NACA.....Reduced Loan As Low As 2%

Let's start off by saying that I applaud NACA, and HUD for their efforts in trying to deal with this mortgage crisis. The fact that they have volunteers that are giving their time is fantastic, and my hat is off to each and every one of their employees. However, the reality is that their efforts have been like scenes in Braveheart or 300 where the valiant group assembles to beat the odds, only to get completely slaughtered on the battlefield. Both agencies have openly admitted that they can't handle the volume of requests, nor have they received the expected results from their clients' lenders. Now ethically, if I know in my heart of hearts that I'm just not getting the job done, I'm at least going to point people in the right direction to someone who can.

A perfect example of results from free agencies is a request for assistance that we had received from our website. Really nice gal seemed very well educated, she had a more than verifiable hardship and was kind of the perfect example of what lenders want to see in order to grant a good modification. She contacted NACA and talked with one of the housing counselors. He walked her through how to fill out the paperwork, and she submitted it to her lender. What she got was a 3 month band aid that is a very typical "first response", which was to lower her payments from $3600 to $2600 for 3 months, NOT lower the interest rate, NOR defer the past due payments that had accrued. This "modification" was done in April AFTER Obama's program came out on March 6th. So the lender got paid, yet the client was not in any better shape than she was before. Furthermore, most lenders have the "one shot" clause in their modification, so most clients are not eligible for future assistance. "Who's fault was it that this happened?" If the NACA counselor had any idea of what was available he would have advised her to decline the offer, and renegotiate. If the lenders were really just "giving homeowners the same results they would get without a third party....." as they indicate, then they would have deferred her past due payments (or at least gave her a 10% of past due good faith payment option, and defer the remainder), lowered her interest rate making her payments $2600 a month LONG TERM, not for 3 months. Just as that lender has done with numerous clients of ours.

Aside from not having a good odds at getting a second chance, she also happened to live in a state that PROHIBITS ANY FORECLOSURE RESCUE ASSISTANCE FROM ANY FOR PROFIT COMPANY. I addressed the problems with this in my last post, and this was a perfect example. By making it impossible for legitimate companies with reasonable fees to assist, clearly leaves homeowners with little alternative. When they explore those alternatives, they come up short.

One of the leading complaints about modification companies is that they misrepresent their services (promising low rates and giving customers false expectations). I'm very particular with my staff in explaining realistic expectations. If you go to NACA's home page, the first thing that comes up is the SAVE THE DREAM TOUR, where it advertises that "thousands of their clients have received permanent interest rates reductions that SAME DAY as low as 2%". Now if one of my staff ever told someone that we could get them a 2% fixed rate for the term of their loan they would be FIRED. Fed rate was last posted right at 3%, I don't know of any lenders that are giving fixed rates lower than 4%. On the occasion that a rate reduction is granted below the fed rate, it is on a stair step program where the rate remain for X amount of years, then gradually go up. If you call a lender and ask them how long their modification process is, they will typically tell you 90-120 days. Our goal is to get a cradle to grave modification in 30 days. I have had extreme cases (sale dates) where we could get something done in 2 days, but 10 days is pretty much the bare minimum. If I had the intestinal fortitude to actually advertise that we got thousands of customers same day modifications, and that we can get them long term fixed rates of 2%......the FTC would crucify me. If my staff even insinuated that either of those claims were remotely possible, we would be shut down.

To add insult to injury they also advertise, "NACA has been extremely successful in making dramatic reductions in interest rates saving homeowners hundreds and thousands of dollars a month in their mortgage payments. You would work with your NACA Mortgage Consultant to determine a mortgage payment you can afford based on the above described Affordability Budget" . Same thing.....hundreds of dollars, OK, a thousand dollars or more, OK, THOUSANDS of dollars a month is savings....., I'm calling another Penn and Teller on that. My staff is not allowed to tell people that they are going to save thousands of dollars through us, nor are they allowed to give customers specific rates or payments. We will explain what we have done for others, and what the current "pulse" is, but is ALWAYS ultimately the lenders decision on IF, and how much they will bend. Again, if I advertised on my website that we saved clients thousands of dollars a month I would probably get a few phone calls.

When you go to Google, and type in "NACA", this is the advertisement that shows up: "Providing loans to low and moderate income people and those who are considered to be subprime borrowers. Information on mortgage services and national ..." Now if we look back, you'll remember that NACA was one of the agencies that was advocating the subprime market and helping people get into homes that they knew they could not afford. One could easily argue that their misdirecting advice is part of the reason why we're in this situation in the first place. Now, the Federal Government and other State agencies are directing people back there to fix the problem?

I would challenge my negotiations staff against any "free agency", given the same number of clients, same parameters, basically on the same playing field, they would run circles around them. No disrespect to any of their volunteers/employees, I made that clear at the beginning. It's just like anything else in life, If I'm the quarterback, I'm going to give the ball to the guy that's going to get it across the line and put points on the board, not the one that's pounding his fists on the grass wishing he tried harder.... Who do you want to give your football to?