Daily Archives: May 19, 2013

Boston Community Capital $25 million expansion deal proves viablility of new fix for the mortgage crisis

I received a response from a blogger on a posting of a video from All In With Chris Hayes on MSNBC about a Boston Community Bank that are buying properties of homeowners that are in danger of losing their homes and sell them back to the owners. Here is the video: http://video.msnbc.msn.com/all-in-/51923529#51923529. The blogger wanted more information about this. Well, here is more information:

Boston Community Capital , a non-profit organization, purchases homes of homeowners that have mortgages in default or are subject to foreclosure from banks at reduced market prices, resells the properties back to the homeowners and then issues new affordable 30-year mortgages. More from Boston Community Capital website:

FOR IMMEDIATE RELEASE: May 15, 2013      CONTACT: Jonathan Lipman, 202-560-5990, lipman@berlinrosen.com

Homeowners, Banks, and Investors All Win in Boston Community Capital’s Foreclosure Prevention Program

Nationwide, 1 in 5 Homeowners with Troubled Mortgages Could Benefit

BOSTON — In a first of its kind deal, Boston Community Capital (BCC), a non-profit community development financial institution, has secured a new investment of $25 million in its innovative Stabilizing Urban Neighborhoods (SUN) Initiative. The investment is backed by revenue from a pool of mortgages SUN has made to homeowners who were previously facing foreclosure, and demonstrates that the financial industry can invest in troubled borrowers while at the same time helping to build healthy communities.

The deal, finalized May 6 with East Boston Savings Bank and arranged by Zions Bank’s non-profit public finance group, allows for a major expansion of the SUN Initiative and proves that new, fair market loans to defaulting and foreclosed homeowners can work for lenders while keeping homeowners in their homes and providing them with a new affordable mortgage.

In exchange for the new investment of $25 million, East Boston Savings Bank will receive a regular stream of revenue from mortgages BCC has assembled, as homeowners in the SUN Initiative pay off their fixed-rate mortgages over the next 30 years.

“Our model works, and our transaction with East Boston will help us expand the SUN Initiative here in Massachusetts and beyond, potentially keeping thousands of families in their homes,” said Boston Community Capital CEO Elyse Cherry. “What’s innovative here is that we’ve taken a transaction that is routine in the residential mortgage market but applied it to a new group of borrowers – those who were facing foreclosure. This new infusion of capital proves financial institutions can invest with confidence and be part of a nationally scalable, sustainable solution to the mortgage crisis that keeps defaulting and foreclosed homeowners in their homes as productive members of their communities.”

“Through the SUN Initiative, Boston Community Capital has a proven track record of helping good borrowers stay in their homes following a hardship, and we’re extremely proud to partner with a program so effective at stabilizing our communities,” said Jeff Dickinson, Vice President of East Boston Savings Bank.  “With the strong underwriting standards employed by the program, we feel confident that the underlying mortgages represent a reliable source of repayment going forward.  This was a good investment for East Boston Savings Bank and Boston Community Capital, but more importantly for the communities hardest hit by the recession.”

Boston Community Capital estimates that its approach could help 1 in 5 homeowners nationwide whose homes have significantly dropped in market price, and who are either in default or foreclosure and currently have few, if any, options for obtaining a mortgage.

Started in 2009, the SUN Initiative has been praised by community, elected and financial leaders, including Federal Reserve Chairman Ben Bernanke, as a pioneering, sustainable, and scalable strategy for tackling the foreclosure crisis that continues to ravage communities and put a drag on the economy. As the only program of its kind in the United States, it offers qualifying homeowners facing foreclosure the opportunity to buy back their homes at current market value and make monthly mortgage payments they can afford. On average, homeowners pay about 40 percent less per month on their new mortgages.

The SUN Initiative has provided more than $56 million in mortgage financing for 270 properties to help 381 families remain in their homes.    Borrowers’ original outstanding mortgage principal has been reduced in the aggregate by more than $30 million. The program is growing rapidly; in 2012, the SUN Initiative’s volume of financing was triple the year before.  And of the hundreds of mortgages SUN has renegotiated, nearly all of them of pay on time.

The new investment will allow Boston Community Capital to expand the program beyond Massachusetts, working with partners in states hit hard by foreclosures.

