Nonprofit continues loan modification mission
Americans speak with a bank consultant to restructure their mortgage at the nation's largest loan modification event, which is part of the Neighborhood Assistance Corporation of America's (NACA) 'Save the Dream' tour at the Los Angeles Convention Center, on Sept. 30, 2010.
Tess Vigeland: Today the Obama administration cut off three of the nation's largest banks from federal money intended to help with foreclosure relief. The Treasury Department said JPMorgan Chase, Wells Fargo and Bank of America aren't doing enough to help troubled property owners under the Home Affordable Modification Program, or HAMP. Three years after the financial collapse, there's no end to the foreclosure crisis.
So one nonprofit is traveling the country, holding what are essentially loan modification conventions. Show up with all your paperwork, they put you with a counselor and then face-to-face with a bank representative. Some 5,000 people a day filed through L.A.'s Shrine Expo Center over five days last weekend. It's called the Save the Dream tour, organized by the Neighborhood Assistance Corporation of America -- or NACA. Homeowners lined up for blocks, some camped out overnight.
Inside we met Shawn Ricks, one of the NACA housing counselors, and Vahe Azarian, a computer technician looking to refinance the mortgage on a house he and his wife bought eight years ago.
Vahe Azarian: I'm an in interest-only loan as of now. And we are just renting; paying just like a rent.
Vigeland: What did the bank tell you when they decided not to modify your loan on their own?
Azarian: They came up with kind of excuses, they said, 'your loan is with us but since it wasn't Fannie Mae or Freddie Mac or whatever, we cannot do anything at this point.' And the interest rate's so high, it was killing us.
Vigeland: Shawn, is any of this difficult to you, because he doesn't have 20 percent value in his house?
Shawn Ricks: I really don't understand why the banks do that. To me, if your homeowner comes and he's struggling, and you can help them, why not?
Vigeland: What's it like to have all these people coming through? I mean, it's a stunning number of people who are in need of help.
Ricks: I was really totally surprised that we were still at this number here in L.A., because this is our fourth trip here. I would say that we need to come back again.
Bruce Marks is the CEO of NACA.
Bruce Marks: Every person who's here has already tried and failed to work with their lender. So it's really incumbent upon the government to require them to do it. I used to be a regulator, I worked at the Federal Reserve Bank. The fact of the matter is, as a regulator, they can force these lenders to do it across the board.
Vigeland: Why does it take something like this for a homeowner to be able to modify a loan? What's the difference here?
Marks: There are two differences. We have legally binding agreements with all the major lenders and the investors covering over 90 percent of mortgages in this country where they have to do it. Secondly, there's nothing like that face-to-face interaction. Personal interaction is what gets the results, because you see families, you see the devastation firsthand, and that makes that banker that much more committed to helping the homeowner.
Vigeland: But if that's the case, then isn't it pretty close to impossible for banks to do this for the millions of people who need a loan modification?
Marks: Well, actually they can. But you know, you have to have the government pushing to do that. The biggest problem we have are not with Bank of America mortgages or Chase or Wells or Citi, it's with government-owned mortgages: FHA, Fannie Mae, Freddie Mac. So the mortgages that the government controls, those should be the ones that we can modify the easiest. They should stop the foreclosures and they should say that these bankers can never foreclose on somebody unless every effort was made to modify that mortgage and that was documented.
Vigeland: What just happened there? We just heard some applause in the background.
Marks: That is another solution. Someone is saving hundreds of dollars, maybe over $1,000 a month in a mortgage payment.
Vigeland: Success story.
Marks: Yes, it is a success story. I mean, I have the best job in the country. People come up to me, sometimes big men, just bawling with tears streaming down their face because they say, 'now I can go home and I can look my children in the eyes and I can sleep at night. And I haven't slept at night for maybe one or two years.'
Vigeland: Are there situations here where you simply look at the paperwork and have to tell the homeowner, 'look, you need to give up the house'?
Marks: There's no 100 percent in life. But if you could help 80, 90 percent or more, then obviously that's a great success.
Vigeland: Are we going to see you back here in a year?
Marks: I hope not. I hope not. We will do whatever it will take for as long as it takes to help the homeowners our there, until we are put out of business, because the banks are doing it and the government's doing it.
Vigeland: Bruce Marks, thanks so much.
Marks: Thank you very much, appreciate it.