Did NC Lawmakers Screw Over Non-Profit Foreclosure Prevention Program (NACA) Out Of Millions?

Jobs, Incentives and a Mix-up


In a mix-up by NC state Economic Development officials, a non-profit expanding in Charlotte may be in line to get a less lucrative incentive package than it expected, though the amount is more than previously specified.

N.C. Commerce Secretary Keith Crisco told the Observer on Thursday the state is able to give the Neighborhood Assistance Corporation of America up to $1 million in on-the-job training assistance. That's on top of a $1 million state grant tied to its plans to hire 1,014 new workers. NACA helps low-income homeowners prevent foreclosures and get new loans.

NACA Chief Executive Bruce Marks, however, had been expecting as much as $3.5 million – including up to $2.5 million in on-the-job training assistance as part of his agreement with the state. E-mails and documents obtained by the Observer show Marks had been promised that amount during tense negotiations that resulted in an announcement in June of a much-needed job infusion for Charlotte's financial sector.

Crisco said he mistakenly extrapolated an estimate by state officials further than he should have. After queries by the Observer, he called Marks to apologize and said he wants to “do everything we can to work with him.”

Marks on Thursday said he's still counting on the $2.5 million for on-the-job training.

“We're working this through with them to see where we are,” he said, declining to elaborate on his plans.

The mix-up highlights the fast-moving, secretive nature of economic development negotiations, which can leave details of incentive packages unclear to the public – and even the players involved.

Bob Orr, a prominent opponent of incentives to lure businesses, said the NACA project was another example of a deal with “big giveaways” crafted without public input.

“The public doesn't have the opportunity to voice complaints or support,” said Orr, executive director of the N.C. Institute for Constitutional Law and a former N.C. Supreme Court Justice.

Crisco noted the NACA Project came together quickly, with some negotiations taking place while he was on an economic development trip in Europe. But he added: “I have to take responsibility.”

Commerce spokeswoman Kathy Neal said she believed the issue would be resolved to everyone's satisfaction, but said she couldn't confirm an amount.

$1 million over 5 years

When NACA's expansion was announced June 11, the news release said the nonprofit could receive $1 million over five years from the One North Carolina Fund. That's a program controlled by the governor that requires companies to meet certain job creation requirements before receiving any money. The grant was “contingent upon local matches,” the news release said without providing any dollar amount.

A day later an official with the Charlotte-Mecklenburg Workforce Development Board told the Observer the organization was likely to provide NACA with $256,000 in on-the job training covering 100 workers.

But the figure turned out to be higher – $1 million, due to a 100 percent match of the governor's $1 million award. The money is considered “local” because it's distributed by the Charlotte-Mecklenburg board but it's actually federal dollars distributed by the state.

The $256,000 figure for 100 workers started out as an estimate produced by state officials in March and was sent in a letter from Crisco to NACA in April. Later, a Charlotte Chamber official and Crisco totaled the amount for 1,000 workers at $2.5 million. Now, however, the state says $1 million was supposed to be the limit.

Going forward, Commerce will be clearer in its announcements, and will note that the One North Carolina Fund typically requires at least a 100 percent local match, said Neal, the Commerce spokeswoman.

“We certainly want to be as clear as we are able to be,” she said.

Confusion is latest twist

The confusion over the on-the-job training money is the latest twist in a drama that unfolded over more than six months.

Boston-based NACA, founded by Marks in 1988, is known for aggressively protesting banks that it deems to be making predatory loans. But it also partners with lenders, including Charlotte's Bank of America, to make low-interest loans to low-income homebuyers.

In its latest effort, NACA is organizing “Save the Dream” events around the country, where it modifies loans of struggling borrowers on the spot.

According to the documents, NACA appeared ready late last year to add at least 400 jobs in Charlotte without incentives. But on Feb. 6, National Public Radio ran a feature on NACA that was followed by other news outlets. That led to a “stream of incentives offers” from several communities, according to a project summary prepared by Charlotte Chamber official Justin Hunt.

Marks now wanted incentive money for the Charlotte project.

Because NACA was a nonprofit that doesn't pay taxes, the state couldn't offer incentives based on rebates of local property taxes, Hunt wrote in the February summary for Commerce officials. But he raised the possibility of a Job Development Incentive Grant, a type of grant based on the payroll taxes paid for new hires.

