The big bank bailout does nothing for the ones who need it most.

How does that old saying go? “No good deed goes unpunished.” Perhaps more fitting for today’s mortgage crisis it should say, “No good mortgage payment history will get aid.” The more people I talk to about their mortgages, the more clear it becomes that people were confused about the bank bailout. It was never meant to assist Americans having trouble making their mortgage payments. The idea of saving the big banks was more about keeping them solvent and keeping depositors from making a run on the banks. In the minds of many Americans, it was also intended to stimulate the availability of money for banks to make loans.

It appears many banks that received the money from the government by way of John Q. Public — that would be you and I and heck, who knows how many future generations — won’t even talk to debtors until they fall inescapably behind on their mortgage payments.

I’m not surprised by the number of people telling me their balloon payment hasn’t hit or their adjustable rate hasn’t gone up yet, but will be coming in the next year. Most are unable to refinance because they are too far under water to do so. In other words, the debt on their home is greater than its value. As I mentioned in a previous column, many of these questionable mortgages were still being sold in fourth quarter of 2007 and first quarter of 2008.

One couple I know can’t refinance or get a loan, because one has been laid off and the other is expecting to be laid off soon. They are representative of our state’s double-digit unemployment rate — victims of a bad economy with very little hope in the future. This would be a good time to explore services needed in this time of distress and fill the need with a small business.

More needs to be done to help protect homeowners in bad mortgages who make their payments on time but are struggling to do so. There may be hope on the horizon for some through changes in the federal Making Home Affordable program. The idea is to give lenders incentives to modify loans to homeowners who are upside-down or under water. It’s estimated that 21 percent of homes in the United States were upside-down, loan to value, at the end of March this year.

While on the subject, I suggest reading these helpful tips on avoiding foreclosure rescue scams from Making Home Affordable.

• There is never a fee to get assistance or information about Making Home Affordable from your lender or a HUD-approved housing counselor.

• Beware of any person or organization that asks you to pay a fee in exchange for housing counseling services or modification of a delinquent loan. Do not pay — walk away!

• Beware of anyone who says he can “save” your home if you sign or transfer over the deed to your house. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.

• Never submit your mortgage payments to anyone other than your mortgage company without their approval.

For more information, go to makinghomeaffordable.gov.

Gas prices

On another economic front, have you noticed the price of gas is making its annual summer price hike up the charts? According to the Energy Information Administration, the average price per gallon of regular unleaded has jumped from $2.138 on March 31 to $2.34 on May 18. I have no predictions of how high it might go over the summer, but my guess is it may remain stable, because so many families are staying closer to home this year, keeping overall consumption down.

Reflective curb addresses

Last week I received an orange flier on my garage door soliciting $20 to have a reflective address number painted on the curb in front of my house.

This isn’t the first time this has happened, and just as before I threw it in the garbage. However, many years ago I did pay to have numbers painted on the curb and a couple of years after that, another group came along and painted over it, covering up the black numbers when I said it didn’t need repainting. Didn’t really matter, because we have large numbers on the front of our house, which are required by CC&Rs.

What is different this time around is not only have they painted addresses on the curbs, but they have painted the street names on the corner curbs, too. Personally, I think the painted street names are ugly as can be in the daylight, but at night they are much better than the street signs.

Heck, for $20 you can paint your own and those of all your neighbors, too.

By JAMES R. HAGERTY and RUTH SIMON

Bruce Marks doesn’t bother being diplomatic. A campaigner on behalf of homeowners facing foreclosure, he was on the phone one day in March to a loan executive at Bank of America Corp.

“I’m tired of borrowers being screwed!” Mr. Marks yelled into the phone. “You’re incompetent!” Before hanging up, he threatened to call bank CEO Kenneth Lewis at home to complain about the loan executive.

Mr. Marks’s nonprofit organization, Neighborhood Assistance Corp. of America, has emerged as one of the loudest scourges of the banking industry in the post-bubble economy. It salts its Web site with photos of executives it accuses of standing in the way of helping homeowners — emblazoning “Predator” across their photos, picturing their homes and sometimes including home phone numbers. In February, NACA, as it’s called, protested at the home of a mortgage investor by scattering furniture on his lawn, to give him a taste of what it feels like to be evicted.

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Housing Advocate Bruce Marks of the Neighborhood Assistance Corp. of America at a ‘Save the Dream’ event he organized in Columbia, S.C., in March to help troubled homeowners get their mortgage payments reduced.
Andy McMillan for The Wall Street Journal

Housing Advocate Bruce Marks of the Neighborhood Assistance Corp. of America at a ‘Save the Dream’ event he organized in Columbia, S.C., in March to help troubled homeowners get their mortgage payments reduced.
Housing Advocate Bruce Marks of the Neighborhood Assistance Corp. of America at a ‘Save the Dream’ event he organized in Columbia, S.C., in March to help troubled homeowners get their mortgage payments reduced.
Housing Advocate Bruce Marks of the Neighborhood Assistance Corp. of America at a ‘Save the Dream’ event he organized in Columbia, S.C., in March to help troubled homeowners get their mortgage payments reduced.

