Bruce Marks offers $1 billion for subprime refis - does nothing to change the corrupt system
Housing activist offers $1b to aid subprime cases
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Apr 12, 2007 - Knight Ridder Tribune Business News
Author(s): Kimberly Blanton
------------------------------------------------------------------------Apr. 12--Boston housing activist Bruce Marks said yesterday that his organization will provide $1 billion in mortgage refinancing to homeowners nationwide who are struggling with high-cost subprime loans.
Marks is a colorful figure who successfully used guerrilla tactics in the 1990s to pressure major US banks to fund mortgages for low- and middle-income workers. Now subprime lenders will be on the receiving end of his confrontational actions as he promi ed to lead mass protests of borrowers with high-cost mortgages at company headquarters and the homes of their executives because the loans made by those firms were “structured to fail.” “If a lender says we’re not going to work with you, we’re going to foreclose, we will be at the auction, we will be at the CEO’s home. We’ll be there to say we are shutting you down,” said Marks, who once referred to himself as a “bank terrorist.” His two-pronged campaign is aimed at stemming the rising number of foreclosures filed against homeowners, which financial regulators have said are being driven by a proliferation of high-cost subprime mortgages.
Massachusetts, for example, had a record 9,487 foreclosure filings against homeowners last year. Marks earned his reputation in the early 1990s organizing protests and sit-ins of Fleet Finance Group Inc., whose mortgage unit he accused of charging higher rates and fees to minority homeowners who took equity loans against their properties, causing s me in Boston and Georgia to lose their homes. Wearing a bright yellow T-shirt with the slogan “Stop the Loan Sharks,” a bull horn-toting Marks would lead his constituency of protesters into noisy confrontations, once storming Fleet’s annual shareholders’ meeting in downtown Boston.
He also demanded—and got—a meeting with Fleet’s then chief executive Terrence Murray, who committed $140 million to Marks’s organization in 1995 to make loans. Fleet also agreed to pay $100 million in 1996 to settle two class-action suits brought by homeowners in Georgia, and also settled with the US Department of Justice and the state of Georgia, which had launched investigations. Marks subsequently broadened his horizons, eventually getting Bank of America Corp., in two different agreements, to provide a combined $6 billion, and Citigroup to provide $3 billion in mortgage money to his organization, the Neighborhood Assistance Co p. of America, to help moderate-income workers finance home purchases.
In 2002, Marks returned to Fleet, getting another $200 million from the bank. Marks estimated his organization has made about 50,000 home purchase loans over the years, and continues to make new ones; his borrowers typically have incomes of $35,000 to $45,000. Marks’s strategy at the time was aided by a key federal law—the Community Reinvestment Act, or CRA, which requires banks to lend in minority neighborhoods. By agreeing to fund his organization’s mortgage program, the banks also fulfilled their Commun ty Reinvestment Act requirements. “CRA is the reason he’s effective,” said Thomas Callahan, who runs the Massachusetts Affordable Housing Alliance, a Boston organization that subsidizes mortgages for first-time homebuyers with modest incomes.
The mortgage industry is less regulated than banks and not subject to the Community Reinvestment Act. As chairman of the Senate Banking Committee in the 1990s, Senator Phil Gramm of Texas called the strategy of Marks and other activists using the federal law to extract funds from financial companies a form of “legalized extortion.” Even without the leverage of a federal law, Marks threatens to be a fearsome antagonist of the subprime lending industry, said those who’ve watched him. “I don’t think anyone wants to be in his sights,” said former Boston Federal Reserve Bank president Richard Syron, who now runs Freddie Mac, the government-sponsored corporation that buys mortgages from lenders to support home ownership.
Indeed, Kevin Cuff, executive director of the Massachusetts Mortgage Bankers Association, said: “Bruce Marks can be an effective and a dangerous guy, and I’m not interested in inciting him to picket one of my members’ houses.” Marks continues to have a ready army to deploy against the subprime lending industry: As a condition of receiving a loan from his organization, borrowers are required to participate in housing activism in their communities. Marks will redirect $1 billion of the home-purchase mortgage funds from Bank of America and Citigroup into refinancing the subprime mortgages of about 7,000 homeowners.
