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Why Are NACA’s Innovative Mortgage Modification Marathons Below the Radar?

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I’m a bit mystified, given the abject failure of various government-devised “save the mortgage borrower programs,” that the Neighborhood Assistance Corporation of America’s mortgage mod marathon’s aren’t getting more coverage, and that limited media attention may be contributing to falling turnouts at its events. It’s telling that a Google News search confirms that the best recent story on this US program comes in the UK’s Guardian:

… For five days, the Neighbourhood Assistance Corporation of America (Naca), a not-for-profit organisation, is working round the clock to help homeowners hang on to their houses. More than 12,000 people have signed up in advance and more than 20,000 are expected to turn up, travelling from as far afield as California, Georgia and Maryland….

Inside, hundreds of loan advisers sit behind trestle tables. They are colour-coded: Bank of America workers wear red, Citigroup are in blue and Wells Fargo are in black. Even the moribund government-supported refinancing giants Fannie Mae and Freddie Mac are here, but their budgets don’t run to natty coloured clothing.

Borrowers go through orientation and financial counselling sessions. Then, for the luckier applicants who can show a steady income, the loan advisers have the power to reduce interest rates or even write off a proportion of loans.

Yves here. What the Guardian does not state clearly enough is that NACA, working with borrowers, does the part that has been a stumbling block for servicers: it works through a borrower’s finances to determine viability on an individual basis. From NACA’s website:

NACA has developed the industry standard in utilizing technology for mortgage counseling, processing and underwriting. While other lenders employ software to underwrite loans using risk-based pricing that considers only the applicant’s credit score, debt ratios and loan-to-value, NACA utilizes customized, state-of-the-art technology which enables NACA to engage in character-based lending. NACA has developed a proprietary software system called NACA-Lynx™ that stores, manages, and manipulates the information and documentation necessary for NACA’s underwriting. This software allows for consideration of a Member’s overall circumstances and incorporates their own explanations of credit history in order to make a character judgment on their ability to make the mortgage payments. NACA-Lynx is a totally paperless mortgage counseling, processing and underwriting system. No other system exists that compares to the sophistication and comprehensive nature of the NACA-Lynx.

The NACA-Lynx is a web-based system. Thus, all of NACA’s offices are able to access the system via the NACA data center seven days a week, 24 hours a day with real-time updating. The data center is equipped with servers in a storage area network and utilizes off-site back-up and redundancies for all equipment. Each NACA staff person has a computer with a high speed processor, a multi-function scanner/printer/copier, and a large screen, high-resolution LCD monitor for easy viewing by both the staff person and the Member as the work is done in the NACA-Lynx.

A NACA staff person would scan the Member’s documents into the NACA-Lynx and return the original documents to the Member without NACA needing them or copies for its files. In addition, the Member can fax or e-mail their documents directly into NACA’s data storage using an individualized, dynamically generated NACA Cover Sheet bearing their unique ID number. Members fax their documents toll-free to NACA’s fax server at 1-877-FAX-NACA (1-877-329-6222). The Member’s ID is read by the fax server using optical character recognition software and then automatically routed into the Member’s pending file. A NACA staff person assigned to the file is notified of the incoming document via e-mail and transfers the document from pending status into the Member’s permanent file by reviewing the document and completing some basic data entry.

Florida, where an event is taking place ought to be ripe grounds for this sort of program, with the Mortgage Bankers Association reporting that one in nine homes in the state is at risk of foreclosure this summer. Yet participation at this event fell short of expectations despite being held in one of the mortgage crisis epicenters and being open to borrowers from all over the country. As the Palm Beach Post reports:

About 8,200 households had sought help from the Neighborhood Assistance Corp. of America through Monday afternoon, fewer than the non-profit group had expected.

NACA, which works with homeowners to get lower monthly mortgage payments through loan modifications, began 24-hour-a-day counseling sessions Friday morning at the Palm Beach County Convention Center.

The Boston-based company will be at the convention center until 8 p.m. today when it will end its second five-day visit to West Palm Beach.

About 24,000 people attended the first event in February, with 16,097 loans receiving a modification.