In an early estimate by the Chamber, NACA could have received a “modified” JDIG worth up to $1.8 million over seven years if it met certain investment and salary requirements.

As the talks continued, NACA said it was likely to create more than 1,000 jobs, but Hunt said that grant was still unlikely, suggesting a One North Carolina Fund grant instead.

State officials also told NACA that it could be eligible for on-the-job training assistance, which helps companies pay the salaries for displaced workers they hire during a training period. In this case, the state could pay NACA $2,560 per eligible worker – half of their $16-per-hour wage over two months, or $256,000 for 100 workers.

NACA threatens to move

On June 2, Hunt and an N.C. Commerce Department official, Ron Leitch, tried to close the deal, but Leitch reported that Marks was still upset the project didn't warrant a bigger grant.

“He threatened to move the operation to SC or elsewhere,” Leitch wrote. “Says (U.S. Rep. James Clyburn, D-S.C.) would insure they received a more significant incentive package in SC.”

In another e-mail that day, Hunt told state officials that Marks complained that the offer of a $500,000 One North Carolina Fund grant was “unacceptably low.”

“That won't even cover our rent,” Marks said, according to Hunt's e-mail.

Hunt suggested the state increase the One North Carolina Fund grant to $1 million. Combined with about $2.5 million for on-the-job training that would bring the total package to $3.5 million, he wrote in an update to state officials.

He recommended that Perdue announce the project on Thursday June 11, noting that Marks was under “extreme pressure” to begin hiring because he needed more than his existing Charlotte workforce to pull off the Save the Dream events. Hunt emphasized the importance of Perdue's appearance at the event to Marks.

On Sunday June 7, while in Europe, Crisco sent an e-mail saying he had talked to Marks and he was agreeable – on the condition NACA receive the $1 million One North Carolina Fund grant and $2.5 million for on-the-job training.

By Monday, June 8, arrangements were being made for the news conference at NACA's east Charlotte office. Marks suggested 10 a.m. was better than 9 a.m. to give TV crews extra time to set up. Gov. Perdue and former Bank of America Corp. Chairman Hugh McColl Jr., Marks' unlikely ally over the years, confirmed their plans to attend.

Hunt, the Chamber official, said in an interview that the project was one of the most competitive he has worked on. Communities in South Carolina, Connecticut and Florida were interested in NACA's jobs, he said.

“We tried to come up with a creative, out-of-the-box way to support bringing 1,000 jobs to a community that desperately needs them,” he said.

Since its June 12-13 job fair, NACA has hired 452 people in Charlotte, Marks said, and he expects to hire all of the 1,014 workers by year end. Gov. Perdue's presence at the news conference gives him confidence that the state will keep its commitment.

“We're confident she's good to her word,” he said. “We've certainly held up our end.”



NACA's "Save the Dream Tour" Hits St. Louis Thursday to Offer Same Day Solutions for Homeowners With Unaffordable Mortgages

In a release issued earlier today by NACA, under the same headline, please note that the "Save the Dream Tour" will arrive in St. Louis at 2 PM and not 1 PM as previously stated. The updated release follows:

Several tour buses will hit St. Louis University's Chaifetz Arena Thursday, July 30th to kick off NACA's Save the Dream of Homeownership Event in Missouri. The buses, filled with hundreds of staff and volunteers, will hold a press conference outside Chaifetz Arena inviting struggling homeowners to take advantage of an historic opportunity to make their mortgage affordable. Hundreds of homeowners and volunteers will be on hand to welcome the tour to St. Louis. A number of elected officials will also be in attendance.

The tour buses will pull in front of Chaifetz on Thursday at 2 PM, July 30th.

The Neighborhood Assistance Corporation of America (NACA) was invited by St. Louis County Executive Charlie Dooley and St. Louis City Comptroller Darlene Green to bring its Save the Dream Tour here to speed up mortgage relief for thousands.

"We offer unprecedented solutions for homeowners caught up in the current mortgage and economic crisis," said NACA CEO Bruce Marks. "During the Save the Dream Events, borrowers can get mortgages restructured the same day. We will have our staff, as well as lenders and servicers on site and in their home offices working to make this the most comprehensive mobile servicing operation in the country."