The typical subprime loan carries a low introductory teaser interest rate that incre ses to double-digits after two years, driving up monthly payments by hundreds of dollars. Those loans would be replaced with traditional 30-year fixed-rate mortgages at the below-market levels Marks’s organization charges its current borrowers—now 5.625 percent. The new loans will be available to working people with a subprime mortgage, w ether they are in foreclosure or not. As for his own organization’s lending record, Marks said the number of foreclosures on NACA customers is “virtually none”—less than one-quarter of 1 percent.
Subprime mortgages exploded in popularity during the housing boom earlier this decade. Critics of subprime loans, including regulators, contend that lenders relaxed standards and made loans to borrowers who could not afford to buy homes in the first pla e, especially in such expensive real estate markets as Boston. As many as 2.2 million Americans with subprime loans have lost or will lose their homes because of mortgages that they cannot afford , according to the Center for Responsible Lending in North Carolina. Marks’s organization may currently be the largest source of financial relief for these troubled borrowers as lawmakers on Beacon Hill and Capitol Hill hold hearings on the issue.
Representative Barney Frank, chairman of the House Financial Services Comm ttee, which plans hearings next week, said the Neighborhood Assistance Corp.’s loan program would be “helpful. You can’t simply retroactively undo this by law.” Marks, meanwhile, said he would not focus protests on any one lender but would pressure all the major lenders, including the subprime subsidiaries of such banking giants as Wells Fargo amp; Co. and HSBC. Spokesmen for both banks yesterday said their organizations engage in “responsible subprime lending.” Subprime lending is one “reason why homeownership for African-Americans and Hispanics has risen faster” than others, said Jay Lawrence, spokesman for Wells Fargo, where 8 percent of $397 billion mortgages made last year were subprime loans.
I’ve been following Bruce Marks and http://www.naca.com (don’t confuse them with NACA.net, the lawyers) for years and I even signed up for one of their campaigns back in 2001, but I didn’t get a response to my email.
Unfortunately, NACA is NOT addressing the real problems:
1) MOST people end up with subprime mortgages because their FICO credit scores are ARTIFICIALLY low due to incorrect credit reporting and the defective FICO scoring formula.
2) Loan agents LIE to borrowers about the terms and the regulators REFUSE to investigate complaints about unethical and illegal mortgage solicitations and loan agents’ misconduct.
If I had the money and knew HOW to accomplish it, I’d subpoena records re. my ignored complaints with the California Department of Real Estate and I’d depose the DRE “investigators” who chose to IGNORE my complaints about scummy lenders.
Bruce Marks HAS the money to address the real issues, but instead, he’ll spend $6 billions to refi borrowers out of subprime loans.
Some of the $$$ go to the subprime lenders who would otherwise LOSE $$$ when foreclosing on homes with 100% financing.
Actually, they usually lose money when foreclosing on loans with 80% LTVs, since the loans are often over 6 months delinquent and you have the costs of sale, fixing up the property and holding it. So he’s mitigating the subprime lenders’ losses. NICE!
I’d rather see the money spent on getting homeowners into another house, let the subprime lenders suffer the losses. Of course each home and borrower have to be evaluated individually and it does take skills to determine the real market value of a house and to correctly assess the homeowner’s credit rating - is it worth giving them a new loan to prevent a foreclosure on their record or is their credit rating shot already?
Is it a solid house or were they screwed by their Realtor too?
Did they have the funds to maintain the home or is it rotting because they haven’t had the cash to fix the leaking roof?
And of course there are other considerations too, everyone’s situation is different. I just don’t understand how one can ignore the issues and decide to spend so much money to accomplish nothing.
There ARE people who will never be able to survive without being bailed out and taken care of by organizations like NACA, but at least a few Americans have the brains to learn how to read their credit reports and how to evaluate a truthful mortgage quote.
Right? ???
Maybe that’s the billion dollar question:
Is the average American mentally incapable of understanding adjustable rate mortgages and interest rates when properly explained?
