This is the first in a series regarding NeighborWorks.
You may have heard about Neighborhood Reinvestment Corporation, doing business as NeighborWorks America (NW) — the nonprofit corporation that continues to receive hundreds of millions of dollars to counsel or fund other agencies to counsel troubled borrowers facing foreclosure. (They just got another $180 million as a part of the new federal lender bailout law just passed in July 2008 described in part here, after previously receiving $180 million in December 2007.) NW performs other activities besides mortgage counseling; over the past ten years NW has received over one billion dollars in government grants and other revenues to perform all of their activities. See NW press release here, IRS Forms for 2003, 2004, 2005.
Fast becoming the Counselor Kingpins
As the nation’s largest certifier of homeownership counselors, NeighborWorks America trained over 3,300 foreclosure counselors in the last four years. In 2008, NeighborWorks expects to train an additional 3,000 foreclosure counselors through forty place-based trainings around the country, an online course on foreclosure counseling fundamentals, and four NeighborWorks Training Institutes.
NeighborWorks Press Release July 30, 2008 here.
NW’s CEO has more impressive statistics:
Since its launch in 2004, [NW's training division] has issued nearly 25,000 certificates of completion to housing counseling professionals in pre and post purchase education and counseling courses focused on homeownership and community lending, including more than 5,500 staff from HUD-approved counseling agencies.
Kenneth Wade, CEO of NW, Statement to Senate Banking, Housing and Urban Affairs Committee, Economic Policy Subcommittee, May 1, 2008 here.
Executive Branch and Lenders Control It
Who is on the board of NW? Government political appointees (hardly a group dedicated to ensuring borrowers are protected).
- Thomas Curry, Chair — board member of FDIC
- Julie Williams, Vice Chair – deputy comptroller and chief counsel of the federal Office of the Comptroller of the Currency (OCC)
- Gigi Hyland, Board member — National Credit Union Administration.
- Brian Montgomery Board member — Assistant Secretary, HUD.
- Randall Kroszner Board member — Board of Governors of Federal Reserve System.
- John Reich Board member — Director of the Office of Thrift Supervision.
Source here.
NW’s partners are equally diverse: Citi, Countrywide, Fannie Mae, HUD, Freddie Mac, USDA, State Farm Insurance, Department of Justice, JP Morgan Chase, Wachovia, E Trade Financial, Bank of America, Genworth Foundation, Home Depot Foundation, MetLife Foundation, Safeco Insurance, Wells Fargo Housing Foundation. Source here.
NW operates their trainings under “NeighborWorks Center for Homeownership Education and Counseling” (NCHEC). Source here. Who are their partners? Another borrower-friendly group:
- Citi
- Countrywide (now Bank of America)
- Freddie Mac
- National Association of Realtors
- HUD
- Fannie Mae
- JP Morgan Chase
- MetLife
Source here.
NCHEC facilitated the development of “National Industry Standards” for counselors utilizing an advisory council. Who is on that council? “A broad representation of industry stakeholders” including: Bank of America, Chase, Citi, NeighborWorks, CountryWide, Wells Fargo, Freddie Mac, Fannie Mae, HUD, etc., with some other groups not previously listed like Chrysalis Consulting Group, LLC, Minnesota Housing, NHS of Great Falls, etc. Source here. Clearly the council is a broad representation of the industry — the lending industry.
Who is missing? Borrower advocates like National Consumer Law Center, Center for Responsible Lending, National Community Reinvestment Coalition, Association for Community Organizations for Reform Now (ACORN), National Association of Consumer Advocates, National Low Income Housing Coalition, National Housing Law Project, legal aid organizations.
Developed Flawed Industry Standards for Counselors
One of the standards developed by NW’s industry council was the Foreclosure Intervention Specialty. It was adopted in January 2008 and is comprised of nine whole pages including exhibits. One of the core operating standards adopted requires competency of foreclosure counselors.