The Save the Dream Tour comes at a perfect time for homeowners as the Obama administration just finished its meeting with mortgage servicers this week to get them to modify hundreds of thousands of home loans for Americans so borrowers can avoid foreclosure. NACA has been the exception in that it has secured legally binding agreements with all the major servicers to restructure loans to what homeowners can afford based on a documented affordability analysis. On the tour, thousands of borrowers receive modifications at once, thanks to NACA's advocacy, state of the art underwriting capability and legal contracts it has with all the major lenders.

St. Louis is the third stop on NACA's ten city tour to help homeowners. Fifty-thousand homeowners attended the last event in Chicago.

About the Neighborhood Assistance Corporation of America (www.naca.com):

Founded in 1988, NACA is a national non-profit community advocacy and homeownership organization headquartered in Boston. Through its 38 offices nationwide and two call centers, NACA has set the national standard in restructuring thousands of mortgages to what the homeowners can afford as well as providing the best mortgage in America for homebuyers.

News of NACA's program and advocacy has been featured in national and local media. The Boston Globe chose Bruce Marks, founder and CEO of the Neighborhood Assistance Corporation of America (NACA), as its 2007 Bostonian of the Year. There is tremendous recognition for the effectiveness of NACA's advocacy and for providing real, affordable homeownership solutions for working people. Bostonian of the Year.

CONTACT: NACA
Darren Duarte, Director of Communications & Public Affairs
617-947-2632
dduarte@naca.com




Thousands in Atlanta turn out for immediate Mortgage help


Thousands lined up outside the Georgia World Congress Center Tuesday hoping to get relief from unaffordable mortgages during the last day of the Neighborhood Assistance Corporation of America’s “Save the Dream” mortgage restructuring tour.

The tour was originally set to end in Atlanta on Monday, but Darren Duarte, spokesman for NACA, said the Atlanta stop was extended an extra day to meet the enormous demand.

“We’ve had huge lines every day,” Duarte said. “This is definitely the largest day.”

Duarte estimated that 2,000 to 3,000 people were waiting in line Tuesday morning. By comparison, on Friday, the first day of the tour’s Atlanta stop, about 3,500 attended for the whole day.

The tour stopped in Cleveland, Chicago and St. Louis before it came to Atlanta, the only city where it was extended an extra day. Duarte said Atlanta showed the largest last-day attendance of any of the tour’s cities so far.

“The need is great wherever you go,” Duarte said. “I think people feel helpless that they can’t get their mortgages down. A lot of people here have been telling us they can’t sleep at night because of their mortgage.”

The “Save the Dream” tour provides free same-day mortgage modifications for many of those who attend.

Homeowners meet with counselors and answer detailed questions about their finances and mortgages. The counselor then makes a recommendation to the bank. NACA has legal agreements from the country’s largest mortgage holders that requires them, in most cases, to restructure the mortgage based on that recommendation.

One of Atlanta’s biggest success stories was a $50,000 drop in one homeowner’s principal, Duarte said.

Lane Hammond, who works as a family services counselor for Kennedy Memorial Gardens, said his monthly payment dropped from $805 to $385.19.

Hammond arrived at the World Congress Center at 6:30 a.m. and received his solution later in the morning.

“I was elated,” Hammond said. “I’m walking on a cloud.”

The tour’s next stops include Phoenix, Los Angeles, San Francisco and New York.

The Atlanta event lasts until 8 p.m. Tuesday. Homeowners who cannot be seen today can access NACA’s free service online at www.naca.com. Results will take between 30 and 60 days.


Nonprofit to hire 500 in Charlotte within 4 weeks

(NACA to add 1,014 jobs over next 5 years)

In the unfolding economic crisis, helping borrowers with troubled mortgages has become a growth business, landing Charlotte's beleaguered financial sector a dose of good news Thursday.

At an office park in east Charlotte, North Carolina Gov. Bev Perdue and other area officials gathered to announce an expansion by a nonprofit organization that aims to add 1,014 jobs to Charlotte over the next five years. Boston-based Neighborhood Assistance Corp. of America, a nonprofit community advocacy and homeownership organization, plans to hire customer service specialists, mortgage counselors and others to help low-income and minority borrowers.

NACA, as the organization is known, said it plans to hire about 500 of those workers in the next two to four weeks. It will hold a job fair today and Saturday from 8 a.m. to 8 p.m. both days at its location at 5855 Executive Center Drive. Job seekers also can find information at www.naca.com.

The bolt of new jobs comes as Charlotte wrestles with layoffs at Wachovia, Bank of America and other financial firms. The metro area had 55,200 finance and insurance jobs in April, down 100 from March and 3,900 from December, according to preliminary data from the U.S. Labor Department.

