I walked through the Los Angeles Convention Center on Saturday, past the marquee blaring the finals of the World Cyber Games, known as the Olympics of video games. I came across thousands of people queued up, some sitting in portable chairs, some carrying food from the commissary, some drifting to sleep. None of them were in line to watch gamers play Counterstrike. They were camped out to get a chance to talk to a customer service representative at their bank, hoping to get a modification on their mortgage. And for most of them, this was their last hope.
“We don’t go out to eat, we don’t drink, we can’t even tithe to the church,” said Mary Pielman, who came about 70 miles from Redlands to the massive loan modification event to get help with their mortgage. “We’re not underwater on our home, we’re underwater on everything else. My principles are we pay our bills first. We’re all in the same pickle, and we want to get out.”
The 100-hour event, which started on Thursday and closes today, was organized by NACA, the Neighborhood Assistance Corporation of America. Officials expected to get 40,000 struggling borrowers a chance to come to a solution with their lenders throughout the five days.
NACA is a non-profit which gets borrowers in front of lenders for same-day solutions on loan modifications. On average, borrowers can save between $500-$1,000 a month on their mortgages, with either dramatically reduced interest rates or even principal reductions. The concept behind NACA is simple: they do the legwork with their “members” (the borrowers for whom they advocate) to verify income statements, and come up with a workable budget that includes an affordable mortgage payment on a first mortgage (because second mortgages cannot jump over first mortgages to foreclose on the home, NACA focuses on the first, and believes such a modification makes it easier to negotiate a solution with the second mortgage holder). After that, they set up legally binding agreements with the lenders to work out agreements based on the affordability parameters they set. For many borrowers, they can get these solutions the same day. The Los Angeles event was the 22nd across the country, which has helped over 100,000 borrowers achieve results. They also have a Web application through NACA.com for their members to continue the modification process. All of these services, including counseling, complaint claims and the rest, are free.
“We’re up front with our members. We can submit their claim if we can document and verify,” said Rick Guerrero, an official with NACA. “Our counselors are trained to present the banks with a realistic affordable payment.” Guerrero said that they present this to the banks as a win-win proposition. It costs the banks more in upkeep and ancillary costs to put the home into foreclosure than it does to reduce the payment for the borrower and keep them in the home. Plus, it saves the banks the time and effort to figure out what the borrower can actually pay. “Foreclosure is bad for banks,” said Guerrero.
And NACA makes the borrower clear about every single option at their disposal to level the playing field with their lender. “If I’m about to get kicked out, I’m going to take the house apart… the banks know that,” said one orientation leader, in a room of hundreds of borrowers. Orientation sessions were in English, with a special room for hundreds more in Spanish. In another one, a leader gave out flyers with the personal office phone number and email address of Jamie Dimon, the CEO of JPMorgan Chase. “We had his cell phone number too, but last week he changed it,” the leader said. He urged Chase borrowers to file complaints with Chase at the Office of the Comptroller of the Currency, their regulator, and to call Dimon at all hours of the day. “Some of us can’t sleep because of our mortgages, why should they?”
All of the major lenders were represented at the event except for JPMorgan Chase, actually. They have a legally binding agreement with NACA, but have chose not to participate in the events, instead setting up parallel “Homeownership Center” off the site. NACA provided transportation for Chase borrowers to go down and meet with Chase, but borrowers were told that the officials there could not make decisions and were not offering long-term solutions. “They tried to get me to sign a release of liability,” said Ayman Moussa of Mission Viejo, who had been trying to get a private modification with Chase for over a year. “People are going back to fight.” Rick Guerrero said the Chase officials were being disingenuous. “They say they have no underwriters there and they can’t make decisions, but they could,” he insisted. “Chase is the servicer of these loans. They are delegated to make decisions on behalf of the owner.” With the Dimon phone number flyers and through other means, NACA members were pressuring Chase to honor their agreement.
