On a windy Saturday morning in October, more than 120 people filed into Gaare Auditorium on the northwest campus of Baltimore City Community College (BCCC). They came from other parts of the city, from surrounding counties, and from as far away as Virginia, and each had a story to tell. The lucky ones hadn't yet missed a house payment, but, thanks to changes in their adjustable rate mortgages, or job losses, or both, they soon would. The less-fortunate borrowers were already past foreclosure, staring at an auction date. But help was on the way. A woman named Ashidda Khalil walked to the front of the room and uttered the words everyone wanted to hear: "We can help you restructure your home loan."

This was the Home Save workshop sponsored by the Neighborhood Assistance Corporation of America (NACA), a nonprofit mortgage broker and community advocacy group that helps low- and mid-income borrowers become—or remain—homeowners. The 20-year-old organization has forty offices in twenty-seven states, including one in downtown Baltimore. Khalil, the director of the Baltimore office, led the BCCC workshop, which, with its mix of rousing rhetoric and miraculous testimonials, often felt more like a revival meeting.

One woman said a family member saw the payments on her interest-only loan drop from $4,000 to $1,100 per month. "Praise the Lord," shouted someone in response. There were tales of auction dates cancelled at the last minute, foreclosure proceedings derailed, and homeowners re-financed out of predatory loans. When struggling homeowners heard what the workshop leaders hoped to win for each of them—a thirty-year mortgage fixed at 3 percent—half the room burst into cheers.

"Everybody say ‘restructure!'" Khalil called.

"Restructure!"

These are busy times for NACA, which calls itself the "largest housing services organization in the country." Nationally, banks filed for foreclosure on 765,558 homes in the third quarter of 2008, a 71 percent increase from the same period in 2007. Maryland fared better than many states, with just a 22 percent spike over the same period, but some jurisdictions are suffering more than others. According to Realtytrac, a California company that reports foreclosure activity, in October 2008 1 in 339 housing units in Prince George's County was in foreclosure, a state high.

 "Clients are coming for help from D.C., Delaware, Pennsylvania," Khalil says. Before the mortgage crisis set in, she estimates that 50 to 60 percent of people who attended a NACA workshop subsequently came in for a one-on-one consultation. She now thinks that number is closer to 80 or 90 percent. For the tens of thousands of people it has helped purchase and, more recently, keep homes, NACA's take-no-prisoners advocacy efforts are a godsend. But for others, NACA is a browbeating bully that helped push the U.S. mortgage market off a cliff.

NACA got its start in Boston in the mid-1980s as a housing trust funded by several hotels as a concession in a labor agreement, to help defray the high cost of housing for low-wage union workers struggling in Boston's expensive real estate market. Soon it broadened its mission to provide housing assistance to low- and moderate-income home-buyers, regardless of union affiliation. Led by its fiery CEO, Bruce Marks, NACA also staged frequent protests against financial institutions whose policies it deemed exploitative.

NACA encourages its clients, or "members," to participate in five "actions and activities," including protests, per year. The effectiveness of its tactics was demonstrated in the early 1990s, when NACA launched a multi-state campaign over what it considered predatory lending practices employed by a subsidiary of Boston-based Fleet Bank. NACA members crashed Fleet shareholder meetings with bullhorns and rallied outside the homes of bank executives. (Marks, who has famously referred to himself as a "bank terrorist," once sported a T-shirt that read "Wanted: Loan Shark" with a picture of Fleet's president.) NACA also worked with attorneys general and advocacy organizations in other states to file suits on behalf of Fleet clients, helped 60 Minutes report on Fleet's lending practices in Atlanta, and testified against the bank before the U.S. Senate Banking Committee. The campaign ended in 1994, after Fleet agreed to give NACA $140 million for its mortgage program.

Other banks soon struck deals of their own: Today NACA can tap into nearly $10.5 billion in low-interest home loans underwritten by some of the largest lenders in the country.

NACA owes some of that success to federal regulations inscribed in the Community Reinvestment Act (CRA). Passed in 1977 amid concerns over "redlining"—the practice of denying consumers access to credit because of where they live—the CRA mandates that banks meet the lending needs of the communities in which they operate, including borrowers in low-income areas. Banks receive periodic assessments of their adherence to CRA requirements, which regulators take into account when considering whether to approve mergers and acquisitions. A public campaign against a bank's CRA compliance record could jeopardize multi-billion-dollar deals, and a bank's decision to work with or directly through community groups such as NACA lend it a powerful ally.

"Legalized extortion is what I call it," says Thomas DiLorenzo, professor of economics at Loyola College in Maryland. Under the CRA, he says, "[community groups] can hold up mergers or expansions unless banks give them money and commit to making subprime loans."

