CORPORATE CRIME REPORTER
NACA’s
Marks Says Fannie, Freddie Still Buying Subprime Products
22 Corporate Crime Reporter 31, August 5, 2008
Fannie Mae and Freddie Mac never learn.
Just last week, taxpayers bailed them out of their subprime meltdown.
And yet, they still continue to buy subprime junk. That’s according to Bruce Marks, CEO of the non-profit Neighborhood Assistance Corporation of America (NACA).
“They continue to purchase interest only, ARM resets and other problematic loan products,” Marks told Corporate Crime Reporter.
“Fannie and Freddie should be prohibited from buying this stuff,” Marks said. “But I have evidence from the borrowers that Fannie and Freddie are still buying these products. They buy 50 percent of all mortgages. So, it might not be a huge chunk. But it is still significant.”
In September 2000, Marks went before a House committee and predicted that the government would be forced to bailout Fannie and Freddie because of their involvement in the subprime market.
And this year, Marks has opposed the bailout bill, saying that it would provide virtually no benefit to at-risk homeowners.
“The beneficiaries of the bailout bill will be Fannie and Freddie,” Marks said. “And it may cost the taxpayer $800 billion or more. It rewards these companies for their past failures.”
NACA is a mortgage broker in the business of providing low interest, fixed rate 30-year mortgages.
Over the past five years, it’s business has stagnated, because it refused to get involved in the subprime market and couldn’t compete.
But Marks says that now, homeowners facing foreclosure because of the meltdown, are flocking to NACA to get their mortgages restructured.
Just
this week, 20,000 people showed up at the Capitol Hilton Hotel in Washington,
D.C. in five days to save their homes.
“I had 420 staff people,” Marks said. “I had about 300 counselors.
Everybody had a laptop on a 36 inch cocktail table. In these huge ballrooms.
They were connected to the Internet. And they were able to do the solutions
right then and there. We asked people to bring their mortgage documents and
their pay stubs and their bank statements. We were underwriting the loans right
then and there. And we were submitting the solutions immediately. I was getting
approvals that same day.”
Marks want criminal prosecutions of the top Wall Street firms and their executives for engaging in the predatory lending that caused the crisis.
“We should not be doing subprime lending,” Marks said. “We should go back to the traditional lending. Fannie and Freddie should expand their pool for prime loans.”
“We are not talking about the loan shark on the corner who says – if you don’t make your payments in three months, I’m going to break your legs. We are talking about the most well established, most well known financial institutions, and “respected” institutions, not just in this country, but in the world. GMAC, Wells Fargo, Countrywide, Bank of America, Washington Mutual, Citigroup – engaging in predatory lending.”
“You are talking about institutions that are well known and supposedly respected worldwide. Citigroup engaging in predatory lending. If you are a homeowner and someone says to you – you can purchase a home in a neighborhood where you don’t have to be afraid of your children’s safety, where you can have your children go to a good school, where you can have a house that you could never even have dreamed of. And this is not some loan shark giving you an outrageous loan. These are some of the most respected financial institutions in this country and in this world. And what were they saying is – trust us, you can refinance after two years. Trust us, you can afford that.”
“You tell me the homeowners who are going to turn that down? Who never ever even dreamed of such an opportunity?”
“You
cannot blame the homeowner. You put the responsibility where it lies. On predators.
On lenders. On Wall Street.”
[For a complete transcript of the Interview with Bruce Marks, see 22 Corporate Crime Reporter 31(10), August 4, 2008, print edition only.]
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