NACA plans to invest $4.5 million in Charlotte as part of an expansion over the next five years, although NACA chief executive Bruce Marks said the total is really much higher when the salaries that will be paid in coming years are tallied. The jobs will have an average annual salary of $35,982 but some will pay as high as $80,000, he said.

The nonprofit is receiving a $1 million grant from the One North Carolina Fund, which provides financial assistance through local governments to create new jobs. The companies receive no money upfront and must meet job creation requirements, the governor's office said. NACA could also be in line to receive job training assistance from the Charlotte-Mecklenburg Workforce Development Consortium, said Justin Hunt, vice president of economic development and European development with the Charlotte Chamber.

Marks said the incentives, which came after wooing by the governor, the chamber and other officials, sealed the expansion in Charlotte. Other locations also were interested in the new jobs, he said.

NACA has two main thrusts: helping borrowers get affordable home loans and, increasingly, helping people who can't afford loans they received from other lenders. The group is holding “Save the Dream” events around the country where counselors aim to provide same-day loan modifications, reducing interest rates to as low as 2 percent and in some cases trimming the principal owed.

The next event is July 10 through July 14 in Atlanta. Some of the new hires at the Charlotte office will be part of the team that travels from city to city running these gatherings, which can draw 25,000 or more homeowners, Marks said. In three earlier stops, NACA has helped 30,000 homeowners, and Marks said he expects to aid hundreds of thousands more in the coming tour. As part of the expansion in Charlotte, Marks has agreed to hold an event in North Carolina at a yet to be determined time.

NACA has reached agreements with major mortgage servicers allowing them to make these immediate modifications, said Marks, wearing his trademark black shirt emblazoned with the slogan: “Financial Predators Beware!”

“We are doing a mobile servicing operation,” he said. “We're doing their job for them.”

Marks said he hopes his organization will set an example for how to modify loans.


NACA likely to receive $256,000 in Training Assistance

The national housing nonprofit that plans to hire 1,014 workers in Charlotte over the next five years is likely to receive $256,000 for on-the-job training assistance, a Charlotte/Mecklenburg Workforce Development Board official said Friday.

Gov. Perdue announced Thursday that Boston-based Neighborhood Assistance Corp. of America, a community advocacy and homeownership group, is also in line to receive a $1 million state grant if it meets its job creation commitment.

The on-the-job training assistance would subsidize the pay of 100 unemployed or displaced workers hired by NACA, paying half of their $16 per hour wages for two months, said Deborah Gibson, executive director of the Charlotte/Mecklenburg Workforce Development Board. The contract with NACA hasn't been finalized, but Gibson said she expects an agreement to be reached.

The training program is administered by the N.C. Department of Commerce and the Division of Workforce Development through local workforce development boards, Gibson said.

The program was popular during the last economic downturn in 2001 but hasn't been used much lately, she said. Typically, companies that are interested approach the workforce development board, she said.

City of Charlotte and Mecklenburg County officials were not asked to provide incentives to NACA because it's a nonprofit that doesn't pay taxes, making it ineligible for local assistance programs, officials said. Staff writers Julia Oliver and April Bethea contributed.



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Sources: Charlotte Observer, NACA, Charmeck.org, Newsobserver, Heraldonline, NY Post, AJC.com, Washington Post, MSNBC, Newsbusters, Google Maps

Congress (Dems) Ponders Adopting NACA's "Bank Terrorism"/ Anti-Predatory Lending Type Tatics For New Financial Regulation

Boston Globe----

Guarding the House

Wall Street made billions off the backs of homeowners. But when the mortgage crisis blew up, a pit bull named Bruce Marks stood up for the Average Joes and, incredibly, got some of the biggest banks to bend.

There are guys you'd want to talk Sox trades with over a beer, guys you'd want to deliver the toast at your wedding, guys you'd want by your side if some goateed knucklehead took a swing at you because you accidentally bumped into his girlfriend. Bruce Marks is none of these guys.

But if you should find yourself up against one of the nation's most powerful banks, feeling abused by a maddening loop of automated messages, threatening letters, and buck-passing paper pushers, if you should feel powerless to reassure your little daughter when she tearfully asks you if you're going to lose the only home she's ever known, well then, there's nobody you'd want in your corner more than Bruce Marks. And sadly, a whole lot of desperate people had to turn to Marks for help this year, and a whole lot more will need his emergency services in the year ahead.

