Bizarro World

By: PAUL JACKSON
February 3, 2009 10:56 AM CST

Am I the only one that thinks a partnership between Neighborhood Assistance Corp. of America and Fannie Mae is a little, well, odd? This story at the WSJ has been bubbling in the back of my head since I saw it last week:

Fannie Mae has reached an agreement to work with one of its former critics, Neighborhood Assistance Corp. of America, to prevent foreclosures by reworking home mortgages to make them easier to afford.

… The agreement with Fannie hasn’t been announced but was confirmed by the company and by Bruce Marks, chief executive of the NACA, a Boston nonprofit with a history of holding protests to pressure banks into cooperating with its efforts to provide mortgages on what it considers fair terms.

Here’s the thing about Marks and his crusade for long-term affordable loans, irrespective of any personal opinion on the man; he doesn’t much care about the original terms of the lending. If a borrower can’t afford the terms, the terms aren’t any good and represent the lender’s outright gouging and mistreatment of the borrower. Any loan is therefore only as good as the borrowers’ ability to afford it, and if the borrower’s circumstances change, so too should the terms of the note. Such goes the mantra here.

Philanthropist or not, Marks clearly makes money off of this process — he’s able to collect Federal grants in the millions from the likes of NeighborWorks America on one hand, while also making money by being the originator of the “affordable” loans to troubled borrowers, on the other. Perhaps he is providing a valuable social service, a point many will surely argue.

But his approach is clearly a strategy that allows money to be made on both the left and right hands, non-profit or not. And I’ll admit upfront that I’m a hardened skeptic on the preferential tax-treatment given many non-profit entities.