Business was already declining when Mike Campbell and his wife, Michelle, decided to close their commercial photography studio in 2006. They would save the monthly rent, they figured, by operating from home. They bought a three-bedroom, 1,600-square-foot home in Highlands Ranch.
Sales continued to slide, and they put up the home for sale early this year. A buyer signed a contract, but after five months of delay, the offer fell through. By then the Campbells were deep into foreclosure.
“The county sale was less than a week away,” recalled Mike Campbell. His negotiations with the lender had been futile. As the Campbells pleaded for lower payments on an adjustable- rate mortgage, the lender’s “solution” would have raised the payments, not lowered them.
Desperate, Campbell called Steven Wright, a real estate broker and longtime friend. Wright put Campbell in touch with NACA, the Neighborhood Assistance Corporation of America. Within 24 hours, the lender agreed to halt the foreclosure process.
“Character” instead of credit
NACA is led by Bruce Marks, a high-profile consumer advocate who was honored last year by The Boston Globe as “Bostonian of the Year.” His 20-year-old nonprofit helps troubled homeowners and new buyers qualify for what it calls “character-based” credit, which it says can trump traditional credit scoring.
NACA operates in approximately 40 cities. It set up shop in Denver in June, not a day too soon for the Campbells and others in similar circumstances.
“It seemed too good to be true,” said Campbell, recalling his initial reaction to conversations with a NACA mortgage consultant. Skeptically, he completed the required forms at and faxed in paperwork authorizing the organization to negotiate with his lender.
“A lot of people have that reaction — it’s too good to be true,” said Wright, whose firm, Networth Investment Properties, stages workshops approximately every two weeks on behalf of NACA. Networth works voluntarily in hopes of eventually serving the buyers and sellers who attend the workshops.
Equally hard to believe, for many, are the favorable terms offered through NACA. There are no down payments, closing costs or requirements for private mortgage insurance. Interest rates are below market — currently offered at 6 percent versus an average of around 6.5 percent (with some fees) advertised elsewhere. NACA borrowers are able to “buy down” their rate further with a down payment.
Beyond FICO scores
Since NACA arrived in Denver, five workshops have been held. The first drew about 25 people and the fifth, more than 400. The next workshop is set for Aug. 23.
What’s most unusual about NACA lending, said Wright, is its independence from traditional credit ratings. FICO scores are checked, but a low score is not a show-stopper.
The process requires borrowers to demonstrate a willingness and ability to meet monthly obligations. Often that involves drafting a monthly budget in writing. The borrower must satisfy old debts such as missed car payments.
NACA calls it “character-based” lending, as opposed to the traditional credit-based variety. “The idea is to judge borrowers one case at a time, taking into consideration that life happens,” said Wright.
NACA helps current homeowners in two ways, either by restructuring bad loans — which works best for someone with a manageable balance but uncompetitive terms — or by refinancing mortgages in cases where the loan principle exceeds the home’s value. Lenders may agree to reduce principle if the high balance is deemed due to predatory loan practices.
In refi cases, NACA itself may step in with a new loan. The organization controls $10 billion in capital from Bank of America.
Aside from existing homeowners, NACA helps prospective buyers purchase new property. Qualifying is similar. Borrowers must demonstrate “character” and ability to live within a budget.
Attracts beyond the strapped
Not all NACA borrowers are in dire financial straits. Attorney Ari Gould was considering the purchase of a home when he heard about the organization’s arrival in Denver. The terms of a loan were better than what he could find elsewhere, he said.
“I was attracted by the ability to avoid some of the usual costs, such as private mortgage insurance,” he said. Gould is under contract to buy a home near the former Lowry Air Force Base with a $300,000 loan through NACA.
Some conventional standards still apply to NACA’s programs. A prospective borrower’s debts may not exceed 30 percent of gross income. People who reasonably will never be able to meet their obligations, because of low income or excessive debt, will not qualify, said Wright.
Qualifying may take “three, six, or nine months,” particularly if there are unpaid obligations to be paid off. The good news is that for a qualified borrower, foreclosure proceedings may be halted as the process begins.
Zachary Urban of the nonprofit Brothers Redevelopment heads the Colorado Foreclosure Hotline. He welcomes the organization’s arrival in Denver. “I’m glad to get all the help I can,” he said.
Still, NACA’s brand of help isn’t for everyone. “There are some borrowers, because of the hole they’ve dug, there’s not a ladder long enough to get them out,” he said.
Learn more in person
The next NACA workshop will be Aug. 23, 9 a.m. to 1 p.m., at Faith Temple at 12400 Hoffman Blvd. in Aurora. To volunteer to help, call 303-368-9900 or visit .
