This article first appeared in the St. Louis Beacon, July 13, 2012 - The Neighborhood Assistance Corporation of America (NACA), a Boston-based nonprofit, plans to bring its “American Dream Tour” to St. Louis in August to counsel homeowners facing foreclosure. A local housing advocate says a similar event that drew 40,000 people to Chaifetz Arena in the summer of 2009 left hundreds seeking assistance from his agency in the aftermath.
Chris Krehmeyer, president and CEO of Beyond Housing, said that hundreds of participants complained of difficulties in communicating with NACA after the 2009 event and turned to his agency and other St. Louis nonprofit housing counselors for help in the months that followed. He noted that delays in getting assistance increased the risk of foreclosure for some homeowners.
“The take is the same,” he said. “They’re going to come into town with their big circus and, as their flyer indicates, they’re promising the world. Some people will be OK, but a lot of people will be harmed.”
NACA reported that 40,000 people representing 25,000 households attended its mobile foreclosure prevention counseling operation -- then dubbed “Save the Dream” -- three years ago in St. Louis. The heavily publicized multi-city tour touted free counseling and same-day mortgage restructures that NACA officials said were facilitated by its legal binding contracts with lenders. NACA brought in several hundred counselors and set up temporary workstations on the floor of the arena, which was packed with worried homeowners.
Krehmeyer said that homeowners should be cautious about claims made in the current NACA flyer promoting the event -- and stressed that free foreclosure counseling is available through local nonprofits, including Beyond Housing, the Urban League and Better Family Life.
“People will go because they’re desperate and need help and they believe NACA’s pitch that’s everything going to be great,” Krehmeyer said. “Our history says they will help some people, but there will be lots of people they will leave hanging. And the rest of us will have to pick up the mess after they leave.”
NACA began staging the foreclosure events around the country at the height of the foreclosure crisis.
A flyer on NACA’s website promoting the St. Louis stop says it will be held at Chaifetz from 8 a.m. to 8 p.m., Aug. 17-21. The flyer describes mortgage restructures that will “make your payment affordable,” same-day solutions, face-to-face meetings with lenders, interest rates as low as 2 percent and “sometimes large principal reductions.” The flyer also lists workshops for homebuyers interested in “America’s Best Mortgage,” described as a 30-year fixed rate of 3.5 percent with no down payment, closing costs or fees.
Reached briefly by phone Wednesday afternoon, Darren Duarte, NACA’s communications director, said the event has changed since 2009 and now includes the mortgage component for home buyers as well as foreclosure counseling. Duarte said he couldn’t talk longer because he was at a radio station in Connecticut; as of Thursday evening, he had not yet called back. According to the NACA website, the American Dream tour is in Bridgeport, Conn., this week.
Jim Wynkoop, general manager of Chaifetz Arena, confirmed that he was negotiating with NACA regarding the August dates. He said the organization had not yet signed the contract.
Cleveland folds up welcome mat
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The NACA website reports thousands of successes, but it is unclear how many participants in St. Louis eventually received mortgage modifications through the organization.
At a press conference before the 2009 event, Bruce Marks, the CEO of NACA, acknowledged that the foreclosure process could take longer than the same day, but he emphasized that 80 percent of participants would eventually get loan solutions. Several St. Louis homeowners who attended that press conference described how NACA had helped them restructure their mortgages.
Despite repeated requests by the Beacon, NACA did not provide numbers of St. Louis homeowners who succeeded in restructuring their home loans.
In June, local counseling agencies in Cleveland banded together with Cuyahoga County Executive Ed FitzGerald to discourage residents from attending NACA’s event when it returned to that city for a second time. NACA had stopped in Cleveland before St. Louis in 2009.
Mark Seifert, executive director of the nonprofit Empowering and Strengthening Ohio’s People (ESOP), estimated that about 400 homeowners turned to his agency for foreclosure help after their efforts failed with NACA in 2009.
“The wounds are still very deep here,” Seifert said. “We still every week see at least one or two people who have previously gone through NACA.”
The Cleveland nonprofits performed community outreach in advance of NACA’s recent event, June 29-July 2, emphasizing their message that local help is available and that local help is the best choice. Seifert discounted suggestions made by Marks to Cleveland media that the local nonprofits were arguing over “turf.’’
“Whether it’s NACA or not, the local counseling groups are the ones that have the lay of the land. You can find them. They’re oftentimes your neighbors. Local is always best,” Seifert said. “NACA was not very helpful to the homeowners in our community.”
Free counseling funded by federal dollars
NACA does not charge homeowners for foreclosure counseling. Like other nonprofits certified by HUD, it receives federal funds for that purpose through the National Foreclosure Mitigation Counseling (NFMC) program.
NACA has received just over $41 million in NFMC funds since 2008; its latest award was for $3.2 million, granted in March 2012. The funds are distributed by NeighborWorks, a national nonprofit originally created by Congress to help improve housing in economically distressed neighborhoods.
Krehmeyer and Seifert said that nonprofits that took on NACA’s dissatisfied clients could not collect federal funds for levels of service that had already been billed by NACA -- a situation that further strained their limited budgets.
Agencies are currently compensated $150 a homeowner for Level One counseling, which includes intake, collection of pertinent information and the development of a budget and an "action plan.” Level Two counseling, compensated at $300 a homeowner, involves more extensive and time-consuming counseling with the agency serving as an intermediary between homeowners and lenders.
In the past, homeowners who were counseled initially by one agency were free to go to another agency for assistance, but the second agency could only bill for levels of counsel not yet provided. The current round of funding allows for a “reset”: Clients counseled before Jan. 1, 2011, are eligible to be counseled again at any level.
Krehmeyer said it’s “a shame” that NACA doesn’t attempt to work with local agencies but instead rolls into town opening new client files and providing Level One counseling.
“There is great need, and these folks aren’t willing to work with local nonprofits and aren’t uniformly looking out for the best interests of the people,” he said.
Foreclosures remain at record levels in the St. Louis area, Krehmeyer said, adding that Beyond Housing’s counselors will work with about 800 families this year.
“It went from a subprime loan crisis to a job-loss, income-loss crisis, and we’re still in the midst of it,” he said. “We think there is another 12 to 24 months to go before things start getting back to normal levels of foreclosure activity.”
