This article first appeared in the St. Louis Beacon, July 28, 2009 - Bruce Marks, founder and CEO of the Neighborhood Assistance Corporation of America, makes no bones about who he is and what his organization is about: grass-roots activism, the old-fashioned, in-your-face way.
Until now, Marks and NACA haven't been well known in the St. Louis area, although the organization has a small office here. On Friday, his "Save the Dream Tour" stops in St. Louis for a four-day event that aims to help homeowners restructure unaffordable mortgages, and Marks expects it will attract thousands.
During a press conference last week, Bruce was joined by city leaders who encouraged troubled homeowners to attend the event at Chaifetz Arena.
"Leaders here are stepping up to get the word out,'' Marks said. "They are not stuck on the politics of whether we're from St. Louis or not from St. Louis.''
NACA is more widely known on the East Coast, particularly in Boston, where Marks founded the group 20 years ago.
In December 2007, the Boston Globe declared Marks "Bostonian of the Year'' and ran a profile of him with the headline: "Who does this guy think he is?" According to the Globe's profile, which can be found on the NACA website, Marks grew up in a middle-class family living among affluent neighbors in Scarsdale, N.Y., and Greenwich, Conn. He has been credited with helping working people with limited means -- and credit scores - become homeowners.
But NACA is also known for aggressive advocacy to convince big lenders like Citigroup and Bank of America to commit billions of dollars to fund its low-interest loan program. Homeowners who get a mortgage through NACA are required to join the group, attend educational workshops and pay into a fund which assists them if they later get into financial trouble.
Through the years, some critics have accused Marks of using strong-armed tactics as extortion: The group has picketed the schools attended by children of bank CEOs and in one notable case revealed the alleged affair of a targeted CEO to his neighbors. Marks, who has referred to himself as a "bank terrorist" and "junkyard dog," attributes his group's success in dealing with lenders to its aggressiveness.
"We believe it's personal when someone loses their home,'' he said last week.
Marks says he knows how to fight lenders because he understands them.
"I went to business school -- New York University, MBA -- to learn the enemy,'' he said. "I got a job at the Federal Reserve Bank of New York in the domestic applications area to learn the enemy. I wanted to know how they did their business better than they know themselves. The ammunition in these wars is not the ammunition of violence; it's the ammunition of information.''
The focus of NACA's national 10-city "Save the Dream Tour" is to restructure - not refinance - troubled subprime loans and adjustable rate mortgages with major mortgage lenders, that, he says, have signed legally binding agreements with NACA. The key, he explains, is to determine what an affordable payment is for a homeowner based on income and expenses and then restructure the loan to get there, either by permanently reducing the interest rate or cutting the principal.
If a homeowner has a monthly mortgage payment of $1,500, but can only afford $1,000, the loan is destined to fail, he says.
"You might use your savings, your 401(k), friends and family members, but eventually you'll be tapped out, and at some point down the road, you're going to lose your home,'' Marks said. "That gets back to what we consider to be homeownership. Homeownership is, 'I've got a 30-year fully amortizing mortgage.' What you don't hear us saying is you have to reduce because the property is worth less than what they owe. It's all about the payment.''
Marks says that even though the average mortgage payment is reduced by between $500 and $1,000, restructuring makes economic sense to lenders and servicers because foreclosures cost more.
The group will not assist investors, and homeowners must live in the house they are trying to save. Though the event touts "same-day solutions,'' Marks acknowledged that it will take longer for some homeowners but most who come eventually will be helped.
"We kept people in the process,'' he said. "I'd rather people stay in the process until they get long-term affordable solution than to take a solution that's structured to fail.''
During an interview with the Beacon, Marks talked about his group's advocacy efforts. Here are excerpts:
BEACON: People who know you talk about your passion.
MARKS: People call it passion. Some people call it anger. To me, how can you not be passionate? I have the best job in the world. People come up to me all the time and say, "You saved my life. I can now sleep at night."
When I say I don't do well in press conferences, I don't. I'm not good with the various politicians. I'm not good on that stage. It's all about the borrowers for me.
The lenders and the people get crazy because I'm very aggressive, and sometimes that is confrontational. I refuse to allow them to take advantage of borrowers. I meet too many borrowers -- tens of thousands. I know what struggles they're going through.
Frankly, in my background I also know the other side. I know the entitlement of these wealthy people. I know the lifestyles they live. I find it outrageous that they, with their lifestyles, can be so uncaring and predatory against people who cut their lawns, clean their homes, provide services so they can live in the lap of luxury.
BEACON: Your advocacy tactics with lenders are sometimes criticized as being too aggressive and confrontational.
MARKS: I have no interest in being an insider. I've been asked, "Do you want to be in this advisory thing?" Or, a part of this? I don't do that. I just refuse to do that because I've learned that if you do that -- one, you're never on the inside. Don't ever fool yourself that that is ever the case.
And two, I want to make bigger changes than the incremental changes that you can make by being on the inside.
I think it's sad that people see us as being so confrontational and so aggressive when you look at what happened to get people to where we are today. Taking a bus of homeowners to one of these CEO's houses, that today is viewed as very confrontational. When we were in Greenwich, Conn., what did the Greenwich police do who are there to guard the rich and wealthy and the famous? They took us aside and said, "You're OK, but can you help me?" And they give us the thumbs up as we're leaving with 350 people. So, obviously, they don't want violence. And we're very clear that we don't do that.
