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NACA – Innovatively Saving the American Dream: Providing Consumer-Friendly Mortgages & Stopping Home Foreclosures

Bruce Marks
Bruce Marks – CEO
Besides job development, there is no other category that is more crucial to the economic health of America than the banking industry, and specifically, mortgage banking. The initial economic down turn that hurt our country occurred with the collapse of real estate markets, due to the failure of the mortgage banking industry to provide common sense mortgages to consumers. This, along with the process of issuing faulty derivatives and bundling sub-prime paper with A rated paper, was the catalyst that brought America to the brink of economic ruin.
As it is stated on our home page, this web site is dedicated to promoting innovation that can help society, in whatever category it is found in. Thankfully, it can be stated that it is found in the financial services industry through NACA – the Neighborhood Assistance Corporation of America. NACA is a non-profit, community advocacy and home-ownership organization. NACA´s primary goal is to build strong, healthy neighborhoods in urban and rural areas nationwide through affordable home-ownership In short, NACA is generating innovation by providing "common-sense "mortgage loans that actually helps consumers to buy their homes, and save them from foreclosure. The structure of their loans is different from anything customary in mortgage banking: They require no money down; no closing costs; no application fees or other fees; no points; no requirement for perfect credit; and their interest is below the prime market rate.

Darren Duarte, Director, Communications and Public Affairs for NACA, gave interesting insights into their operation. He stated, "We put or our borrowers through a process that even banks don´t do. We have a mandatory seminar they attend to help them understand every aspect of buying a home and maintaining a mortgage. Then we have counselors that go over every aspect of their income and budget to determine the size of the mortgage they can actually afford, because we won´t qualify them for more than that. Also, we do not issue sub-prime mortgages or mortgages with balloon payments or escalating interest rates. NACA´s primary focus is to make sure that our borrowers become and remain financially healthy after they deal with us. If the banking system applied the same process as ours, there would be no banking crisis or recession. "

SAVE THE DREAM TOUR


NACA was started in 1988 by its CEO, Bruce Marks. Mr. Marks, the holder of an MBA in Finance and a BA in Economics who could have worked on Wall Street, yet worked with the Hotel Workers Union – Local 26 in Boston. The workers could not afford decent housing in that market and they were funneled towards "hard money " lenders with high interest rates that took advantage of them. Lenders also discriminated against minorities, putting them into inferior loans even when they qualified for better rates and terms. Fleet Bank was one of those lenders and Mr. Marks investigated and fought their operations in over five states, for four and half years until he negotiated an unprecedented settlement with them. Fleet committed to an $8 billion reinvestment program for low and moderate income people, settled law suits in Georgia for hundreds of millions of dollars and provided $140 million in an unprecedented mortgage program administered by NACA. Bruce Marks´ leadership has garnered over $10.5 billion to finance the best mortgage product in America, making NACA the largest housing services organization in the United States.

Mr. Duarte outlined NACA´s philosophy as this, "We are first an advocacy organization that uses non-violent, but effective, tactics to fight unfair banks. Once we decide to confront one, we are like a bulldog, we latch on and donot let go. We protest CEO´s in their boardrooms and even at their homes, until we get their attention and compel them to see our lending solution. When they do, that brings them in to us because it becomes obvious that their practices won´t work long-term. You can´t continuously damage your customer base without eventually being damaged yourself. That is why Bank of America, JP Morgan, Wells Fargo, Fannie Mae and Freddie Mac have entered into covenants with NACA for our solution on dealing with foreclosures. After home owners threatened with foreclosure go through our seminar and meet with our counselors to determine what they can afford, we negotiate on their behalf with the banks to mitigate the arrears, lower their interest rates and also to lower the principle on these mortgages, because now it makes more sense to keep the home owners in their houses with a payment they can afford and get a smaller revenue stream than it does to keep throwing them out and depending on the properties to be resold. (Thousands of homes have been saved by us).We help stop foreclosures as a service to the community. We do not charge a fee for doing it. "

When asked if the banks were forced by Congress to provide risky loans, Mr. Duarte had a detailed response, "No. The government did not make banks provide loans that were risky. The banks should have done our underwriting process themselves. The banks, the mortgage brokers, the investors, were blinded by greed in a system that is dysfunctional. Mortgage brokers were paid yield spread premiums, which is a larger commission for putting people into sub-prime mortgages, so you know what their motivation was. Brokers would wait until the closing or close to it to pressure buyers into higher rates or risk losing their earnest money. That is why people who qualified for prime rate loans were put into inferior loans, sometimes without their knowledge. It is also why banks preyed on consumers –disproportionately minorities-subjecting them to unnecessary balloon payments and escalating interest rates; without refinancing them as they said they would because the likelihood for default would be higher, giving the banks opportunity to resell the property and flip the paper again. Brokers and bankers didn´t care if the consumer had a loan greater than they could afford because they were making enormous sums of money.Then the paper representing these unstable loans were mixed with paper representing stable loans, creating exotic and dubious financial products sold as derivatives, giving investors visions of enormous profits. When mortgages default resulting in foreclosure and if modification or restructuring is blocked, it is the banks or the investors that stand in the way of restructuring these loans, because they are determined to get the most money out of these properties possible, even when it is obvious that it won´t happen because of depressed job and real estate markets. Greed took over our banking system and it almost collapsed; now we are all paying the price for it. "

In light of the solution that NACA is delivering, what should the public do to help it? Mr. Duarte said, "Volunteer to assist us in the events that we sponsor to help the community such as our home owner education seminars and our "Save the American Dream of Home Ownership " campaign. This campaign is a major free seminar that is conducted throughout the year around the country. For about a week in every city, we have citizens who are behind in their mortgage or in danger of foreclosure come to a major venue so we can help them. We conduct an intense home owner education seminar for them and have them meet with our counselors to determine a mortgage payment that they can afford. We then place them in front of our covenant bankers at the event to streamline acceptance of our counselor´s evaluation. They receive a mortgage modification or restructure on the spot that clears up their back payments and reduces their mortgage; some have had their monthly payments cut in half through this process. When we are successful in these events it helps everyone in that community by stabilizing home values; so when the public volunteers, they are helping themselves as well. That is why spreading the word about what NACA is doing is so necessary. Also, put pressure on your elected officials to make all banks operating in America participate in an innovative solution, like our covenant partners, that keeps people in their homes and that preserves home value. "

It is time to stop the negative pronouncements about America´s demise; there are positive examples of activity that will bring solutions to our problems. That is why the organizers of this site have dedicated the space for this report about NACA because its business model is providing innovation that is desperately needed in our country. The housing industry in America has been weakened and it has in turn contributed to weakening our economy; the program that NACA is operating can help in reviving both. The idea in banking of making the well-being of the borrower as an important a priority as profits is indeed novel and it should have been instituted decades ago. Our society can no longer afford to tolerate failed policies and business models that only benefit business and not the public. We urge you to find out more about NACA, the banks working in covenant with them, and visit their site at www.naca.com, to see how they can assist you in financing a home, saving your home, or helping them in their effort to "Save the American Dream of Home Ownership ".