Marks is a 52-year-old man of slight build, a harmless-enough-looking guy. He has dark, narrow eyes, a brown beard threaded with gray, and lonely swirls of brown hair scattered atop an otherwise bald head. He rarely departs from his uniform of casual shirts emblazoned with the menacing slogan of his housing organization ("Financial Predators Beware!"). The CEO of the nonprofit Neighborhood Assistance Corporation of America, or NACA, Marks works out of a stripped-down office above an electrical-supply store in Jamaica Plain. Yet over the years he has become one of the most feared men in the corporate boardrooms of the nation's leading financial institutions.

How can this be? It starts with an approach best summed up by a nickname some friends gave Marks years ago: The Junkyard Dog, because once he gets his jaws around somebody, he's not letting go until he gets what he wants.

When Marks began his housing work two decades ago, banks were still largely operating in a yes-or-no world, lending only to those deemed creditworthy. Some banks were still redlining whole neighborhoods of low-income people they dismissed as not worth the risk. Marks came along and argued that people of limited means and imperfect credit could, in fact, become good mortgage bets if they were just given a proper education and a fair deal. Over time, he succeeded in shaming a host of big banks into committing millions to NACA so his organization could write reasonable loans for the banks, getting tens of thousands of working-class people across the country into the ranks of homeownership. Today, NACA has commitments, principally from Bank of America and Citigroup, totaling $10 billion.

"No matter what you think of Bruce," says Jim Mahoney, director of public policy for Bank of America, "there are thousands of people who are successful homeowners who otherwise would not have been without him."

And had he stopped there, he would have had quite a record to rest on. But events this year catapulted Marks to the forefront of a national crisis.

We're in the midst of a mortgage meltdown, one we're told was caused by something called "subprime." That opaque term suggests discount steaks but turned out to be a scheme through which the rich became richer by hoovering people - often of limited means and with poor credit - into cynical loans that were really ticking time bombs.

Now that those bombs have begun to go off and the shrapnel is hitting people up and down the economic ladder, there is panic all around us. Homeowners are trying to stave off foreclosure, lenders are trying to stave off bankruptcy, and everybody else is bracing for a recession. With many of the players engaged in a heated blame game, Marks is, once again, standing apart. Whether testifying before Congress or staging takeovers of lending-company offices, he is making the case for average homeowners by keeping the pressure on the big banks.

Meanwhile, behind the scenes, he is offering a sophisticated solution that may well make the most sense for borrowers and lenders alike. He's already persuaded the nation's biggest mortgage lender, Countrywide Financial, to let NACA restructure many of Countrywide's bad subprime loans with reasonable terms based on what the borrower can pay. And now other big-name banks appear poised to follow Countrywide's lead.

It is for his relentless advocacy and sensible innovation in working to find a way out of this mortgage mess that affects so many that Bruce Marks is our 2007 Bostonian of the Year.

IT MAY SEEM LIKE AN UNUSUAL CHOICE, given that Marks is a controversial character who once infamously called himself a "bank terrorist." But this is no ordinary time, and it seems uniquely suited to Marks's curious blend of in-your-face activism, customer-focused service, Machiavellian angling, and social-justice passion.

Over the years, as part of his permanent campaign to browbeat banks into giving fair loans to low- and moderate-income people, Marks and his yellow-T-shirted followers have swarmed shareholders' meetings with enough force to shut them down. They have picketed outside the schools attended by the children of bank CEOs, pressing the youngsters in signs and chants to answer for the actions of their daddies. And they even once distributed scandal sheets to every house in one CEO's neighborhood, detailing the affair he was allegedly having with a subordinate. In time, that CEO, like most of the others that NACA targeted, sat down with Marks and signed a deal.

To those who found his tactics an outrageous invasion of bank executives' personal lives, Marks refused to acknowledge any line between home and work. "What you do is who you are," he says. "It's all personal."

There is no such distinction in Marks's own life. His wife, Marissa Landrau-Pirazzi, a former public defender, began working at NACA four years ago, partly because she believes strongly in its mission and partly so she could see more of her workaholic husband. Their 11-year-old daughter, Gabriela, has also figured out the score. Many afternoons, she can be found doing her homework not at the family's home in Jamaica Plain but at the nearby NACA office, where she has her own desk.

