A visit to the foreclosure circus

The Neighborhood Assistance Corporation of America helps Los Angeles homeowners modify their mortgages.

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TESS VIGELAND: Remember when you were a kid, how you looked forward to certain events that came to town once a year? Like the fair or the circus.

These days, folks are marking their calendars to catch a different kind of show. Call it a foreclosure circus. This weekend, the Neighborhood Assistance Corporation of America is visiting Phoenix. The organization is crisscrossing the country to help homeowners modify their mortgages.

Marketplace's Jeff Tyler caught the road-show when it pulled in to Los Angeles last weekend.


Jeff Tyler: On the Save the Dream tour, the day starts with a sing-a-long.

Chanters: WE ARE NACA.

Reply: WE ARE NACA.

NACA -- the Neighborhood Assistance Corporation of America -- is an advocacy group that pressures banks to modify home loans. That can range from lowering the interest rate to cutting the total amount owed on the home.

The tour is funded with federal grant money. Plus, the lenders who cooperate with NACA pay the organization up to $500 for every borrower who makes the modified payments on time for three months. Banks have an incentive; foreclosures are expensive and some return on a property is better than none.

Over five days, some 50,000 people file through the L.A. Convention Center. Many are initially skeptical.

Roger Perez has been paying his lender only part of his monthly mortgage payments. He can't afford to pay the whole thing since his heating and air-conditioning business went south along with the economy.

Roger Perez: I tried remodifying the loan at first on my own, and the banks weren't listening to me. They kept losing my letter. They kept losing all my paperwork. They kept saying, 'We'll get back to you. We'll get back to you.' And they never got back to me.

Perez even hired a lawyer to help him.

Perez: I spent $3,500, and it just didn't do anything for me.

Mortgage foreclosure scams are growing problem around the country. By contrast, the NACA event aims to modify loans for free in a single day. Participants start by registering, then sit through an orientation.

Orientation speaker: Your counselor is going to sit there and look at where your money is currently going, and they're going to ask you to do what makes sense. It may not make sense to ask a servicer to change your mortgage payment from $2,000 a month to a $1,000 a month when you're spending $1,000 a month eating out.

Next, homeowners wait with hundreds of others to speak to a counselor. The NACA formula for modifying loans subtracts household expenses from the money coming in after taxes -- that determines how much the homeowner can afford. Equipped with this estimate, the borrower meets with the lender.

Wells Fargo and Bank of America are among the banks that have chosen to have representatives here, ready to modify mortgages. They asked not to be recorded.

Still, there's plenty of evidence about the kinds of mortgage deals being struck.

Joe Vecchiarelli: Bank of America took it from a 6.78 percent interest rate down to a two-point interest rate, reducing my monthly payment from $4,375 to $2,600 per month. A near-savings of $18,000.

That's 53-year old Joe Vecchiarelli.

Vecchiarelli: I was behind five months on my monthly mortgage due to the fact that I'm self-employed and business took a real hit.

He spent 26 hours over two days at the NACA event.

Vecchiarelli: Had I not done something, they would have definitely put the house into foreclosure in the next four weeks.

When a friend told him about the event, Vecchiarelli almost didn't come.

Vecchiarelli: I said, 'Oh, it's probably a joke.'

He wasn't the only one who thought it was too good to be true. That's one reason for the testimonials broadcast throughout the day, including one from Vecchiarelli.

Vecchiarelli: 6.8 interest rate down to 2 percent.

Audience: Applause.

Not everyone gets a 2 percent loan. Not everyone gets their issue resolved. And, on the other side of the table, not every lender agrees to take part. Financial companies that don't negotiate with NACA tend to become targets of more direct action.

NACA's CEO Bruce Marks brings frustrated mortgage holders to the homes of financial bigwigs, like the CEO of Morgan Stanley.

Bruce Marks: NACA's non-violent bank terrorism is when we take hundreds of homeowners, and we go to the gated communities where the CEOs live, and we -- in a non-violent way -- say, 'We want you to be accountable for your actions. We want you to meet the homeowners that you're foreclosing on.'

Many of the homeowners who are rescued by NACA feel so grateful that they want to give back. Some sign on to be protestors and risk arrest. Others are content to volunteer at NACA events and sing the program's praises.

Chanters: N-A-C-A, N-A-C-A, NACA! Whoop whoop!

In Los Angeles, I'm Jeff Tyler for Marketplace Money.

About the author

Jeff Tyler is a reporter for Marketplace’s Los Angeles bureau, where he reports on issues related to immigration and Latin America.

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