It bites that NACA has so much money and won’t do a thing to fix the real problems.
As I’ve been looking for a mortgage, even I can’t get the terms. When I asked for the interest rate and terms, I received a faxed payment schedule for an ARM starting with 1% payments. I still have no idea what the interest rate is. It’s been 5 weeks now since they ran my credit and I haven’t even received the Good Faith Estimate or any disclosure.
I have a written approval, but the agent didn’t even ask me about my income or employment.
He wanted my authorization to order the appraisal and when I didn’t give it, he dumped me.
The real reasons for the subprime lending crisis—credit reporting, FICO scoring, lying loan agents and the corruption of the regulators—will definitely be part of my book. Considering my suits against Ameriquest, First Magnus, Bridge Capital, Central Pacific and now Dana Capital, I have enough documentation to write a book just about the subprime lending crisis.
My 8/26/05 posting is quite relevant, it describes the 1% payment loan that was recently offered to me:
Housing sales slowing down - house-poor Californians - mortgage fraud rampant
So I’m sending this URL to , unfortunately there’s no contact info for Bruce Marks and I don’t expect a reply.
UPDATE 12/20/07:
I didn’t receive a response to my email. But a NACA employee contacted me and agreed that the agenda is NOT to change the corrupt system.
Currently a client is expecting to close a NACA refi soon. It seems that NACA is very much in line with President Bush’s bailout program, designed to protect the LENDERS.
Posted by Christine on 04/13/2007 at 09:24 PM
Credit - Collection - Economic News • DONATION • (4) Comments • Permalink
We have been duped by Novastar/Ameriquest and ARgent Mortgage and what we owed on our home has gone from $158.000 to 178,000 and all of the money that we put into it we have lost as you can see. It is like being upside down on a car loan. You can never get out. You lose your money, your house, everything. We refied through Freedom Mortgage, who we have found is not even licensed in MS. They told us our payment would be 779 Interest only or 1206 P&I;. We got our first bill from Countrywide, who they sold it to the next day and the $1220 amount is for a NEGATIVE amort. loan in which we lose 458 a month. Nowhere is there a payment listed of the 779 that we were quoted. The actual payment is 1770 which we could never afford. We were told it was a fixed 30 yr loan with a 10 year option to pay just the interest if we had to for financial reasosns. All lies. How do we stop this stuff. I am on disability and going to scollege to be an elementary teacher to try to get my life back if I can. Cant the government stop these people?
You stop it by adding dates and names to your posting and publicizing what happened.
The legislators can’t possibly be as stupid as they act, they are either completely removed from reality or totally corrupt. I think it’s corruption. I have filed a number of complaints with licensing agencies and they do NOTHING, NOTHING and NOTHING again.
So, if you really want to do something, write up a factual summary and submit it to your representatives in Congress and to the morons on the banking committee. You probably heard that they’re holding hearings on the “subprime crisis” and talking about everything BUT the problem:
The God damned lying loan agents.
Unfortunately, it is NOT illegal to lie to prospective borrowers!
There are federal judges like judge Neil Wake in Phoenix federal court who find absolutely NOTHING wrong with lying loan agents (my Ameriquest litigation} even though I had the lies RECORDED.
Until these judges are FIRED, nothing will change.
Question: Why did you get this loan and did you read the Truth in Lending disclosures and the Good Faith Estimate?
Those disclosures were to be sent to you within 3 days from the application.
If the disclosures do not contain the actual terms of the loan, you might be able to find a good attorney to take your case on contingency.
The Boston NACA office seems to be stone walling white first time home buyers. I know some people who are in process. They submit an application and it is sent to the underwriters only to be return with yet another request for more information. Inted of listing all the data need. New request for additional data are made after each resubition. This goes on for several months. I belive with he hope that the client just gives up. I do not think the same thing happens to all cleints. I think it is a form of reverse discrimination and is shameful.
I know someone who got a refi from NACA last fall and seemed happy, so I don’t know what to say.
Oh, I almost forgot. A month or longer ago I sent in my request for info about getting a loan through their website, never heard anything back. Odd.