In the 1990s, Mr. Marks leaked details of a banker’s divorce to the press and organized a protest at the school of another banker’s child. He says he would use such tactics again. “We have to terrorize these bankers,” Mr. Marks says.

Though some bankers privately deplore his tactics, Mr. Marks is a growing influence in the lending industry and the effort to curb foreclosures. NACA has signed agreements with the four largest U.S. mortgage lenders — Bank of America, Wells Fargo & Co., J.P. Morgan Chase & Co. and Citigroup Inc. — in which they agree to work with his counselors on a regular basis to try to arrange lower payments for struggling borrowers. NACA has made powerful political friends, such as House majority whip James Clyburn of South Carolina, and it receives federal money to counsel homeowners.

Some 1.7 million U.S. households will lose their homes in foreclosure this year, according to a forecast by Moody’s Economy.com, versus under 500,000 a year early in the housing boom. Banks want to show they’re making every effort to keep people in their homes. That can mean working with housing-advocacy groups that routinely bash the industry, increasing the clout of such nonprofits. Less certain is whether these groups can translate their new leverage into long-term influence over how mortgage lenders treat customers.

“We have the opportunity to change how lending gets done in this country,” says Mr. Marks, whose group is itself a mortgage broker and has 40 offices staffed with housing counselors. He favors a return to more traditional standards, with full documentation of income and the same fixed interest rate for everyone.
Mortgage Help Wanted

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Andy McMillan for The Wall Street Journal

Barbara and Joseph Green feed M&M’s to their granddaughter while waiting to speak with a counselor at an NACA event in Columbia, S.C.

Instead of relying on credit scores, he thinks lenders should look into the reasons for any late payments in prospective borrowers’ past and prepare renters for the responsibilities of home ownership. Then, if people are given a loan they can afford, they shouldn’t be required to make a down payment, he argues.

Critics doubt some of these changes would be helpful. Having to use a single interest rate for all would make banks less likely to lend to people with blemished credit records, says Richard Riese, an executive at the American Bankers Association.

A single rate also could lead to higher rates for everyone, adds John Courson, chief executive of another trade group, the Mortgage Bankers Association.

Mr. Courson declined to comment on Mr. Marks. “You’re not going to drag me in there,” he said.

For now, NACA’s main focus is fighting foreclosure, and the 53-year-old Mr. Marks pursues it relentlessly. NACA holds mass “Save the Dream” gatherings, flying in hundreds of counselors to work with borrowers who hope to restructure their mortgages.

At one in Columbia, S.C., in March, a line of homeowners stretched around an arena waiting to meet counselors in canary-yellow T-shirts reading “Financial Predators Beware.” Mr. Marks, dressed in black and wearing a NACA cap, circled the arena with a bullhorn. “We’re gonna get it done!” he bellowed.

Erick Exum, a NACA official, told those present: “What happened is not your fault. The mortgage crisis is the result of abuses and exploitation by Wall Street.” Even so, he said, they might have to make sacrifices: “If you have a car payment and a boat payment, the boat may not make sense.”

Counselors discussed borrowers’ incomes and spending, calculating how big a monthly payment each could afford. For most, NACA later came up with a proposal to lower the interest rate, reduce the principal or both. NACA took the proposals to banks — many of which had someone at the event — and negotiations often followed.

While in Columbia, Mr. Marks made his angry cellphone call to Bank of America executive Steve Bailey. Pacing a hall, Mr. Marks accused Mr. Bailey of reneging on the bank’s agreement with NACA by failing to reduce borrowers’ payments on their second liens, in addition to their first mortgages.

“You eat that second!” Mr. Marks shouted.

Mr. Bailey says Mr. Marks was mistaken about what the bank had agreed to. “I think Bruce was having a bad day,” Mr. Bailey says. He and Mr. Marks agree that their dispute has since been resolved, but differ on the details.

NACA seeks to limit mortgage payments to whatever a borrower can afford, and doesn’t favor stretching out payment periods. That contrasts with a loan-modification plan pushed by the Obama administration, which aims to limit payments to 31% of income.

One borrower at Columbia was Kenneth Brown, a truck driver from Richmond, Va., who had driven over 300 miles to attend. Though he said he was still current on his mortgage, Mr. Brown hoped to get his monthly payment of about $1,600 cut in half by lowering his loan’s 12.5% interest rate. “I’m not leaving till I get something in my hand,” he said as he sat in the arena.
[number of foreclosures]

Two months later, Mr. Brown said he had given up on waiting for NACA to find a solution and was trying on his own to refinance. Mr. Marks said NACA tried to help Mr. Brown but ran into complications documenting his income as a self-employed trucker.