Competency: Possess a strong knowledge in the area of mortgage default and/or foreclosure intervention counseling, specifically relating to the current industry practices of loss mitigation to include loan repayment, forbearance, modification, refinance, loan assumption, short sale, deed-in-lieu, community referrals, and other remedies available to the homeowner to avoid foreclosure. The counselor should understand the structure of the primary and secondary markets, the collection and loss mitigation functions of those entities collecting mortgage payments, financial management and budgeting, and be familiar with state and federal regulations regarding the foreclosure process. The counselor should possess the skills to obtain pertinent client information, analyze financial and property data and draft a comprehensive written Action Plan (see Exhibit B) based on the client’s goals outlining the resultant recommendations for foreclosure avoidance or sale.
National Industry Standards for Homeownership Counseling – Foreclosure Intervention Specialty, January 2008 here.
Notice that there is a requirement to be familiar with the foreclosure process. There is no requirement that counselors know anything about state or federal laws that relate to improper, illegal, or predatory lending practices. Nothing in the advisory suggests counselors should know anything much except “current industry practices of loss mitigation to include loan repayment ….” Just like the Hope Hotline, the counselors are to be trained to help the industry. See Hope Hotline created to save lenders money. Counselors are taught to tell borrowers what lenders want — either pay up our way, or get out and save us the time, money and trouble of foreclosing: “foreclosure avoidance or sale.”
Counselors Taught to Avoid Advocating and Steer Borrowers to Pay or Vacate
What is NeighborWorks actually teaching to these counselors? Advocates decided to find out and attended a NeighborWorks Training not long ago. Following the direction of NW’s board, the advisory council and their partners, and abiding by their industry standards, NW trainers — over a two-day period — belittled and blamed borrowers, instructed would-be counselors how to avoid helping borrowers, and instructed attendees to avoid advocating for borrowers and instead view themselves as extensions of mortgage servicers. Attendees were not told about state laws that might help a borrower, other than the basic foreclosure timeline, and were sure not told about any federal law besides bankruptcy and the servicemembers relief act. Contact the attendees to confirm. List here. Most importantly, it is not the fault of the individual trainers — they followed the book written and published by NeighborWorks. More about the content of their trainings and manual will be covered in subsequent postings.
It is no wonder that NW was selected to receive funds – judging from their two day foreclosure training for new counselors – the priority is saving money for lenders, not preventing foreclosures.
Filed under: Advice for Borrowers, National Foreclosure News
I have been concerned about Neighborworks and every other non profit organization that has the mission of supposedly helping homeowners. I am in the process of completing a book, titled the Unfortunate Truth” that talks about these organizatioins. It became clear to me sometime ago from my first hand experience that the non profits and lenders were in partnership and as a result, this whole Housing Bill of 2008 was a bill for the lenders, not the homeowners and was designed to assure their best interest would be maintained, not the homeowners. I have called for Dodd and Frank to reverse the bill, but that of course cannot happen.. I had talked with several other non profits in Washington only to find that the bill adopted was one that was very subtly designed by both the non profit and the lenders themselves. What a terrible shame the homeowners have had to endure not one, but two, possibly three victimizations from the very people who were supposed to be protecting them. This cannot be tolerated and the funds provided to this organization need to be repaid to the federal government on behalf of the taxpayers. Some profits have done some good work, but some have not , so it is important that any money given to them be very closely monitored. I do not wish to give the impression that I am hostile or disgruntled. or a difficult person. I have been working for three years for the benefit of minority groups that could not afford to pay someone to represent them and I never charged for my services and most assuredly and most importantly, I never have accepted any funds from other non profits, lenders, the fed government, realtors, servicers or anyone connected with the mortgage industry as being objective when I had to go into battle with the very lenders you say are the partners of this non profit, is critical.. What is the deal and how is it going to be remedied. Homeowners have been lefft in the lurch by these non profits and almost lost their homes.
I met so very many nice people that work for the NW, but I am concerned. In fact, it has been somewhat disappointing to know that they were not on top of things. About a year ago I talked with a gentleman who was supposedly a strong player on a legislative committee in Texas and I said to him, do you think we should talk about the unfair practices of loan servicers? He said to me, what are servicers? I told him, that’s okay. I’ll deal with it myself and that is exactly what I have done. Taking them to task is a primary concern which needs to be addressed.