Wells Fargo & Co. (WFC) is launching a new program to help mortgage borrowers with poor credit records improve their plight — and help the bank shake off years of accusations depicting it as a predatory lender.

The initiative, dubbed "Steps To Success," promises to provide free credit records, personal credit scores and more financial advice to customers who can't qualify for the best rates on home loans.

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Wells Fargo plans to unveil the program Tuesday, following through on a pledge made by the bank's executives at a national housing symposium six months ago.

The new campaign continues Wells Fargo's recent efforts to polish its reputation in the so-called "sub-prime" mortgage market that caters to downtrodden consumers with blemished borrowing histories. Critics say Wells Fargo has been unfairly gouging sub-prime borrowers for years — allegations the San Francisco-based bank denies.

Wells Fargo ranks as the nation's fourth largest sub-prime mortgage lender with a 2005 volume of $42 billion, according to Inside Mortgage Finance, a trade publication. Only Ameriquest, New Century Financial Corp. (NEW) and Countrywide Financial Corp. (CFC) outranked Wells Fargo in last year's $625 billion market for sub-prime home loans.

With its sub-prime lending practices coming under fierce attack, Wells Fargo last year made a series of changes that capped some fees and reduced prepayment penalties.

But Wells Fargo still hasn't been able to satisfy some consumer activists who want the bank to make amends for the past or lawmakers fighting to impose more controls on the steadily growing sub-prime mortgage market.

"I believe in the power of redemption and if (Wells Fargo) is willing to sin no more, I welcome that. But more still needs to be done to protect consumers from hidden fees and other abuses," said Rep. Brad Miller (news, bio, voting record), a North Carolina Democrat who has introduced legislation proposing tougher limits on sub-prime lenders.

Miller's reform package, H.R. 1182, never made it out of the House Committee on Financial Services last year, but the legislator expects the bill to become a higher priority next year after the Democrats take control of Congress. The Financial Services committee's new chairman is expected to be Rep. Barney Frank, a Massachusetts Democrat who co-sponsored the measure.

Wells Fargo declined to comment on the bill's merits, saying its officials are still studying the legislation.

The backlash against sub-prime mortgage lenders has intensified in recent years as the number of borrowers with credit trouble expands. Sub-prime loans accounted for about 20 percent of the $3.12 trillion mortgage market last year.

Spurred by borrowers' complaints, attorneys general in 49 states reached a $325 million settlement with Orange-based Ameriquest earlier this year to settle allegations that the lender had been engaging in abusive practices.

In 2002, Household International Inc. paid $484 million to settle complaints that it had been duping poor home buyers scattered across the nation.

Wells Fargo staunchly defends the propriety of its sub-prime lending practices, attributing last year's decision to lower its fees to changing market conditions.

The new sub-prime program is meant to be a goodwill gesture aimed at creating more responsible borrowing habits and drumming up more future business from grateful customers, said Stephanie Christie, a Wells Fargo senior vice president overseeing the new initiative.

"We are very proud and excited about this," Christie said.

John Taylor, president of the National Reinvestment Coalition, said Wells Fargo should be applauded for helping consumers understand how they can eventually qualify for less expensive loans. "I would like to see more lenders do something like this," he said.

The Association of Community Organizations for Reform Now, a longtime critic of Wells Fargo's sub-prime lending practices, isn't impressed.

"We think they have been taking some steps in the right direction, and this (program) could be good if they were doing something about the people who already got sub-prime loans from the bank," said Jordan Ash, director of ACORN's financial justice center. "It's less expensive to give away free credit reports and credit scores than to compensate people for the excessive interest rates that they charged in the past."

ACORN is supporting a proposed class-action lawsuit seeking to represent Wells Fargo's sub-prime mortgage borrowers dating back to December 1999.

The complaint, filed in San Francisco Superior Court, alleges Wells Fargo repeatedly slapped sub-prime borrowers with exorbitant fees and interest rates that were often concealed until the last minute. The suit also charges Wells Fargo with violating state and federal laws.

Christie called the allegations "absolutely unfounded."

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