It began more than a decade ago as a way for middle-class workers to fulfill the American dream of home ownership.
Since then, it has become a nationally financed corporation enabling scores of people to purchase their own homes.
Last Wednesday, Chief Justice E. George Daher welcomed the Neighborhood Assistance Corporation of America into his courtroom to announce the availability of $300 million for home loans to low- and moderate-income buyers in Massachusetts.
The money will be made available through a partnership between NACA and the Bank of America. Bruce Marks, chief executive officer of NACA, isn’t shy about why the partnership was formed.
“It’s who we are. We’ve been out there beating the hell out of the banks,” he said in reference to the loans, which will be available at 6.5 percent for the low- and moderate-income market NACA serves. The program offers mortgages with no down payment, no closing costs and no fees with below-market interest rates.
“We’ve put together a mortgage program that’s the best in the country,” he said. Marks said it’s high time for an investment like this in the community. He’s also accused area banks like FleetBoston Financial of abandoning the low-income borrowers who most need their attention.
“While Fleet and its CEO, Terry Murray, are known throughout New England for exploiting consumers, the Bank of America provides a community lending standard of excellence,” he said. Bank of America fulfills part of its Community Reinvestment Act obligations by its funding of NACA.
Critics have questioned Marks’ ability to forge such deals and suggest he should open the company’s books to closer scrutiny. But Marks said all the important statistics are on NACA’s Web site. “It shows that 99.75 percent of all the homeowners are in their homes making their mortgage payments. The more you scratch the surface, the brighter it shines.”
“It sounds too good to be true, but when you look at the underwriting and the product it’s as good as it sounds,” he said.
While one industry insider who wished to remain anonymous said banks do provide many loans to the same market Marks’ group services, NACA supporters, including Daher, say it’s time borrowers had more options.
“The partnership of NACA and the Bank of America provides not only an unbelievable mortgage but free counseling services that include landlord-tenant education. The result will be an alternative for working people who, through no fault of their own, may have ended up as a plaintiff or defendant in my courtroom. This is a blessing,” Daher said in a press release announcing the program.
According to Marks, there is a real need for competition against the large banks that dominate the commonwealth’s market. “… There needs to be a real alternative to Fleet Bank. Fleet Bank has been withdrawing from affordable lending,” said Marks. “We needed to bring in some real competition from the largest bank in the country, which Fleet cannot intimidate or acquire,” he said.
“We have been working with Fleet, but at this point we’re dramatically reducing our working [relationship] with Fleet because they are the most anti-consumer bank in this country. People are still angry about their predatory lending and predatory fees,” he said.
Fleet did not immediately return calls seeking comment on Marks’ charges.
However, Marks does expect the $300 million in NACA loans to affect Fleet’s attempts to meet its CRA obligations, he said.
“I think they have requirements they have to meet. They do rely on NACA and other nonprofits to get access to a market they cannot get access to, so it’s going to hurt them. They’re going to have to compete to meet their regulatory and legal requirements,” said Marks.
Ironclad Commitments
According to Marks, NACA’s success has not come from large marketing efforts but “by word of mouth. People have a tremendous amount of respect for NACA. At our homebuyer workshops, we get 300 to 400 people every month. They learn about it because their friends have gone through the program and are now homeowners,” he said.
Among other services, NACA provides counseling, property evaluation, post-ownership counseling and financial assistance through the Neighborhood Stabilization fund, which helps prevent foreclosures.
NACA got its start in 1988 with the Boston Union Neighborhood Assistance Corp.
Marks’ first efforts through BUNAC on behalf of hotel union workers garnered down payment assistance for first homes. “But that down payment assistance was not good enough to get them into homes because of the restrictive underwriting of the banks,” he said. From there, NACA was born and currently has $4.3 billion committed to the program over the next 12 years.
“It’s not dependent on the economy or anything else. There are ironclad commitments,” said Marks when asked about the effect of an economic slowdown on NACA’s program.