Yves here. As noted at the top of the post, this program seems to be very much underpublicized. I did find some reports in Florida papers, but virtually none outside the state. I’m wondering whether readers have any informed guesses as to whether the shortfall for the latest event was merely a one-off, a function of lack of press, or an indicator of borrower issues (inability to organize needed paperwork? proof that only a few are willing to expend effort to save a deeply underwater mortgage? general defeatism given all the deserved bad press about government mortgage mod programs?)

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15 comments

  1. conchscooter

    I would have attended. All Wells Fargo has done is prevaricate over the phone. My wife and I have secure government jobs but our investment income has died. We’re three months in arrears and planning to take a long slow path to bankruptcy even though we’d prefer a modification to stay in our home… Go figure. It’s all BS.

  2. psychohistorian

    I think this fits with money’s control of the media. Big banks don’t want clearly qualified and documented “CRAMDOWNS”. It may be hard to believe that the media is so complicit but the accumulation of evidence continues to grow.

    Yves and other bloggers represent the only glimmer of a “free” press in this country. The rest are totally captive by their advertisers.

  3. Tom Crowl

    I’ve written a bit about my problems with trying to deal with banks and servicers… and can only say I never heard of this program… and it’s too late now anyway for me at least.

    There’s NO due process of law for the little guy. Banks have staffs of lawyers who know all the tricks and loopholes.

    They don’t really care about logical solutions since they are in no-lose situations. They have the government and ‘independent’ Fed to take care of their every little need…

    They, after all… are TOO BIG TO FAIL!

    I’m convinced the general erosion in faith in the legal system… and the clearly recognized bias in favor of the ‘big players’ is going to have pernicious results.

    1. Leviathan

      If it is any consolation, Tom, you are not alone. We have just completed a move out of the family home (into a rental in a nearby town) and are preparing to turn in the keys to the servicer in a deed-in-lieu transaction. Could this company have helped us stay? Perhaps.

      I was just thinking last night that was is needed nationwide is an independent third-party system to EFFECTIVELY (that’s the key) help homeowners navigate the modification process with lenders. It appears to already exist. But it is being starved of oxygen.

      Things that make you go “hmmmm.” Must not be Timmy and Larry approved.

  4. Jim Haygood

    ‘Inside, hundreds of loan advisers sit behind trestle tables. They are colour-coded: Bank of America workers wear red, Citigroup are in blue and Wells Fargo are in black.’

    Life imitates art. Straight from The Handmaid’s Tale:

    Wives always wear blue dresses, presumably as a reference to the traditional depictions of the Virgin Mary. (After the death of her husband, a Wife becomes a Widow and must dress in black.) “Handmaids” are fertile women whose social function is to bear children for the Wives. They dress in a red habit, including red shoes and red gloves.

    http://en.wikipedia.org/wiki/The_Handmaid's_Tale

  5. Greg

    With so many scammers advertising similar services, it’s hard to imagine that this program has any chance of rising above the sleaze.

  6. Whiskey

    Is NACA-Lynx derived from Lynx, the text-based, pre-Netscape web browser? If so, then kudos to whomever it was who designed an web system for mortgage mods.

  7. Braden

    I’m going to reveal myself as hopelessly naive, young, and obviously not the holder of a mortgage. Are you telling me that most mortgage originators and servicers don’t consider income? I mean, if you walk into a bankruptcy court to get your mortgage discharged the first meaningful conversation you’ll have with your lawyer is what are your employment prospects and how much can you expect to earn over the next 10 to 20 years.

    I mean good grief. How difficult is it for the bank to ascertain your income and input it in a database? And, if that’s all you needed to convince the banks to modify, how could Treasury have designed HAMP to fail so spectacularly? I guess I’m now starting to believe the uncharitable things I read about Tim Geithner. The guy’s either a moron or the most evil man in America.

    1. traderjoe

      @Braden,

      I don’t think the banks are interested in modifying mortgages at all, except for enough token participation in all of the programs to appear ‘consumer orientated’.

      If you make the assumptions that: (1) most banks are overvaluing their real estate/mortgage exposure on their balance sheets (especially home equity lines of credit) and are allowed by the regulators to mark-to-fantasy; and (2) any semblance of reality in their models/marks would make them effectively insolvent.