Walking through the NACA event reminded me of those massive Remote Area Medical events where the uninsured would go for a marathon of treatments. In rows upon rows of chairs sat thousands of borrowers and their families, some of whom had been there for three days. Servicers use a bullhorn to call out the names of the next borrower who can meet with a consultant. NACA volunteers in yellow T-shirts with slogans like “Stop the Sharks” (i.e. the banks) tried to get borrowers set up in the right place. NACA tries to give borrowers a specific time range for consultations (they’ll even text message people with a time, but even that said “the wait time may be considerable”), but with this massive an event there’s bound to be confusion. Against the far wall, the names of servicers were written on papers stuck to tables – AHMI, Ocwen, Suntrust, Citi, GMAC, Bank of America.
“I came here on Thursday, volunteered, came back at 8:00 last night, and they just told me it could be another 6 or 7 hours,” said Sandra of Buena Park, who was rejected from the government’s HAMP program by Bank of America. Her story was familiar. “I went to a third party law firm after I got laid off to help with a modification. Then my husband got laid off and the law firm told me immediately to short sale,” she said. “Bank of America rejected me for a loan modification, they refused to work with me. All they said to me was, ‘You owe $35,000, how would you like to pay?’ At least here I can get a face-to-face discussion.” Sandra suffered through constant confusion over who actually owned the mortgage between BofA and Freddie Mac, and who had authority to negotiate the loan modification. “No one knows what anyone else is doing,” she said.
Others were similarly desperate. “I was laid off as a teacher with LAUSD, we have thirteen people in the home,” said Petra, of Pico Rivera. “Most of them have been laid off or had their hours cut back. My husband is basically supporting the family. I have a special needs child who’s 31 years old.” Petra raised a common theme, one of pride in homeownership. “I have never missed a payment and I would never miss one,” she said. “I would rather not pay a utility bill. But with our income, the mortgage will not balance out, there’s not enough savings.” Petra’s loan was through a credit union, which orientation leaders flagged earlier as among the most unlikely candidates for a modification. “They didn’t touch that bailout money,” said one NACA orientation official, which he said made it harder to get them to honor modification agreements.
Ayman Moussa, the Chase borrower, concurred with the idea of loyalty to the home. “I invested my life in this home,” he said. Though he lost his main income in 2009 and ran out of savings shortly thereafter, he wanted to find a solution that could help him stay in the home. He now has found new work as a software developer, and he showed me a meticulous set of documents of his entire journey with Chase to try and find a modification. Chase had initially furnished him with a trial modification that cost more than his original loan payment, a clear effort to push him out of the home. “They said take it or leave it,” he said.
Despite this, most people I encountered at the event seemed hopeful that they could get a solution with the help of NACA. When modifications came through, members announced them on a loudspeaker to rousing cheers. Others told me excitedly about the modifications they heard about from fellow members. People there on their birthdays were serenaded with a round of “Happy Birthday.” “I’m optimistic,” said Robert Padilla of Corona. “It’s a matter of going through the process.” He hoped to get a principal modification, as his son did at a previous NACA event. “This is a wonderful thing to help the community.”
Adriana Ayon, a reporter for Univision in Los Angeles who was there to cover the event, agreed. “It’s so great to have this resource,” she said. “As someone who’s in the same situation with my home, I’m coming back tomorrow to get in line.”
NACA is accomplishing this mainly through the persistence of their CEO Bruce Marks, a lot of jawboning of the lenders and collective action. They have a tiny fraction of the money and leverage that the government would have to get these modifications done using the same practices. “We went to Washington last week,” said the NACA official, Rick Guerrero. “Some politicians said to us that contacting CEOs on behalf of their constituents was not part of their job description. Why not?”
Guerrero continued. “Our foreclosure day of action was to let Congress know what we’re doing, and to wake them up and ask them, why are you not doing this? You’re well-funded. Why aren’t you fixing this problem?”