Fighting a foreclosure? You're not alone. And a new program is on the scene to offer help.
Marylanders who already have been through HAMP, HARP and the HOPE hotline—state and federal programs to try to stave off foreclosure-- got some good news Friday. A Massachusetts non-profit that has helped hundreds in that state avoid foreclosure is setting up shop here.
Boston Community Capital announced it will bring its SUN initiative—Saving Urban Neighborhoods—to Maryland.
SUN’s Elyse Cherry said they try to buy homes from foreclosing lenders at the current market price, which often is substantially lower than the original price, but “frankly, it’s the only amount of money anyone will pay the lender.”
“So, we buy for that price and we turn around and sell it to the homeowner,” she said.
She said that reduces the homeowner’s principal by almost 40 percent on average and makes the monthly payment lower. It’s a technique housing advocates and activists have been pushing for years, but lenders and investors have resisted.
Cherry said SUN decided to come to Maryland because the state has seen a spike in foreclosures and state officials were receptive to the idea.
The program started with money borrowed from high net worth individuals, philanthropic organizations like the MacArthur Foundation, and some government money.
“We initially raised $50 million to do this work,” Cherry said. “But now we have taken the income – the principal and interest payments that each homeowner makes every month –and have re-capitalized the undertaking so that we have more funds. So what we think is that we have an evergreen source of capital.”
SUN has had an occasional customer who pays late, she said, but they have had to foreclose only once in three and a half years.
In addition, SUN has streamlined its process by hiring employees they trust to see things through and who won’t lose paperwork.
“It does require a significant effort to what we call manually underwriting people, meaning you can’t just put folks through some automated process,” Cherry said. “It can be a labor intensive undertaking. We’ve been able to build up a set of systems to get people through the process efficiently. We don’t lose their paperwork – it tends to be a borrower friendly process.”
With 15 employees, Cherry said she expects to do $50 million worth of lending in Maryland in the next year. And then she’d like to expand to other states like Florida, Nevada, California, and Illinois, which are among those hardest hit by the foreclosure crisis.
Foreclosures in Maryland have spiked over the last year. According toRealtyTrac, about 12,000 properties were foreclosed upon from January through August last year, compared to more than 28,000 properties during the same period this year.
So, though many greeted SUN with open arms, the initiative’s track record in Massachusetts--400 homes in 3 and a half years—won’t be nearly enough.
Marceline White, executive director of the Maryland Consumer Rights Coalition, said she’s happy to see another non-profit on the scene, but questioned why the lenders aren’t making principal reduction loans.
“What you’re seeing is the private and non-profit sector basically playing the role the banks should be playing” she said. “And you’re not seeing the government playing the role that it should – in terms of enforcing the actions of the banks and having consequences that are meaningful enough to make the banks change their course of action.”
Maryland received $1.3 billion from the Attorneys-General National Mortgage Settlement.
White said she’d like to see more done with the money to keep homeowners in their homes and more of a push from Maryland Attorney General Doug Gansler to get the banks to offer principal reductions and refinancing, like she’s seen in other states such as New York and Florida.