CRA opponents say an amendment strengthening the act and other federal measures instituted in the 1990s forced banks to lend to unqualified borrowers, thus setting the stage for the current mortgage meltdown. "The mechanism government decided to use was lower lending standards," says Stan Liebowitz, professor of economics at the University of Texas at Dallas and adjunct scholar at the Cato Institute, a libertarian think tank. "Government tried to convince banks it was safe to lend with lower down payments and higher obligation ratios. They put pressure on Fannie Mae and Freddie Mac to make these loans. That whole ball got rolling because of it."

In 2000, Howard Husock, director of the Social Entrepreneurship Initiative at the conservative Manhattan Institute, wrote an article titled "The Trillion-Dollar Bank Shakedown That Bodes Ill for Cities," cited by many CRA opponents as a prescient warning. "The Clinton administration has turned the Community Reinvestment Act … into one of the most powerful mandates shaping American cities—and ... a vast extortion scheme against the nation's banks," the article began. Of the groups leveraging the law, wrote Husock, "There is no more important player in the CRA-inspired mortgage industry than the Boston-based Neighborhood Assistance Corporation of America."

Today, Husock remains a stout critic of NACA and its tactics, which he calls "outrageous. The extent to which they have personalized those protests to bank executives is unconscionable and irresponsible." He also says that housing advocacy groups such as NACA aren't taking their fair share of responsibility for the credit crisis. "I don't think that advocates of the CRA are willing to reflect and say, ‘Maybe we played a part. Maybe we should insist that bank lending go to people with good credit scores.'"

NACA, for its part, lays the blame for the meltdown on the greed of for-profit brokers and lenders, not homeowners or the CRA. "The CRA has helped a lot of people," says Darren Duarte, NACA's director of public affairs. "It does not force banks to lend to people who can't afford loans." He notes that NACA counsels prospective homeowners—sometimes for months—on how to manage their budgets before matching them with loans. Approximately 80 percent of subprime loans were written by institutions that were either not covered at all or not fully regulated by the CRA; of the tens of thousands of mortgages NACA helped process, fewer than half of one percent are in foreclosure.

NACA member Bernard Porter is one distressed homeowner who's happy with the group's efforts, and he says his story proves there's more to the mortgage crisis than poor people taking out irresponsible loans. "People say, ‘These folks shouldn't have bought those big old homes,'" he says, "but that's just a fraction of what's taken place."

Porter, a sales manager for a company that sells software and office equipment, lives in a three-bedroom brick colonial in north Baltimore that he bought for $104,500 in 1998. In a good year, after commissions, he might gross $120,000, more than enough to make house payments and take care of his 12-year-old daughter. But last year he was hit by a perfect financial storm: His sales weakened in the sagging economy, and his income fell more than 40 percent. High gasoline prices made driving to sales calls more expensive. At home, he faced higher homeowners insurance after a burglary, a spike in his water bill, and the added cost of taking over the care of his elderly mother. His monthly expenses rose $400.

So in July, Porter joined more than five thousand people who attended NACA's Save the Dream five-day homeownership counseling marathon in Washington, D.C. Housing counselors were on hand, calling lenders to secure restructured loan agreements. Within forty-five days, Porter's lender, Citigroup, lowered his 8.75 percent interest rate to 3.7 percent. His monthly payments dropped by $431.

Call it extortion if you want, but NACA leaders say that the group's efforts get results. "Lenders tend to listen to us," NACA's Khalil explained to attendees at the BCCC workshop, "because they know we're a thorn in their sides."

On October 29, NACA was again flexing its protest muscles, this time in front of Fannie Mae headquarters on Wisconsin Avenue in Washington, D.C. At issue was the government-sponsored mortgage giant's policy for allowing its partner lenders to restructure loans—a standard that NACA insists is unreasonably punitive. More than a hundred NACA members and staff showed up to unload four U-Haul trucks filled with used clothing and furniture onto the pavement. "Fannie Mae's policies are going to lead to thousands of evictions," Khalil said, "so we're going to show them what that will look like."

As police, security guards, and Fannie Mae staffers looked on, protestors walked up and down the sidewalk with signs that read "Fannie Mae is a Predatory Lender" and "Fannie Mae Destroyed My Family." After forty-five minutes, Bruce Marks pushed past the guards who blocked the driveway and waved his people in. Once gathered on the steps at the front entrance to the building, they shouted "We want Herb," vowing not to leave until Fannie Mae's newly appointed CEO, Herb Allison, agreed to meet with them.

Allison did so, for an hour that afternoon, and for one subsequent meeting, according to Duarte. "[Fannie Mae] agreed to look at all those loan restructures they denied," he says. "We're confident that we'll reach an agreement."

—Lionel Foster



Share your thoughts at www.urbanitebaltimore.com/forum.