As to what makes Marks tick, even his own mother is still a bit mystified. "I'm very proud of him," June Marks tells me. "But how you put Bruce together, I don't know. As soon as you figure him out," she says, chuckling, "please let me know." She insists he was a nice, quiet boy who never gave her any trouble or any hint of the aggressive street fighter he'd become.

He grew up in a middle-class family living in the moneyed towns of Scarsdale, New York, and then Greenwich, Connecticut. The family was culturally Jewish, but non-practicing. His father, who died three years ago, was a toy-company salesman and a competitive tennis player. A birth injury deprived him of much of the function in his right arm and leg - but remarkably he never spoke about it and refused to let it hold him back. Bruce insists he never realized his father had a handicap until he was a teenager and other kids asked about it.

His father was also an alcoholic, though a highly functioning one. Bruce's mother thought she managed to shield her husband's disease from her two children. In fact, it gnawed at Bruce. "I would hide the bottles on him," he says.

Only now does June Marks wonder if her husband's alcoholism exacerbated Bruce's most obvious problem as a child: a severe stutter.

Because Bruce inherited his father's talent on the tennis court, he spent lots of time at the country club and even worked as an instructor. But he realized how little he fit in once he stepped off the court. He was surrounded by the sons and daughters of privilege. To him, they carried themselves with arrogance and entitlement even though their only obvious talent was getting lucky in the birth lottery. And here was Bruce, the stuttering son of a salesman. He says he learned to appreciate what people went through when they were judged by things out of their control, "like the color of their skin or their accent or where they were born."

It's not surprising that so much of his work over the years has been in minority communities or that NACA's nationwide staff of around 300 is more than 90 percent people of color. Marks's longest-running partner in NACA is the Rev. Graylan Hagler, a onetime Boston mayoral candidate and prominent black minister who now lives in Washington, D.C. "People who face some kind of disability in life, they get discounted. It's the same kind of thing that people of color often feel," Hagler says. "Part of what burns our desire is to have nobody disregarded, because we know what that feels like."

That anger at entitlement that has fueled so much of Marks's advocacy was clearly born in his boyhood. All these years later, it remains undiluted, even after he has largely conquered his stutter and has managed to outnegotiate some of the most powerful executives in the country. I ask Marks, who now makes a healthy $150,000 a year, if he remains automatically suspicious of anyone who is wealthy.

He pauses and smiles. "Absolutely."

IT'S NO MYSTERY WHY MARKS HAS BEEN SO disliked by bank CEOs. But his lack of popularity among fellow soldiers in the battalion of affordable-housing advocates is more puzzling. There are a few specific complaints, notably his refusal to make public the standard performance data of NACA loans, leading some to suspect he's been hiding bad numbers. Yet after I repeatedly pressed him to release this data, the numbers he provided turned out to be impressive. (See chart.) Why, then, did he resist all these years?

Well, that gets to the bigger problem some people have with Marks: his personality. In a nonprofit world built around coalitions, Marks, apart from working with his rank-and-file NACA members, prefers to go it alone, cutting the best deal for his members regardless of the interests of other groups. While he is tireless and can be quite charming, like many driven people, he can also be tiresome and theatrically stubborn. Tom Callahan, who heads up the Massachusetts Affordable Housing Alliance, puts it this way: "Bruce doesn't play well in the sandbox."

Marks doesn't disagree. He says he learned early on that playing nice is often a waste of time, and sometimes the people you think are your allies in the sandbox can stymie you as much as your foes. Not long after he arrived in Boston in the early 1980s, he made history, hatching a first-in-the-nation plan to negotiate through collective bargaining a housing benefit for members of Boston's local hotel workers union, so that waiters and maids might have a shot at living in the city where they worked. But first the union had to get federal labor law changed. When Marks and union president Domenic Bozzotto tried to do that, they found their biggest obstacle was not big business, but rather big labor, namely the AFL-CIO, which did not want to rock the boat for a bunch of hotel workers from Boston. Against the odds, the local union eventually prevailed.

From that achievement sprang NACA. And even though Marks was soon running a mortgage business, NACA never departed from its street-activist roots. Homeowners who get a NACA loan are required to participate in five actions a year, whether stuffing envelopes or storming a shareholders meeting. Marks continues to approach negotiations with Bozzotto's philosophy foremost in his mind: "You only get what you're strong enough to take."

