MHP News

BOSTON --- Governor Deval Patrick, Secretary of Housing and Economic Development Dan O’Connell, Undersecretary of Housing Tina Brooks and MassHousing Executive Director Tom Gleason today announced that Massachusetts is ready to roll out the most comprehensive, publicly assisted loan program in the nation to help address the ongoing home foreclosure crisis.

The program, which will not rely on taxpayer money, will provide foreclosure prevention counseling and fixed-interest rate refinancing loans to help hundreds of struggling Massachusetts homeowners get out from underneath increasingly unaffordable subprime loans.

“For many Massachusetts homeowners, the subprime crisis has turned the American dream of homeownership into a nightmare,” said Patrick. “Too many of our residents were put into loans they couldn’t afford. This innovative mortgage loan program will give some of our most vulnerable citizens a fighting chance to keep their homes.”

Geared toward homeowners with 'modest' incomes

The Governor announced that MassHousing, a quasi-public agency, will partner with Fannie Mae to provide $250 million for the new loan program, which will also include extensive counseling for homeowners.

The program is geared toward homeowners with modest incomes who were put into loans that were unaffordable and unsustainable, and where abusive practices may have been used by the lender. Household incomes may not exceed 135 percent of the area median in the Boston area and 125 percent of the area median income for the rest of the state.

“This is the next step in the Administration’s ongoing and comprehensive approach to addressing the foreclosure issue,” said Secretary O’Connell. “This program will allow us to offer vital relief to families and neighborhoods all across the Commonwealth at a time when it is most needed.”

Hotline is setup to connect homeowners with counseling

Information regarding the program, including income limits and eligibility guidelines, can be obtained by going to the MassHousing web site. 

Homeowners who are struggling with a loan that has suddenly become unaffordable will be encouraged to call a toll-free foreclosure prevention hotline, 1-888-995-HOPE or the Homeownership Preservation Foundation web site. From here, homeowners will be connected with foreclosure prevention counselors from NeighborWorks, a national nonprofit partially funded by Congress and a partner with the Homeownership Prevention Foundation.

After providing the NeighborWorks staff with initial information, homeowners will be directed to one of a dozen or so Massachusetts non-profits, where they will receive more in-depth counseling about how they can work with their lender to remain in their home despite falling behind on their mortgage payments.

Refinance loans part of program

If the borrower is qualified, they may be able to obtain up to a 40-year, fixed-interest rate loan for up to 105 percent of the value of the home, as determined by an appraisal. Interest rates are expected to be approximately 7 7/8 percent at the outset. Borrowers can be behind on their mortgage payments by up to 60 days and still be eligible, as long as the delinquency was caused by their interest rate resetting to a higher level, and not by the homeowner’s actions, such as assuming more debt. The program is open to owners of condominiums, single family homes, as well as two-, three- or four-family homes.

Acknowledging that homeowners saddled with unaffordable loans are likely to have damaged credit, borrowers with credit scores as low as 560 will be eligible, although credit scores must be slightly higher for the owners of multifamily homes.

Program funded by Fannie Mae, MassHousing bonds

The program will be financed with approximately $190 million from Fannie Mae and $60 million from MassHousing. MassHousing will sell bonds to raise the capital for its portion of the program. "There will be some risks with a program of this nature, but they are risks we are willing to take in these difficult times in order to help the people we were created to serve,” said Gleason.

“Over the last several months, MassHousing and Fannie Mae have been negotiating the minute details of this program,” said O’Connell. “Each agency showed strong leadership during a difficult time in the industry and I commend them for stepping into the fray on behalf of our neediest citizens and staying true to their affordable housing missions.”

“Governor Patrick has once again taken action to coordinate and harness the resources of the state’s housing agencies to make Massachusetts a national leader in developing this innovative, flexible and accessible mortgage product,” said Brooks.