Bad Credit? No Down Payment? NACA Will Still Help You Buy a Home

Susan and Russell Harris stopped looking for a house roughly a year ago. After two failed deals, they threw their hands up, sick of working with untrustworthy lenders.

“There were things that just blatantly weren’t right,” says Susan Harris. Lenders, she says, asked them to lie about their incomes and, partway through the deal, would raise interest rates without explanation. At one point, a lender faxed just part of a loan document, with obviously missing pages, to sign.

“Sometimes they asked, ‘Can’t you just say that you work at another job, or for a friend, so they could say you worked for them?’” Susan recalls.

But, on Saturday Oct. 4, the Harrises decided to wade back in. They headed to the Martin Luther King Library in downtown D.C. for a four-hour seminar explaining how to buy a house through the Neighborhood Assistance Corporation of America. The nonprofit offers mortgages with no down payment and no closing costs. And you don’t need perfect credit either.

And this seemed credible?

“Oh yeah,” Susan Harris says when asked if she’s planning to follow through and set up meeting with a NACA representative. “It made me feel optimistic,” says husband Russell. “At least it seems like everything is up front and there are no mysteries involved.”

In the context of the housing crisis, it’s hard to imagine such a deal. But NACA isn’t a product of the times. It started in Boston in 1988 and has grown into a national organization with $10.5 billion in funds committed from Bank of America and Citigroup to help low- to middle-income people buy homes. In 2007, it also launched its Home Save Program, which helps homeowners restructure their mortgages to prevent foreclosure. NACA now has about 40 offices, including one at 1716 14th St. NW.

To get started, every participant must attend one of the four-hour seminars. The D.C. area workshops-most of which are held at MLK Library with a maximum capacity of 400-are booked until late December, according to the Web site.

On Saturday, a quiet crowd packed a stuffy waiting space. When the doors opened, NACA workers divided attendees by program, directing people to white metal chairs on different sides of the room: On the left side, those interested in preventing foreclosure; on the right, those interested in buying homes. An aisle separated the already-screwed and the hoping-not-to-be-screwed, but they had to listen to one another’s gripes, questions, and-in some cases-miserable tales until 2 p.m.

Wearing a blue collared shirt with naca embroidered in red, Keith Johnson, director of NACA’s Washington office, led the show. After a few minutes of introductory hellos and jokes, he started the sales pitch, a unique blend of marketing and tough love.

At one point, Johnson laid down the law: The maximum home price allowed under the program is $362,790 for a single family home-no additional borrowing, “no shenanigans” to finance a larger loan.

In the next moment, he switched to full-on salesman mode: “This is the best mortgage product bar none. NACA is the only 100-percent-financing program in the country.”

Then he laid out the basic steps: First you sit through the entire introductory seminar; then participants sign up for a meeting with a mortgage consultant who reviews their bank statements, credit card activity, W2s, and a long list of other financial documents to help determine how much the prospective homeowner can afford to spend on a monthly basis.

Then participants must prove they can put away that sum for three to six months. Buyers are still responsible for certain early costs: inspection fees, an earnest money deposit, the first year’s homeowner’s insurance premium, mortgage interest from the day of closing until the end of the month, and several other items.

In the last three years, business has more than doubled at the local NACA office. In 2006, the group issued 130 mortgages. In 2007, the number jumped to 250. So far in 2008, the tally is up to 350, with roughly three months to go.

In the last two months, the D.C. office has added three new mortgage counselors and new administrators to handle the call load. When I ask Johnson for the office number, he says, essentially, don’t bother. The lines are always tied up. (Instead, he gives me his e-mail.)

A forum on real estate Web site Redfin.com regarding NACA reveals a bit of frustration with the backup:

“I’ve been toughing it out since the first week of Feb,” says one commenter, who posted in March of 2008. “We’ve provided all the docs and they still haven’t looked through all of them. It’s always next week, next week.”

“If anyone is looking into working with NACA in Baltimore, be aware that the organization is profoundly non-professional,” says another. “Our completed paperwork has been submitted for over a month now and they have not processed it.”

But not everyone involved with NACA is in a rush. For eight years, New Carrollton resident Damion Birdwell has been mulling home ownership. In that time, he says, he’s been “just educating myself, trying to understand how banks work.” He reads Web sites and spends time at Barnes & Noble with real estate titles. He’s also paid off loans and is trying to get his finances in order so he can start looking for a home in Bowie or Greenbelt.

“It’s been more or less just weighing my options, getting myself squared away before coming out and saying, ‘Yeah, I’m ready to do this,’” Birdwell says, adding “just being able to afford a mortgage—yeah, it’s not cheap.”

Tags: Mortgages, NACA