NACA Pockets Millions From Taxpayers While Selling An Empty Sack Of Promises To Desperate Homeowners
Steve Dibert, MFI-Miami
You have probably seen news stories about a Not-For-Profit group named NACA. Neighborhood Assistance Corporation of America or NACA gets thousands of people to show up at their foreclosure rescue sessions. They have at different convention halls across the U.S. NACA founder Bruce Marks treats it as if NACA is a foreclosure rescue version of “Brother Love’s Traveling Salvation Show“
Neighborhood Assistance Corporation of America is a Community Redevelopment Act (CRA) Housing Agency out of Boston. NACA stands for Neighborhood Assistance Corporation of America (NACA). NACA is nothing more than an ACORN wannabe.
This NACA should not be confused with another NACA, the National Association of Consumer Advocates. The National Association of Consumer Advocates has consumer attorneys and real consumer advocates as members.
Naturally, these two NACA groups are locked in mortal combat because the National Association of Consumer Advocates feels Bruce Marks hijacked their acronym creating confusion with consumers.
Think of it like the NAMBLAs from South Park. The Good NAMBLA aka National Association of Marlon Brando Look-Alikes and the pro-pedophilia bad NAMBLA aka National Association of Man/Boy Love Association. National Association of Man/Boy Love Association is a real group. You can figure out which NACA is which while reading this article.
What Are CRAs?
I should explain what a CRA is before I get to how Bruce Marks and NACA operate and make their money. The Community Redevelopment Act was passed by US Congress in 1977 to encourage the major banks to help people in low and moderate-income neighborhoods become homeowners. Contrary to what armchair conservatives like to claim, CRAs were not the cause of the financial crisis.
Furthermore, banks flock to CRA developments. Banks will fight over eligible homeowners because the lending guidelines on CRA loans is generally stricter.
The FDIC allows banks to offer low-interest mortgages because the local municipality donating the land to the homeowner. Banks also like CRA clients because it helps them get FDIC approval when they want to expand or merge with another bank. CRA loans also benefits the bank when they want to create a branch network in certain parts of the country.
Neighborhood Assistance Corporation of America may be a designated CRA Housing Non-Profit. Yet, when you dig deeper you see that it is really nothing more than a for-profit enterprise disguised as a housing non-profit. A housing non-profit feeding off the teat of the American taxpayer.
The Smoke And Mirrors Of Bruce Marks
What Neighborhood Assistance Corporation of America isn’t telling people is that he is double dipping. NACA gets a grant money he gets from the federal government. Furthermore, they also get paid by lenders for the homeowners he helps them refinance.
There is a reason why Bruce Marks likes doing his “Financial Terrorist” shtick and it is not because he wants to make the banks afraid of him. It’s for what is known in marketing as “Sideways Marketing”. Marks uses the media to give NACA exposure and free advertising. Furthermore, he uses the media to give him and NACA credibility. All of that notoriety helps him create a Robin Hood persona to attract pissed off homeowners.
The notoriety also helps him when he’s bringing his foreclosure rescue version of “Brother Love’s Traveling Salvation Show” to town. He also uses his CRA Housing Non-Profit status as a way for television stations to give him free advertising. He also gets the banks to pay for the convention hall space.
It’s A Numbers Game
Marks plays his business as a numbers game. He wants thousands of people to show up to NACA events because if 2,500 people show up then it becomes a media event. The media shows people standing out front of the convention hall. Marks understands that desperate homeowners have a herd mentality. If 2500 people rushing to an event will attract 2500 people more.
Bruce Marks and NACA are not the nightmare for banks that he likes to portray in the media. Rather, they are just the opposite. His events are to the CRA world what Russian romance tours are to lonely middle-aged American men. NACA helps connect potential CRA mortgage clients with the banks like Russian romance tour operators. This is why banks are eager to pay for the convention space and let Marks do his “Bank Terrorist” shtick.
How NACA Makes Their Money
What Marks doesn’t tell people is he uses the event to screen people for CRA loans. Eligible CRA borrowers account for 5% of the people who come through the door. Since Neighborhood Assistance Corporation of America is legally a “housing non-profit” he can get discounted interest rates from the bank and NACA gets a fat check from the bank. Marks and NACA pocket nearly 4% of the loan. NACA gets a loan origination fee of 2% and an SRP of 2% on the back end of the loan from the lender when the loan closes.
What’s an SRP? SRP or Service Release Premium is the payment NACA receives from the lending institution outside of closing. It’s a sales incentive lenders get when they sell a mortgage loan on the secondary mortgage market.
Marks along with the banks are playing a numbers game. Let’s assume Marks has 10,000 people show up to an event. He closes 500 loans from the event with an average loan amount of $150,000. Neighborhood Assistance Corporation of America has made $3,000,000 from the event.
Banks will enthusiastically pay for the convention space because they can write $75,000,000 in mortgages that will be sold to the federal government. The lender will also be able to have the servicing rights for. So the more people that show up to an event, the more money both NACA and banks can potentially make.
Other Ways NACA Makes Money For Banks
There is another way Neighborhood Assistance Corporation of America helps banks make money. It’s from of the other 95% of homeowners that NACA can’t help with CRA loans. Not only are banks writing an estimated $75 million in loans at each NACA events but they’re also pocketing billions of dollars in profits by Marks and his staff giving false hope and empty promises to hundreds of thousands of homeowners who eventually lose their home
Neighborhood Assistance Corporation of America signs up the majority of these homeowners knowing full well they can’t help them. They give homeowners false hope. NACA representatives make homeowners believe that NACA is helping them by working on their file. In reality, nothing is being done. Naturally, because the homeowner believes NACA is working on the file, they stop making their mortgage payments either because the third party or the bank tells them to. Several MFI-Miami clients that filled out applications with NACA were actually told by NACA to quit making their mortgage payments.
They give these homeowners false hope by making them believe that Neighborhood Assistance Corporation of America is working on their file. Rather, nothing is being done. The homeowner stops making their mortgage payments because NACA or the lender tells them to. Several MFI-Miami clients that filled out NACA applications were actually told by NACA to quit making their mortgage payments.
Mortgage Servicers Make More Money When Your Loan IS In Default
Believe it or not, this is quite common with CRA funded housing non-profits. CRAs advise the homeowner not to make the payment. This is because the lender told the housing non-profit to tell the homeowner to quit making the payment. The lender won’t help the homeowner if they are not 90 days behind on their mortgage. As anyone who is a frequent reader of my posts knows, this is all bullshit.
I’ve written quite a few times about how mortgage servicers make money from mortgages in default. MBS Trust cashes in its insurance policy and how the mortgage servicer buys the outstanding loans in the mortgage trust. They also get them for pennies on the dollar. When the servicer buys a mortgage from the MBS for $2000 that has a face value of $200,000. The servicer is now the owner and can foreclose. They can also sell the property for $80,000 is still make a profit of 40 times what they paid for it.