The Columbia event drew people from 10,000 households, and more than 3,000 loans have since been modified, Mr. Marks says. He won’t disclose NACA’s success rate but says that it wins some change in loan terms in the vast majority of cases, including about 24,000 mortgages last year. Hope Now, an alliance of a wide array of mortgage companies, investors and counselors, estimates the mortgage industry modified 969,000 home loans in all last year, a figure that would include NACA’s total.

Mr. Marks grew up in affluent Scarsdale, N.Y., and Greenwich, Conn. He says a childhood stuttering problem gave him sympathy for underdogs, which evolved into a career as an activist. He studied business to “know the enemy,” earning an M.B.A. and working briefly for the Federal Reserve Bank of New York. A later job for a labor union stirred his interest in reviving poor neighborhoods and helping people afford homes.

In 1988 he launched NACA. It soon began arranging loans for Boston-area banks that were eager to show they were serving poor neighborhoods, in compliance with the 1977 Community Reinvestment Act.

The organization has been allocated $34.5 million from a new federal program to counsel distressed mortgage borrowers, to be paid to groups such as NACA little by little as they provide counseling. NACA’s slice is nearly 10% of the program’s funds; the rest goes to more than 100 other nonprofits and state agencies. Besides these grants, most income to cover NACA’s roughly $40 million annual budget comes from the fees lenders pay it for arranging new mortgages, typically $2,500 per loan.

Another NACA event is the “predator’s tour.” In February, it sent hundreds of protesters to the homes of bankers and investors in posh New York suburbs such as Rye, N.Y., and Greenwich. One stop was the home of William Frey of Greenwich Financial Services, a broker-dealer specializing in mortgage-backed securities. He was a target because he resisted some aspects of a settlement that called for modifying loans.

State attorneys general had accused Countrywide Financial Corp. of predatory lending, and Countrywide’s new owner, Bank of America, settled the suit last year by agreeing to modify many mortgages. A fund Mr. Frey controls then sued the bank. The suit didn’t take issue with the settlement but complained that the bank had passed on most of the cost of it to buyers of securities backed by Countrywide’s loans.

Mr. Frey was the target of the protest in which NACA dumped furniture on the lawn. “They had hundreds of people trespassing on my property,” he says.

“I have a difference with Bank of America. I have a substantial amount of assets with them,” Mr. Frey says. “We take them to court. This is how we do it in this country….It’s a civilized society.” The response from NACA, he adds, “is a mob showing up at someone’s house to intimidate them to drop this suit. At what point do people say, ‘This is starting to be uncomfortable’?”

“It should be uncomfortable,” says Mr. Marks. “You win a campaign by being relentless. Everybody has a breaking point….At some point they say, ‘How do I get these crazies off my back?’ ”

Some lenders have refused to sign contracts to work with NACA, among them HSBC Holdings, Barclays and Credit Suisse Group. All declined to comment. Mr. Marks says some banks that won’t sign agreements do negotiate individual cases with NACA. Even so, NACA sometimes pictures their executives and the executives’ homes on its Web site.

It recently added a photo of William Gross of Pacific Investment Management Co., the big bond house known as Pimco, along with pictures of his home and other information. Mr. Marks says his contacts in banking and government tell him Pimco doesn’t support the administration’s push to modify mortgages. “We’re exposing them,” Mr. Marks says. A spokesman for Pimco said neither it nor Mr. Gross would comment.

Mr. Marks says financial executives should be held personally responsible for actions that affect people’s lives, and “if they interpret that as intimidation, so be it.” He says that “we’re not talking about violence. We don’t do violence.”

NACA says it arranged $367 million of mortgages last year. Those borrowers must become members of NACA, agreeing to participate in its protests or help out at its offices, and for several years must contribute to a fund for homeowners who fall behind because of sickness or job loss. All NACA members pay the same interest rate, currently 4.375%.

Mr. Marks says 3.67% of loans NACA originated were 90 days or more overdue as of March 31. The industry average was 3.49%, according to LPS Applied Analytics, a data firm. According to Mr. Marks, 0.68% of the NACA loans were in foreclosure. The industry average was 2.45%, says LPS.

Bank of America says home loans originated by NACA “are equal to and in some cases are performing better than our prime book of business.” A bank spokesman added, “There are few organizations that can bring a buyer to the table who has been through such extensive pre-buying counseling.”

Despite receiving taxpayer money, NACA doesn’t provide public reports on either its loan-brokerage business or its campaign to modify mortgages. Jim Campen, an economics professor emeritus at the University of Massachusetts, Boston, says he tried in the 1990s to analyze the performance of loans arranged by NACA, but Mr. Marks refused to provide data.

Mr. Marks says he feared the data would be used by another nonprofit to discredit his group. NACA does provide information to lenders that work with it, he says, but sees no duty to disclose it to the public.

“He’s been very effective in shaking money out of the banks,” says Mr. Campen, but “he’s not one to open up his records to public scrutiny.”

Write to James R. Hagerty at bob.hagerty@wsj.com and Ruth Simon at ruth.simon@wsj.com