“This highly successful program is another example of the innovative ways underway to help families stay in their homes,” said Massachusetts Attorney General Martha Coakley.  “The SUN Initiative makes sense for both homeowners and lenders, and shows how principal reduction can be a successful tool to help solve the foreclosure crisis.”

The SUN Initiative is not a bailout or charity.  Here’s how it works:

  • Through aggressive outreach, local media, and 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.
  • 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.  That gain is reinvested in the communities BCC serves.

Since 2009, the SUN Initiative has provided an annual return to its investors of 4.25  percent. To further protect investors, the Initiative maintains strong loan loss reserves.

“Boston Community Capital is proving we can do what makes financial sense and do what is right,” said Amy Domini, a wealth manager at Loring, Wolcott & Coolidge in Boston, an initial SUN investor. “By re-aligning home prices with neighborhood income levels, they are aligning the interests of investors with the interests of communities.”

“It takes innovation to bring much-needed capital to America’s underserved communities,” said Mark Pinsky. Pinsky is CEO of Opportunity Finance Network, which made an early investment in the SUN Initiative through a NEXT Award supported by Wells Fargo and the John D. and Catherine T. MacArthur Foundation. “The SUN Initiative and other creative solutions like it point the way forward, and today’s milestone shows that Boston Community Capital is leading the way. We congratulate BCC on this crucial next step and look forward to seeing how it can help more homeowners in more places.”

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.

http://bostoncommunitycapital.org/

http://www.sunhomehelp.org/

And more information on this program, please go to Boston Community Capital website. Click here.

Quelle surprise: Liberal group Progress Texas and two other liberal groups also received extra IRS scrutiny

The IRS scandal gets more interesting as Tea Party group were not the only group targeted by the IRS. For sure, IRS’ reputation is tarnished as the agency should be focus on going after tax cheats than targeting certain groups  for qualification for Section 501(c)(4).

Raw Story:

A liberal group on Wednesday said it had faced the same level of scrutiny from the IRS that was applied to tea party groups.

“Progress Texas and the Tea Party strongly disagree on the role of government,” the group’s executive director, Ed Espinoza, said in a statement. “Yet, when we applied for tax-exempt status, Progress Texas received the same type of additional scrutiny that Tea Party groups are complaining about. The similar treatment indicates the IRS was likely addressing a flood of 501c4 applications after Citizens United, and undermines the paranoid notion that Tea Party groups were singled out.”

An IRS letter (PDF) published by Progress Texas online Thursday showed the liberal group was given 22 days to respond to a list of 21 questions. Some of the questions included up to nine sub-questions.

 

The questions resembled the list of 35 questions (PDF) sent to the Liberty Township Tea Party, which has complained of IRS harassment.

 

Bloomberg reported Tuesday that at least two other liberal groups, Emerge America and Clean Elections Texas, also received additional scrutiny from the IRS.

 

Link

Fannie Mae, Freddie Mac Cancel Appearance At Metro Detroit Foreclosure Hearing

Fannie Mae, Freddie Mac Cancel Appearance At Metro Detroit Foreclosure Hearing

Officials from the mortgage financing giants Fannie Mae and Freddie Mac have withdrawn from a Detroit event where homeowners are set to talk about the impact foreclosures have had on their lives and communities.

The group Detroit Eviction Defense claims the last-minute cancellation of the May 20 hearing comes after officials for the government-backed agencies told organizers it would be “awkward” to hear testimony from homeowners who are currently litigating against them.

Steve Babson, a spokesman for Detroit Eviction Defense, said organizers received word of the cancellation through a series of phone calls with employees of the Federal Housing Finance Agency (FHFA), which oversees Fannie and Freddie.

“They said, ‘Well, we’ve decided it would be pretty awkward for us to be in the same room in a public event with homeowners who are in litigation against Fannie Mae and Freddie Mac over potential evictions,'” Babson told The Huffington Post. “This was a phone conversation, as it had been for several months, but this was unfortunately at the 11th hour saying they were pulling out.”

Meg Burns, senior associate director of the Office of Housing and Regulatory Policy, sent a statement to The Huffington Post confirming that officials from FHFA, Fannie Mae and Freddie Mac had earlier committed to attending the hearing but now would be unable to do so.