The major roadblocks for low- and moderate-income people from obtaining homeownership are:
- Saving to meet down payment and closing costs requirements
- Risk underwriting that does not take in consideration individual circumstances makes difficult the access to credit
- Higher interest rates derived from risk underwriting based on credit scores
- Market prices often driven by speculators and investors with not vested interest in the communities
The mortgage crisis was not the fault of homeowners. It was a mortgage deception scheme by lenders, investors and wall street. I was never about homeownership. This is because millions of homeowners purchased a home with a mortgage they could afford. The deception was that this mortgage was never intended to be affordable. Starting in February 2008, the mortgage payments significantly increased with many doubling and continuing to significantly increase. Thus homeowners with a $1,000 mortgage payment would now be paying $2,000 and increasing to $3,000 a month. It was just a matter of time that they would lose their homes.
It is an outrageously false statement to blame the homeowners who were owner-occupants achieving their dream of affordable homeownership. Remember that this does not include investors who did not live in the properties and whose focus was to flip them for a quick profit. Homeowners were told that purchasing on these terms was the right and economically rational thing to do and to do otherwise would be to miss the dream of homeownership. This came from all sectors including the government, all the major lenders, investors, politicians, wall street, real estate agents, and other professionals. They led the homeowners down the road to inevitable end of financial disaster.
Yes, and the first in a national setting. On September 12, 2000 NACA’s CEO and founder Bruce Marks testified at the House Financial Services Congressional hearing. At this hearing he sounded the alarm of the pending mortgage and financial crisis stating “Without such controls, Fannie Mae will continue to expand its reach into the subprime market and might itself become a predatory lender. … ”Participating in these schemes by the GSEs poses potential risk for the housing and banking industry and for the economy in general.” The transcript of the hearing can be found in the Congressional Record.
NACA through its operations nationwide was seeing the crisis unfold. A prime example was NACA’s operations in Lawrence Massachusetts. This was a city that Fannie Mae had designated as a “declining value community” and thus requiring a higher interest rate for homebuyers purchasing in Lawrence. Activists from Lawrence were outraged about the devastation occurring there from the collapse of the manufacturing industry and the burning of properties for insurance. They convinced NACA to open one of its first local offices there. Over a few years NACA provided over 2,300 affordable fixed rate mortgages in Lawrence. NACA stabilized and transformed Lawrence.
This transformation was short lived. Starting in the late 1990s homeowners were encouraged to refinance their homes by accessing the equity in their homes with a low interest rate. NACA reviewed these mortgages and told the homeowners that these were Teaser Rate and would significantly increase making the mortgage unaffordable. The inducement of cash for the equity was too strong and many homeowners took out these loans. NACA would not change its lending practices and closed the office for almost two years. The homeowners lost their homes and Lawrence was again devastated. This same process happened in many communities nationwide.
NACA believes in personal accountability. It is personal when a homeowner loses their home or when a homebuyer or homeowner is unfairly denied the dream of homeownership. That is why NACA holds the CEOs and executives of many financial institutions personally responsible for their actions.
NACA performs the research on them and take actions so they can understand the consequences of their actions. NACA has unique access to these executives since it is the NACA Members who provide their security, clean their homes, provide their services and much more. With 2.7 million members, NACA has a strong presence in so many communities nationwide and access to the targets of NACA’s campaigns.
Executives, with millions in compensation, think that their money allows them to live in a protected bubble but it cannot keep NACA, other members and their supporters out.
Yes. This is true. Back in the late 1980s NACA engaged in a campaign against lenders who targeted long-term minority homeowners stealing their equity. That was when NACA introduced the term “Predatory Lenders.” Unsurprisingly, given the widespread abuse by many bad actors in the financial system, it quickly became common and stuck.