FOR IMMEDIATE RELEASE: Sept. 27, 2013
CONTACT: Jonathan Lipman, 202-560-5990, lipman@berlinrosen.com
SUN Foreclosure Prevention Program Begins National Expansion with Opening in Maryland
Program praised nationwide as privately-financed solution that keeps families in their homes
BALTIMORE — Taking its first step toward a nationwide expansion, Boston Community Capital’s (BCC) groundbreaking foreclosure relief program, the Stabilizing Urban Neighborhoods (SUN) Initiative, is now accepting applications from homeowners across Maryland, announced BCC CEO Elyse Cherry at the state’s 2013 Governor’s Housing Conference.
The SUN program, which has kept more than 425 families facing foreclosure in their homes in Massachusetts, is an innovative, investor-financed program that buys troubled homes from lenders at fair market prices and sells them back to the original homeowners with mortgages they can afford. The program is financed primarily through foundations and private investors rather than with taxpayer dollars.
“SUN is open for business in Maryland, as of today,” Cherry said. “It’s unfortunate that this program is still needed, but sadly it is. Although the housing market has recovered in many middle and upper income suburbs, low-income and urban communities are still suffering, and foreclosures are concentrated in low-income communities. Our experience over the past several years with the SUN program proves that many struggling homeowners are ready and able to be good solid borrowers , if they have a mortgage that makes sense.
“We have been eager to help more people through the SUN program by expanding outside of Massachusetts. Maryland made a lot of sense as our first target because of both existing need and the strong nonprofit counseling and legal services network in place here.”
Raymond A. Skinner, Secretary of Maryland’s Department of Housing and Community Development, welcomed the SUN Initiative’s expansion.
“The SUN initiative’s innovative approach has helped many families obtain a reduced mortgage they can afford, without relying on taxpayer dollars,” Skinner said. “We welcome SUN’s expansion into Maryland and look forward to working with Boston Community Capital and Maryland’s network of nonprofit counselors to help as many eligible families as possible stay in their homes.”
“Given the ongoing economic circumstances, it is still challenging for people to afford a mortgage, and we are still not getting the principal reductions necessary to help homeowners sustain their mortgages, “ said Donna Hurley, president of the nonprofit Housing Options & Planning Enterprises. “The SUN program will be so beneficial to homeowners who come to us with foreclosure concerns. We look forward to working with Boston Community Capital to help eligible families understand how SUN can help.”
Families interested in learning more about the SUN Initiative in Maryland can may contact SUN directly at the toll-free number, 855-604-HOME (4663), via email at info@sunhomehelp.org or on the web at www.sunhomehelp.org. There is no fee to apply.
Started in 2009, the SUN Initiative has been praised by community, elected and financial leaders as a pioneering, sustainable, and scalable strategy for tackling the foreclosure crisis that continues to ravage communities and put a drag on the economy. The Washington Post touted BCC’s SUN program as a “model to save foreclosed homes.” Federal Reserve Chairman Ben Bernanke called SUN “an innovative strategy to prevent occupied homes from becoming vacant and creating a strain on the community.” Salon calls the program “a win-win that people in power should have been doing all along.”
The SUN Initiative has provided more than $62 million in mortgage financing for 305 properties to help more than 425 families remain in their homes. Borrowers’ original outstanding mortgage principal has been reduced in the aggregate by more than $36 million. The program is growing rapidly; and of the hundreds of mortgages SUN has renegotiated, nearly all of them pay on time.
Earlier this year, Boston Community Capital raised $35 million in additional capital from East Boston Savings Bank by pledging the revenue from SUN loans as collateral. This mechanism – used regularly by conventional mortgage lenders but never before used by a foreclosure-relief program dealing with troubled borrowers – has demonstrated that SUN’s model can expand nationwide.
The SUN Initiative is not a bailout or charity. Here’s how it works:
- Through, housing counseling programs, local media, and other community partners, Boston Community Capital connects with homeowners facing foreclosure who genuinely want to stay in their home and responsibly pay an affordable mortgage that reflects the current fair market value of their home.
- SUN qualifies potential borrowers by carefully analyzing their finances and employment situations and employs strong underwriting standards to assure that borrowers have the ability to pay a properly sized and priced mortgage. Applicants must show they fell behind on payments because of a demonstrable hardship, such as illness or job loss.
- Using primarily money raised from private investors and foundations, SUN negotiates with the lender to buy a home at the current distressed market value – which is substantially less than the amount originally paid by the homeowner during the housing bubble.
- SUN resells the home, typically at current fair market value, to the existing occupants with a new fixed-rate 30-year mortgage they can afford.
- Homeowners’ monthly mortgage payment and principal balance are reduced on average by 40 percent.
- To guard against fraud and speculation, SUN institutes a shared appreciation program requiring that BCC receive a portion of the gain if the value of a home appreciates over time. Any gain will be reinvested in the communities BCC serves.
- To further protect investors, the Initiative maintains strong loan loss reserves.
Boston Community Capital (BCC) is a non-profit community development financial institution dedicated to building healthy communities where low-income people live and work. Since 1985, BCC has invested more than $900 million in projects that provide affordable housing, good jobs, and new opportunities in low-income communities, connecting these neighborhoods to the mainstream economy.