      Therefore, all of these programs, bailouts etc. are just an attempt to mark time, effectively a Hail Mary pass by the banks, governments, etc. to see if the economy revives enough to make all of the problems go away.

      It’s all smoke and mirrors. As is the rest of the global Ponzi.

  8. Alberto Ugas

    As a fellow who ran through the gauntlet and, after a 19 month process was finally able to secure a modification from Citi, even though they fought me every step of the way, it seems clear to me there are other forces at play in this equation.

    In the case of Citi, dealing with an in-house mod after having given up on HAMP, the major stumbling block was first their ineptness, and second their avarice. But patience and perseverance do pay off.

    In the case of the others… I submit this link as a probable explanation of the motives and the dynamics at play. http://www.mfi-miami.com/?p=3636 It reveals the root cause as the common thread that weaves its ugly face throughout everything it seems: corruption, fraud and looting on a massive scale.

  9. Secretary Cleary

    I’ve worked with NACA a handful of times in my career as distressed mortgage Asset Manager. The borrowers they represented typically earned $30,000 or less, owed $250,000 on their home now worth $150,000, and were at least 12 months behind (with a 3-5 year history of being 60-90 days late).

    NACA’s people were the most professional of the MOD companies I’ve worked with. However, they were a bit delusional about the merits of the borrower, who could only afford a $750 PITI payment (30% DTI). That would have called for a principal reduction down to $90,000 at 6.00%. Even though my firm bought the Mortgage at a discount, we didn’t buy it that low. My conversations went nowhere and eventually the borrowers dropped NACA and either filed Chapter 13 (3-4 times) the morning of the Foreclosure or realized that a Deed In Lieu, along with $$ for moving assistance was their best option.

    NACA needs to train their people that not everybody, at present, can be a homeowner, despite Obama’s claims. Renting or living with family may be the best option for a few years until the dust settles and they can re-establish themselves professionally and financially.

  10. FJ

    My experience actively working with and through NACA is that they are sincere, honest, and have capable info systems, but that they can be helpless in the face of the banks intransigence. I am in my 2nd year of trying to get a HAMP mod.

    In summary, it seems the program is designed to delay foreclosures, but to allow almost any excuse for the bank not to do a mod, and by helping them analyze market value and the likelihood to repay, maximize their return on foreclosures by milking every last mortgage payment from the defaulter and then foreclosing on houses with a high enough current value.

    The staggering red tape put up by the banks, constant changing of customer contacts, failure to return calls and emails, demands for lost or updated documents, etc. etc. etc., in light of their unlimited resources, seem to be bad faith and not mere incompetence. Appeals to law or equity, to the BBB, NACA, the Office of the President, OCC, HAMP, Senators, Congressmen seem to leave them completely unfazed.

    If anyone can think of a pressure point, please advise!

    1. Art Vandeley

      Best thing you can do is contact your state Attorney General. Organize your paperwork, document what you’ve done so far dealing with the Bank/Servicer. Summarize your intent, that you qualify for the HAMP (or whatever MOD) based upon your understanding of the guidelines.

      Send a copy along with documentation, addressed to the Attorney General. Also send this to your Bank/Servicer, and major newspaper in your city.

      My experience is that Banks/Servicers, make the Modification a priority when a borrower has elevated the situation to the Attorney General and the media.

      And you’re right, the program IS designed to delay foreclosure for the banks benefit, not yours. A modification can happen in less than 30 days. It’s simple: Underwrite, Appraise, draw MOD docs, sign and record on Title. You’re a pawn in the FASB charade. Congratulations.

  11. Dave in Phoenix

    From zilions of reports on various forums, NACA is often even harder to work with than the servicers. They are well intentioned but can not force the banks to accept their “solutions” which are different than HAMP (no step rate and no extension of term).

    Banks lose paperwork, make up their own rules to disqualify etc because as servicers they make far more money by delaying and foreclosing than the HAMP incentives. Remember the servicer rarely owns the loan. About 90% of all 1st mortgages are GSE backed – so banks only make profits the taxpayers take the loss on foreclosure.

  12. Jb

    This flys under the radar screen always. I live in California and I have never heard of this organization coming here. I read where there were people driving from all over the country, why Palm Beach?

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