MHP News

As foreclosure rates in Massachusetts continue to climb, the NeighborWorks Homeownership Center of Worcester has taken a major step forward, teaming with the Massachusetts Housing Partnership’s SoftSecond Loan Program to increase its post-purchase homeownership outreach to first-time homebuyers in the Worcester and south central Massachusetts area.

MHP has announced that Worcester’s NeighborWorks Homeownership Center will be the fifth agency statewide to be certified as a HomeSafe Program Sponsor, giving the SoftSecond program statewide post-purchase coverage for the first time.

Developed in conjunction with the City of Boston and the Massachusetts Affordable Housing Alliance (MAHA), the HomeSafe Program provides homeownership counseling, early delinquency intervention services, and 10-year supplemental funding to all eligible SoftSecond borrowers. Altogether, these services provide new homeowners with a valuable safety net during the first years of the mortgage, which are statistically the riskiest for foreclosure.

More reach for Worcester

The Worcester NeighborWorks Homeownership Center has worked since 2002 to increase the post-purchase resources and services available to first-time homebuyers and homeowners. According to NeighborWorks Director Fran Paquette, in the last year the program has successfully assisted 172 families purchase their first homes, and has provided post-purchase counseling to 155 families. Being certified as a HomeSafe provider will help the center reach more homeowners.

“We not only want to get people into homes, but enable them to keep their homes over the long term,” said Fran Paquette, Director of Neighborworks. “With the added support from SoftSecond and the HomeSafe Program, we will be able to help many more families purchase and sustain their homes.”

Timing couldn't be better

The increased emphasis on post-purchase counseling in the Worcester area comes at a time when foreclosure rates in Massachusetts are climbing. Right now, Massachusetts foreclosure rates for 2006 are on track to surpass the state high of 17,000 foreclosures in 1991, according to ForeclosuresMass.com. Central and western Massachusetts have been especially vulnerable to foreclosures, and Worcester county has recorded over 500 foreclosures in the last sixty days.

Unlike these and other zero-down payment and sub-prime mortgage products, SoftSecond loans are fixed-rate, require a three-percent down payment and borrowers must take homebuyer classes. As a result, delinquent payment and foreclosure rates are significantly lower for SoftSecond loans than other targeted loan programs, setting an industry standard with a below-average delinquency rate of 1.9 percent and a foreclosure rate of .35 percent.

SoftSecond: loan for the long run

Since 1990, SoftSecond has helped nearly 10,000 households purchase their first home. Currently, the average household income of a SoftSecond homebuyer is $47,000. SoftSecond works by combining a conventional first mortgage from a bank with a state subsidized second bank mortgage. The state subsidizes interest payments on the second mortgage for the first nine years and the borrower pays interest after 10 years, but makes no principal payments until the 11th year. The homebuyer is then able to increase potential buying power while reducing monthly debt.

For instance, a first-time home buyer earning $45,000 could afford a home priced at about $155,000 with a conventional mortgage. The mortgage payment would be about $1,237 a month on a 30-year mortgage. By picking up the interest payments on the second mortgage, the SoftSecond program allows a buyer to purchase a $195,000 home, with a payment of $1,228 a month. The borrower also avoids paying private mortgage insurance, which can cost as much as 0.5 percent of the mortgage.

For more information about how communities and banks can utilize SoftSecond to reach first-time homebuyers, email SoftSecond or call 1-800-752-7131.