Obama's housing solutions is filled with doomed-to-fail private sector initiatives [AFP]
It was one of those steamy Saturday mornings in August, a time usually called "a dog day," because so little is happening. Yet on this day cars were packed into a parking lot in the back of a shopping center where the Meadowlands Exposition Hall is based. The vast center was housing a "Save The Dream" event for distressed homeowners facing foreclosure organized by one of America's most aggressive housing rights group, NACA (NACA.com) or the Neighborhood Assistance Corporation of America.
Don't let its benign name fool you. NACA and its CEO Bruce Marks, a former employee of the Federal Reserve Bank, is more than a service organization. With over 350 employees in 40 offices across the country, they call themselves "bank terrorists" because of the militant protests they mount against banks that engage in predatory practices and overcharge customers.
They offer counseling, budget preparation, and direct help in negotiating affordable deals. They also provide advice on how bank lending works, and how to work with banks without getting exploited.
Their direct action campaigns have won results, and now leading banks, perhaps in fear of becoming targets, have begun to work with NACA in processing loans, modifying mortgages and even cutting interest rates that offer better terms.
Founded in 1968, NACA operates in a highly business-like manner -- unlike most well-intentioned but poorly organized community activists while boasting of victories for their members:
"NACA's aggressive confrontation advocacy has yielded numerous victories against some of the country's largest and most power financial institutions," they claim on their website. "NACA was the worst nightmare for a number of huge institutions and powerful individuals."
Behind the website's take-no-prisoners advocacy is a proprietary online system for processing loan applications and tracking the cases of homeowners facing foreclosure.
NACA says they have over a hundred thousand members and their own mortgage sales program with over $10bn to offer. Their system does not rely on credit scores; charges no down-payment, and offers below market rates for long-term mortgages. All their services are free, although the members have to pledge to take part in direct action to benefit
NACA was not what President Obama had in mind when he recently proposed yet another initiative to solve the protracted housing crisis that helped demolish the economy.
While the business sections of major newspapers report on the many lawsuits against illegal practices by banks and other lenders -- most leading to large cash settlements without any admissions of guilt -- the foreclosure crisis goes on with little relief.
Obama's greatest failure
Many see this as the Obama administration's greatest failure -- the foreclosure crisis continues to hurt the poor and struggling middle class.
Obama's solution consists of more private sector iniatives -- the very same polices that brought these crises in the first place. In a recent speech he made in Phoenix, Obama said:
The New York Times noted that "there is little sign of progress" in fixing the housing crisis.
NACA's Bruce Marks went further by telling me that Obama has betrayed most of his promises to homeowners, and has sided with the banks with subsidies and incentives. He also supports the need for government financing since the private sector only funds 13 percent of mortgages through lenders like Fannie Mae and Freddie Mac that Obama now wants to phase out.
Limiting government involvement will hurt the poorest Americans, he argues, even as he acknowledges the need for more efficiency, accountability, and transparency in private sector and public sector lending programs.
The Atlantic Monthly agrees that critiquing government support may play well with the right but distorts the larger truth.
"The US government and taxpayers did rescue these agencies in 2009 (to the tune of nearly $200bn) and, after injecting them with capital and essentially nationalizing them, these companies started to turn a profit as the housing market slowly recovered," writes Zachary Karabell.
"This month, they contributed more than $15bn to the US Treasury, and have been one factor in sharply reducing government deficits."
Black Americans hit hardest
A new book by Laura Gottesdiener, A Dream Foreclosed: Black America and the Fight for a Place to call Home, offers deeper context in the socio-economic effects of the housing crash.
She shows how foreclosures have devastated America's black community while banks profit. Incredulously, nearly every African American has seen their income decrease -- all under the watch of our first black president.
She offers first-person reports on the trauma and tragedies of families who bought homes with deceptive loans offered by hustlers and conmen who knew they would not be able to afford their payments but sold the properties anyway. These are the people who made large fees from subprime loans even when borrowers qualified for lower interest loans.
Her reporting from the frontlines of this battle humanizes the issues and highlights the injustices that most of the business media glosses over.
Her insights conflict with the president's, most of the media and the banks. "We've already tried policies that benefit Wall Street and massive corporations, and all we've ended up with is more financial consolidation, speculation and criminal activity," she concludes.
"If we really want to benefit the majority of Americans, let's focus on proposals like implementing widespread principal reduction and creating structures of collective local ownership like Community Land Trusts."
Fortunately, as Gottesdiener documents, and Marks affirms, community groups are not waiting for the government to act, but are taking action to save homes and stop often illegal evictions.
When President Obama speaks at the 50-year anniversary of The March on Washington on August 24, I doubt he will do much boasting about how he helped black American families hold onto their greatest assets and dreams of home ownership.