Neighborhood Assistance Corporation of America: Teachers lose jobs while taxpayers fund non-profit

Updated August 25, 2009

Mission
The Neighborhood Assistance Corporation of America (NACA) states that its “primary goal is to build strong, healthy neighborhoods in urban and rural areas nationwide through affordable homeownership." NACA has made the dream of homeownership a reality for thousands of working people by counseling them honestly and effectively, enabling even those with poor credit to purchase a home or refinance a predatory loan with far better terms than those provided even in the prime market.  But in practice, the organization appears to operate differently.

Didn’t practices such as credit check leniency and sub-prime mortgages get us into this housing market mess? Through a complete repudiation of the way hard working Americans have been financing their homes for generations, the NACA fights to essentially get mortgages for people that wouldn’t otherwise receive approval, while disparaging the corporate greed of the institutions that have made responsible mortgages possible for millions of qualified borrowers.

History
The Boston headquartered Neighborhood Assistance Corporation of America first began its quest for affordable housing in 1988 when the Boston Hotel Workers Union forced the development of “the first ever housing trust fund” with hotel management. The three year campaign resulted in the creation of NACA.

Since then, the group has developed a number of mortgage-assistance services, including a Home Save program to help individuals who can’t afford their existing mortgages to stay afloat. Additionally the group offers financial counseling, as well as specialized mortgage services. The motivation for the group’s effort isn’t inconspicuous by any stretch of the imagination. While blaming the current housing crisis on “executives of financial institutions [that] have amassed huge fortunes on the backs of hardworking American families,” the group happily accepts the assistance of big banks like Citigroup and Bank of America, both which have committed billions in the past to the organization. NACA CEO Bruce Marks, a self-proclaimed “bank terrorist,” lost no time, however, in joining the cacophony of criticism aimed at big banks when the housing market came crashing down.

Ironically, both once-private corporations are now managed or at least partially funded by the federal government through taxpayers.

Background
While the group presents itself as a saving grace for low-income homeowners, there is, of course, a profit motive. Following the push by Marks and NACA to ensure that risky mortgages are backed by the very corporations they appear to bully, NACA then receives significant fees for each transaction.

Mr. Marks clearly feels his means are justifiable. Ranging from staging protests at the schoolyards of the children of bank CEO’s to leaking personal emotional details of divorces, nothing appears to be off limits.

Lawsuits and Hypocrisy
Marks and the NACA have a history of suing banks into pledging funding to the organization. From First Union, to Fleet and even their biggest lenders Bank of America and Citigroup, much of NACA’s funding has resulted from their use of scare tactics which have have produced settlements amounting to billions of dollars in pledged support (at least $10 billion to date). The NACA has struck deals with four of the largest banks in the country: Bank of America, Wells Fargo & Co., J.P. Morgan Chase & Co., and Citigroup. Moreover, the group has criticized Fannie Mae for attempting to avoid scrutiny, while they seem to do everything possible to avoid disclosure of their own unscrupulous tactics.

Political Propoganda
While the NACA s not notable for large political contributions, it does a good job of selling itself to policymakers. In a recent press release aimed at constituents, US House Majority Whip James Clyburn noted that “NACA has helped thousands of homeowners keep their homes … because it has secured legally binding agreements with most of the major lenders and investors which covers 90% of the at-risk homeowners. All of NACA’s services are free.”

NACA’s services may appear free to Rep. Clyburn, but they’re not free to taxpayers. The organization enjoys subsidies from federal and state governments – money that comes directly from taxpayers – to rewrite mortgages.

Programs
The NACA offers three main services to their constituents.

Advocacy – NACA maintains an online portal where supporters can contact politicians or regulatory agencies for personal assistance or to promote the policies of the organization. The site also reports on lawsuit victories by NACA/

Home Save – The NACA Home Save program is an interest rate-reducing service that assists homeowners in lowering their mortgage costs. Participants are required to attend one of the NACA workshops, meet with a mortgage consultant, and finally complete the “Homeowner Submission”. The group even offers to postpone a set foreclosure auction date if needed.

Purchase Program – The NACA-sponsored purchase program offers 5.25% fixed 30-year mortgages regardless of credit. According to NACA, the program “provides everyone with one mortgage product, which is the best one available anywhere with no down payment, no closing costs, no fees, at a below market fixed rate and you do not need perfect credit.” The program appears to rely on “character-based” criteria.

The mortgage service promises seem to add fodder to the charge that the NACA (and its henchman Marks) are filling in where ACORN leaves off with strongarm tactics to secure support of their programs.

Staff & Governance
The Neighborhood Assistance Corporation of America is headed by CEO Bruce Marks. According to the organization’s most recent IRS Form 990, Marks oversees the organization on a part-time basis, working only 25 hours per week. It’s hard to say how many workers the organization employs, since its web link to “Our Staff” doesn’t work, but NACA claims “hundreds of dedicated staff” across the country in their 30 plus offices.

Governance of the organization is unclear, though NACA’s IRS filing lists four officers, including Marks and his wife. Of the two remaining listed officers, Richard Kelleher, NACA’s treasurer, appears to be the most politically active. In 2007, Mr. Kelleher donated $2,500 to the Democratic Congressional Campaign Committee, and an additional $1,800 to the American Hotel and Lodging Association. In 2008, he followed it up with $5,000 to the American Hotel and Lodging Association. Other smaller political gifts are scattered throughout the states.

Financial Profile
In 2007, the 501 (C)(4) NACA received $9.4 million in revenue, including subsidies from state and federal governments and revenues from large financial institutions. NACA boasts that it carries more than $10 billion in mortgage commitments.

According to the groups IRS 990 for the year ending 2007, the Neighborhood Assistance Corporation of America had net assets of $17.5 million. Program service expenses for the year accounted for 58-percent of the revenue for the year. The ratio is an important one as it highlights the funds expended directly to further the mission of the organization. It’s a widely accepted benchmark to use a 70/30 ratio. In other words, 70-percent of revenue should be spent on program services, while no more than 30-percent should be spent on management and fundraising.  NACA comes in just over 13-percent.

Summary
Bruce Marks and the Neighborhood Assistance Corporation of America clearly believe that everyone has a right to a low interest, no down payment loan – an attitude that can lead naive borrowers into a financial hole they can never climb out of. It appears now that North Carolina’s administration is ignoring the history-making housing crisis created by such thinking, gifting taxpayer dollars to an organization that uses questionable tactics to secure risky mortgages, all for the promise of jobs. The fact that background information about NACA is lacking and its employment numbers are dubious doesn’t seem to impact the wisdom of that decision.

Organizations such as NACA completely erode individual incentives to be responsible and live within their means when the non-profit simply swoops in on the wings of government subsidies and tort lawsuits and deliver inequitable mortgages to those who weren’t responsible with their finances or simply can’t afford the home that they wish to purchase.

Further, one wonders how the promise of job creation can be quantified when NACA doesn’t disclose data concerning its current workforce. While North Carolina employers, including state and local governments, are forced to lay off workers because of the current fiscal crisis, is this really the wisest expenditure of taxpayer dollars?

Contact – NACA does not make North Carolina contact information available.
NACA Services
3607 Washington Street
Jamaica Plain MA 02130
Email address: services@naca.com
Phone: (800) 302.6222