in assets, millions of which are invested in the hedge fund Fortress Investment Group., a company that paid him nearly half a million dollars last year for consulting advice.
Fortress has investments in lenders that offer subprime mortgages, higher priced loans for borrowers considered greater risks. The Wall Street Journal on Friday identified 34 New Orleans homeowners who face foreclosure actions from lenders connected to Fortress.
"My reaction is I'm going to help these people," Edwards said in a telephone interview. "I just learned about this. I don't know the details, I will find out and I will find a way to help them."
Edwards has decried the predatory lending practices that sometimes accompany subprime mortgage lending, which especially target minorities and the elderly, and can tie people to home loans that they can't repay. He has built his campaign on an anti-poverty message and has toured and worked in the neighborhoods devastated by the 2005 hurricane. In fact, a three-day poverty tour he embarked on last month began in New Orleans' hardest hit Lower Ninth Ward.
Edwards worked part-time for Fortress Investment Group, getting paid $479,512. He and his wife also had $2.7 million to $8.5 million invested in a Fortress subsidiaries, according to ranges listed in his personal financial report. And Fortress executives have donated generously to his presidential campaign - company employees have donated more than $150,000 toward his candidacy during the first six months of the year.
Asked Friday if his investments damaged his image as a poverty fighter, Edward's said: "No. Everyone knows I am completely committed to eliminating poverty in this country. I have the strongest national predatory lending proposal. These are things I will pursue."
Edwards has proposed passing federal laws to prohibit mortgage abuses and help homeowners at risk of foreclosure or bankruptcy.
Among its investments, Fortress has for some time owned a stake in Green Tree Servicing, a company that specializes in managing higher-priced mortgages for people with tarnished credit or low incomes who are considered greater risks. As home-mortgage delinquencies and foreclosures have surged in recent months, especially for subprime loans, the distress has roiled financial markets and sparked anxiety that it could spill over into the broader economy.
Green Tree and a second subprime lender acquired by Fortress, Nationstar Mortgage, were the two lenders filing foreclosure suits in New Orleans, the Journal reported.