Bozzotto says part of what makes Marks so effective is that he is beholden to no one, having resisted all overtures to join the insider crowd. After Bozzotto left his union position, he went to work for the Massachusetts Turnpike Authority, a job he acknowledges he took to help pay his kids' tuition bills and which he received largely because of his past support for Republican governors. In a way, he says, "I co-opted myself." As for Marks, he says, "I don't know anyone who's managed to stay as pure."

Marks credits his deep-seated anger for keeping him barking from behind the same chain-link junkyard fence for two decades. During that time, Marks watched as many of the world's most powerful financial institutions went from ignoring people of modest means to coveting them, realizing they could make billions by catering directly to that mortgage market. But instead of doing it through the tedious, disciplined work of a group like NACA - which offers extensive education before qualifying borrowers for a below-market-rate, 30-year fixed mortgage with no down payment or closing costs - they opted for the subprime route. Suddenly, virtually anyone could qualify for a loan. It was just a question of how much they'd be charged. Subprime loans generally come with a rate at least 3 percentage points higher than the going prime rate, but they are often masked by lower "teaser" rates and have nooselike provisions slipped into the fine print, such as penalties for prepayment and timed resets to extremely high rates. Wall Street fell in love with all this subprime "product," because loans were bundled into huge funds, theoretically minimizing risk - but in reality pushing it downstream - while producing hefty returns for investment firms. As the players all along the lending process got rich, from mortgage brokers to servicers to investment bankers, the demand for more borrowers exploded. Before long, the normal safeguards for underwriting loans got tossed faster than losing scratch tickets outside a convenience store.

It got so bad that some lenders began offering what they called "no-doc" loans, where borrowers didn't need to provide even the most basic documentation for their income. One 41-year-old Brockton woman named Tammy told me that even though she made no more than $15,000 a year as a part-time newspaper delivery person, she watched as her mortgage broker put down her income as $44,000. "I was smart enough to know what was happening," Tammy says. "Who's going to give me a loan when all I have is a damn paper route?" But she figured that was just the ways things were done.

As the number of subprime loans climbed, Marks railed against them as just old-fashioned predatory lending gussied up in a new skirt and pumps. He says NACA lost a good deal of business when low-and moderate-income borrowers found they could qualify for a lot more money, with a lot less work, by signing a subprime note with a big-name bank.

In the meantime, Marks busied himself making the NACA process better, working with his IT guy to develop a streamlined Web-based software system that was able to determine, efficiently and reliably, what a borrower could afford to pay. The system improved quality control for Marks as he continued to open new NACA offices across the country.

When subprime went south and homeowners started defaulting and getting squeezed out of their homes, Marks shifted into his activist mode. He refused to see borrowers as anything but victims, even if some of them, like Tammy of Brockton, blamed themselves. "Bruce has a Messiah complex," says local real estate analyst John C. Anderson. "He refuses to differentiate between people suffering discrimination and people who are legitimately bad credit risks." The latter, Anderson says, "have always been able to borrow their way out of trouble, until now."

But Marks blamed only the greed of the big guys. He started by going after the biggest of them all, Countrywide. He prepared himself for a long fight and was shocked to see the lender cave within 48 hours.

The teetering company no doubt wanted to shut Marks up. More important, though, was NACA's state-of-the-art system, which integrates financial counseling and behavioral change on the part of the borrower with the creation of a solid new loan package based on what that particular borrower can afford to pay. Marks offered Countrywide a more reliable alternative to a flood of expensive foreclosures.

As senior policy adviser to the Financial Services Roundtable, veteran banking executive Bill Longbrake is one of the key players in plotting the response, by government and industry, to the mortgage meltdown. Until now, he never wanted anything to do with Marks, given his reputation. But after seeing NACA's operation up close, he became a believer in Marks. Now he's trying to persuade other banking executives to do the same. "The time is right for what he's built, given the crisis in this country," Longbrake says. "It's almost as if Bruce has two personalities. There's the advocate and bomb thrower, which has made many people in banking wary of him. But behind that, there's this incredibly effective, disciplined businessperson."

LATE LOANS

The most recent available data on the percentage of mortgages in the NACA portfolio that are at least 90 days late - called "seriously delinquent" - compared with the national average:

NACA RATE 1.15 percent VS. NATIONAL RATE 2.95 percent*

*Prime loans, which make up the bulk of mortgages, have a national "seriously delinquent" rate of 1.31 percent. For subprime loans, that rate is 11.38 percent.

