Is NACA The Russian Romance Tour Operator Of Foreclosure Rescue?in HPN Blog
Steve Dibert, MFI-Miami
For the past several years, you have probably seen news stories about a Not-For-Profit group out of Boston named NACA who get thousands of people to show up at their foreclosure rescue sessions they have at different convention halls across the U.S. and how it’s founder, Bruce Marks, markets it as if it’s a foreclosure rescue version of “Brother Love’s Traveling Salvation Show“
For those of you who don’t know, NACA is a Community Redevelopment Act (CRA) Housing Agency out of Boston called Neighborhood Assistance Corporation of America (NACA) which is nothing more than an ACORN wannabe. This NACA should not be confused with another NACA, the National Association of Consumer Advocates, which 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, National Association of Marlon Brando Look Alikes and the pro-pedophilia bad NAMBLA, National Association of Man/Boy Love Association (which is a real group). You can figure out which NACA is which while reading this article.
Before I get to how Bruce Marks and NACA operate and make their money, I should explain what a CRA is. The Community Redevelopment Act was passed by US Congress in 1977 to encourage banks help low- and moderate-income neighborhoods become homeowners and contrary to what arm chair conservatives like to spout on social media websites, CRAs were not the cause of the financial crisis.
Matter of fact, banks flock to CRA developments and fight over eligible homeowners because the lending guidelines on CRA loans is generally stricter than on most conventional lending programs.
Through FDIC mandates, banks can offer low interest mortgages with the local municipality donating the land or leasing the land to the homeowner. Banks also like CRA clients because it helps them get FDIC approval when they want to expand their business, merge with another bank or want create a branch network in certain parts of the country.
NACA may be a designated CRA Housing Non-Profit but when you dig deeper you see that it is really nothing more than a for-profit enterprise disguised as a housing non-profit feeding off the teat of the American taxpayer.
What Bruce Marks isn’t telling people is on top of the grant money he gets from the federal government, he is also getting 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’s 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 not only exposure and free advertising but he uses it to give him and NACA credibility especially when he brags about tormenting the young children of banking executives by driving to their school and yelling to them that their daddy is a monster. All of that notoriety helps him create a Robin Hood persona.
It then helps him when he announces he’s bringing his foreclosure rescue version of “Brother Love’s Traveling Salvation Show” to a local community. He also uses his status as a CRA Housing Non-Profit as a way for local television stations to give him free advertising time and to get the banks to pay for the convention hall space.
“Quantity has a quality all its own.” -Joseph Stalin
The reason Marks wants thousands of people to show up to NACA events is because if 2,500 people show up then it becomes a media event. The media shows people standing out front of the convention hall and because people especially desperate homeowners have herd mentality, the more people rush to the event.
Bruce Marks and NACA are not the nightmare for banks that he likes to portray. They’re just the opposite. His events are to the CRA world what Russian romance tours are to lonely middle aged American men because like Russian romance tour operators, NACA helps connect potential CRA mortgage clients with the banks which is why the banks are eager to pay for the convention space and his “Bank Terrorist” shtick.
What Marks doesn’t tell people is he uses the event to screen people for CRA loans which account for 5% of the people who come through the door. Because he is legally a “housing non-profit” he can get discounted interest rates from the bank and NACA gets fat check from the bank. Marks and NACA pocket nearly 4% of the loan. If the loan closes, NACA gets a loan origination fee of 2% and an SRP of 2% on the back end of the loan from the lender.
What’s an SRP? Like a Yield Spread Premium, SRP or Service Release Premium is the payment NACA receives from the lending institution outside of closing that they get when they sell a closed mortgage loan to the secondary mortgage market to Fannie Mae, Freddie Mac, or Ginnie Mae.
Marks along with the banks are playing a numbers game. If he has 10,000 people show up to an event and he closes 500 files with an average loan amount of $150,000, he made $3,000,000 from the event. Banks will enthusiastically pay for the convention space for a NACA event because they can write $75,000,000 in mortgages that will be sold to the federal government that they will 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.
There is another way NACA helps banks make money and 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 homes.
NACA signs up the majority of these homeowners knowing full well they can’t help them with loan modifications. They give these homeowners false hope by making them believe that NACA is helping them and is working on their file when 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.
Believe it or not, this is quite common with CRA funded housing non-profits. They advise the homeowner not to make the payment because the lender told the housing non-profit to tell the homeowner to quit making the payment because the lender won’t help the homeowner if they are not 90 day 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 and how when a MBS Trust cashes in its insurance policy that the mortgage servicer is the first to swoop in and buy the outstanding loans in the mortgage trust for pennies on the dollar. This means if the servicer buys a mortgage from the MBS for $2000 that has a face value of $200,000, the servicer who is now the owner can foreclose and sell the property for $80,000 is still make a profit of 40 times what they paid for it.
Original linkOriginal author: Steve Dibert