BEACON: National statistics on foreclosure intervention show that some homeowners who negotiated loan modifications with lenders have returned for assistance two and three times. Is there some level at which you can't help a homeowner? Do people have to be employed?
MARKS: There are two solutions: If someone is underemployed or unemployed there's a forbearance where we give them time to get back on their feet. So they might make a minimum payment or maybe even no payment for a period of time until they get income. Then if they have the income, they do the restructure. So, there are only two solutions out there. Payment plans don't work. Interest-only solutions, resets don't work.
Have you ever read the book "Getting to Yes'' [the bestseller written by Harvard professors Roger Fisher and William Ury]. I went to business school. I went into this negotiating class, and the whole premise was getting to yes. You have to find a compromise position; everybody gives a little and all that. It's completely wrong. It's never that way.
When you look at negotiations, you always get what you're strong enough to take. Now, in the end everybody stands up and they say everybody gave a little and all of that. That's just the public relations piece of that. It's what you're strong enough to win. And negotiation is a reflection of how strong you are.
I'm determined that I will not compromise when it will undermine what you are trying to do for the borrowers because in the end it will come back to bite you. It will make it unworkable. And so I won't do that. And with 700,000 [NACA members] and by the end of summer over a million members, well, we've got an army out there.
BEACON: You talk about your membership as if you are the general of an army.
MARKS: People want to give back. And people say what do you want me to do? Whose house should we go to next? Who should we target next?
If I start to compromise and not push it, then I shouldn't be in this job. Then someone else should take over my position because our job is to do the right thing for the borrowers and to push it until we get there. It's not to settle.
I get the lecture, "Bruce, you're a big organization. You've got a big presence. You do more [home] counseling than anybody else does in the country - 15 percent and growing. You can't do that advocacy piece. Now, you're in Washington. You have to behave yourself. You can't be on people's doorsteps. You can't dump furniture on their lawns. You can't do all that stuff." No, no, no. You don't change what's gotten you to be successful.
And I think that's a big problem with people who run organizations. When they get to Washington, they get caught up in the Washington stuff. I've got no interest in that. Just none.
BEACON: Housing counselors who work in foreclosure intervention say that even now, several years into this mortgage crisis, some lenders are still not willing to renegotiate at-risk loans.
MARKS: President Obama has to go back to his roots and stop begging, pleading and bribing these servicers. You have to require them to do it.
Take the NACA standard that we require them to do it, and make that the national standard. He's bringing them in. He's pleading with them. He's begging them. He's saying, "I'll give you all this money." The whole industry is a business model that doesn't work. How are you going to get them to change their business model if you're begging them to do it, and you're giving them $1,000 for every loan they do?
You think I have anger. They have that toward the borrower. They blame the borrower. Their mindset is they blame the borrowers, and they think the borrowers put them into this crisis, not the mortgages. They don't want to do anything for the borrowers. Don't want to change their business model -- which would be a huge expense -- for borrowers that they don't think deserve it.
BEACON: Is the economy now driving more homeowners to seek your services?
MARKS: These mortgages were so on the edge, there was no flexibility. There was no margin for error, and that was the problem. People were struggling. Could they have continued to struggle if things hadn't turned? Yes, some of them could have. But there was no margin of error in there that they could address this crisis.
BEACON: You say your goal is to put NACA out of business.
MARKS: I'm really serious about that. We can have a huge impact -- and we do -- on a huge number of people's lives. That's not good enough if you don't make the lenders change and the servicers change the way that they do business. That is our goal. For everybody we help, there will be many more people who don't know about NACA who will lose their homes, who shouldn't lose their homes.
ABOUT NACA MEMBERSHIP
* Homeowners helped by the Neighborhood Assistance Corporation of America become members and agree to volunteer for the group. Here is the participation pledge that is posted at the group's website, www.naca.com :
"I understand that community advocacy is the major reason that NACA can provide America's Best Homeownership Program including free individualized comprehensive housing services to its Members. I embrace NACA's mission to revitalize communities, address financial exploitation, promote economic justice, and eliminate predatory and discriminatory lending practices.
"I therefore pledge to stand with NACA in pursuit of this mission. I will participate in at least five actions and activities a year, such as neighborhood outreach, rallies, demonstrations and public education during my home buying process and for as long as I have the loan I obtained through NACA."
* The website says the organization raises the money it needs to operate and administer its programs from mortgage brokerage fees, lenders, servicers, real estate brokerage commissions and membership dues.
* There are no membership dues for members in the HUD-certified Home Save program that provides counseling for foreclosure and loan restructuring. The program, which receives federal funding, includes free counseling, credit reports, processing, solutions and advocacy.
* Members who participate in NACA's home purchase program -- a mortgage program separate from the Home Save program -- pay dues of $20 per household. The dues increase to $50 per month for members who close on a NACA mortgage, which the organization says is a replacement for private mortgage insurance that the organization does not require. Those dues are in place for five to 10 years, depending on the loan amount and includes short-term financial assistance for members who get into trouble.
* "Community Members" also pay dues of $20 a year.