NOTE: NACA borrowers pay into a Neighborhood Stabilization Fund, to which they can apply for assistance if they run into financial trouble. NACA reports that 6.32 percent of its borrowers have taken advantage of that fund.





Huffington Post----

Dems Using Drug War Playbook For Bank Regulation


Democrats in Congress are taking a page from the drug war playbook to see if they could apply it to new financial regulation.

The drug war model was suggested by Harvard professor Dan Carpenter, University of Iowa law professor Katherine Porter and others, as part of the Tobin Project, an alliance of academics seeking to shape debate on public policy. The Controlled Substances Act instructs the Food and Drug Administration to parse drugs into five separate categories, known as Schedules, based on their harmfulness, usefulness and risk of abuse.

Rep. Brad Miller (D-N.C.), in coordination with policymakers at the Treasury Department, is considering their proposal and the possibilities of applying it to financial regulation. (Read the papers that are influencing the discussion.)

"In the [drug-regulation] statute there's this gradation of five tiers of regulation, how strict the regulation is," says Miller. "And it's based upon the risk of harm and the usefulness. So aspirin is useful, doesn't have any recreational applications and if you wanna buy it over the counter, you can. LSD is harmful and has no medicinal value. It only is recreational. It's prohibited in every circumstance, and then there's stuff in between."

LSD is in Schedule I while aspirin isn't scheduled at all. Highly risky investment products -- say, adjustable rate loans where the borrower provides little documentation of income and only pays a portion of the interest for the first several years -- would be placed in a higher schedule and more strictly regulated. A standard 30-year fixed rate mortgage to a borrower with well-documented ability to pay could be in a lower tier and encounter less red tape.

Lenders, says Miller, could use form contracts that have been pre-approved in cases where the products are standard or familiar. "They would actually issue a form contract and say, 'If you use this contract you will get in no trouble with us. If you want to do something different, then there's the possibility of disapproval. And you've got to advertise it; you've got to let consumers know in a really conspicuous way, that they're using a form that's not approved by the regulator,'" said Miller, pointing out that the regulatory proposals were "just discussions" at this point.

The approval process touched on by Miller relates to another FDA-related regulatory approach. Today, a lender can gin up whatever exotic product it can think of and sell it to any customer willing to take it. Miller and other Democrats are looking at slowing that process down. Much as a new drug must first be tested and deemed safe, so would a new financial product.

Elizabeth Warren, head of the Congressional Oversight Panel, has advocated for a Financial Product Safety Commission modeled after the existing Consumer Product Safety Commission. The new ideas being floated would still create an FPSC, but model it instead on drugs. The reason is simple: A toaster that catches on fire is a bad toaster, no matter who uses it. But some drugs are safe for some people while dangerous to others.

"Pharmaceuticals, like credit products, are not easy to categorize as safe or dangerous on an across-the-board basis. The task is to calibrate the product to the consumer and to balance the benefits of use against the risks. The FDA has to contend with the hard reality that some people are willing to suffer grave side effects to cure grave diseases, just as some people are willing to suffer severe financial distress to relieve severe privations," writes Porter in a paper that has influenced Miller's thinking.

The problem with the consumer commission, writes Porter, is that the "agency largely uses a binary approach, either banning or approving products, without promulgating guidelines for their use."

Sending new financial products through government hoops would slow down innovation but lessen systemic risk. It was the exotic innovation, after all, that got the U.S. economy into this mess in the first place. The FDA approach might be one way to keep the system healthier.

"In order to get the drug approved, drug manufacturers know that they really need to come in with a lot of data. And then the approval can be limited. It can be limited to use in a certain market for a certain time, and there can be conditions on the approval," says Miller. "The analogy is that a consumer financial product -- retail financial product -- could be allowed a limited market, initially, for a limited time. And then see what the experience is during that period. That is a profound change from what we've had before."

It's not the kind of change House Republicans can believe in. Rep. Mike Pence, a leading conservative Republican from Indiana, responded to the idea by telling HuffPost he wants "...the government out of the business of picking winners and losers and assessing risk. I think the American people want a refereed private sector, but I think there's an awful lot of fatigue about government intrusion into various aspects of the economy."



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Sources: Huffington Post, Boston Globe, NACA, Google Maps