“I’m tired of borrowers being screwed!” Mr. Marks yelled into the phone. “You’re incompetent!” Before hanging up, he threatened to call bank CEO Kenneth Lewis at home to complain about the loan executive.
Mr. Marks’s nonprofit organization, Neighborhood Assistance Corp. of America, has emerged as one of the loudest scourges of the banking industry in the post-bubble economy. It salts its Web site with photos of executives it accuses of standing in the way of helping homeowners — emblazoning “Predator” across their photos, picturing their homes and sometimes including home phone numbers. In February, NACA, as it’s called, protested at the home of a mortgage investor by scattering furniture on his lawn, to give him a taste of what it feels like to be evicted.
In the 1990s, Mr. Marks leaked details of a banker’s divorce to the press and organized a protest at the school of another banker’s child. He says he would use such tactics again. “We have to terrorize these bankers,” Mr. Marks says.
Though some bankers privately deplore his tactics, Mr. Marks is a growing influence in the lending industry and the effort to curb foreclosures. NACA has signed agreements with the four largest U.S. mortgage lenders — Bank of America, Wells Fargo & Co., J.P. Morgan Chase & Co. and Citigroup Inc. — in which they agree to work with his counselors on a regular basis to try to arrange lower payments for struggling borrowers. NACA has made powerful political friends, such as House majority whip James Clyburn of South Carolina, and it receives federal money to counsel homeowners.
Some 1.7 million U.S. households will lose their homes in foreclosure this year, according to a forecast by Moody’s Economy.com, versus under 500,000 a year early in the housing boom. Banks want to show they’re making every effort to keep people in their homes. That can mean working with housing-advocacy groups that routinely bash the industry, increasing the clout of such nonprofits. Less certain is whether these groups can translate their new leverage into long-term influence over how mortgage lenders treat customers.
“We have the opportunity to change how lending gets done in this country,” says Mr. Marks, whose group is itself a mortgage broker and has 40 offices staffed with housing counselors. He favors a return to more traditional standards, with full documentation of income and the same fixed interest rate for everyone.
Instead of relying on credit scores, he thinks lenders should look into the reasons for any late payments in prospective borrowers’ past and prepare renters for the responsibilities of home ownership. Then, if people are given a loan they can afford, they shouldn’t be required to make a down payment, he argues.
Critics doubt some of these changes would be helpful. Having to use a single interest rate for all would make banks less likely to lend to people with blemished credit records, says Richard Riese, an executive at the American Bankers Association.
A single rate also could lead to higher rates for everyone, adds John Courson, chief executive of another trade group, the Mortgage Bankers Association.
Mr. Courson declined to comment on Mr. Marks. “You’re not going to drag me in there,” he said.
NACA seeks to limit mortgage payments to whatever a borrower can afford, and doesn’t favor stretching out payment periods. That contrasts with a loan-modification plan pushed by the Obama administration, which aims to limit payments to 31% of income.
NACA says it arranged $367 million of mortgages last year. Those borrowers must become members of NACA, agreeing to participate in its protests or help out at its offices, and for several years must contribute to a fund for homeowners who fall behind because of sickness or job loss. All NACA members pay the same interest rate, currently 4.375%.
Mr. Marks says 3.67% of loans NACA originated were 90 days or more overdue as of March 31. The industry average was 3.49%, according to LPS Applied Analytics, a data firm. According to Mr. Marks, 0.68% of the NACA loans were in foreclosure. The industry average was 2.45%, says LPS.
Some lenders have refused to sign contracts to work with NACA, among them HSBC Holdings, Barclays and Credit Suisse Group. All declined to comment. Mr. Marks says some banks that won’t sign agreements do negotiate individual cases with NACA. Even so, NACA sometimes pictures their executives and the executives’ homes on its Web site.
It recently added a photo of William Gross of Pacific Investment Management Co., the big bond house known as Pimco, along with pictures of his home and other information. Mr. Marks says his contacts in banking and government tell him Pimco doesn’t support the administration’s push to modify mortgages. “We’re exposing them,” Mr. Marks says. A spokesman for Pimco said neither it nor Mr. Gross would comment.
Mr. Marks says financial executives should be held personally responsible for actions that affect people’s lives, and “if they interpret that as intimidation, so be it.” He says that “we’re not talking about violence. We don’t do violence.”
“I have a difference with Bank of America. I have a substantial amount of assets with them,” Mr. Frey says. “We take them to court. This is how we do it in this country….It’s a civilized society.” The response from NACA, he adds, “is a mob showing up at someone’s house to intimidate them to drop this suit. At what point do people say, ‘This is starting to be uncomfortable’?”
“It should be uncomfortable,” says Mr. Marks. “You win a campaign by being relentless. Everybody has a breaking point….At some point they say, ‘How do I get these crazies off my back?’ “
Bank of America says home loans originated by NACA “are equal to and in some cases are performing better than our prime book of business.” A bank spokesman added, “There are few organizations that can bring a buyer to the table who has been through such extensive pre-buying counseling.”
Despite receiving taxpayer money, NACA doesn’t provide public reports on either its loan-brokerage business or its campaign to modify mortgages. Jim Campen, an economics professor emeritus at the University of Massachusetts, Boston, says he tried in the 1990s to analyze the performance of loans arranged by NACA, but Mr. Marks refused to provide data.
Mr. Marks says he feared the data would be used by another nonprofit to discredit his group. NACA does provide information to lenders that work with it, he says, but sees no duty to disclose it to the public.
“He’s been very effective in shaking money out of the banks,” says Mr. Campen, but “he’s not one to open up his records to public scrutiny.”