Posted on July 1, 2008
BOSTON, July 1, 2008 --- Governor Deval Patrick has announced details of a unique state-sponsored, low-interest loan fund for developers to buy abandoned and at-risk properties, and get them quickly reoccupied with new homeowners or renters.
The Massachusetts Housing Investment Corp (MHIC) and MHP are each providing $8.5 million from their bank-funded loan pools. Another $3 million is being provided by non-profit foundations.
“This rich blend of private and non-profit resources will help us stabilize neighborhoods hard hit by foreclosure, and turn troubled properties into brand new affordable family housing opportunities,” said Patrick at a July 1 press conference in Chelsea.
The $20 million program is available to non-profit and for-profit developers, and targets communities with a high concentration of vacant properties including Boston, Brockton, Chelsea, Lawrence, New Bedford, Springfield and Worcester. For more information and a term sheet, go to www.mhp.net/neighborhoodloan.
"We will be making loans based on what we think can be reasonably repaid, based on the long-term plan for the property," said MHIC Executive Director Joseph Flatley. "The benefit of this loan fund is to go to the borrowers and the neighborhood – and is not intended in any way to generate higher prices for the lenders who foreclosed on these properties."
"This fund evolved from a collaborative process between an ad hoc group of people from all sectors with a focus on what would work at the local level," said Judy Jacobson, MHP's deputy director and co-chair of the state's foreclosure task force. "The fund will continue to evolve as local strategies are pursued and we see what works and what doesn’t."
Key support from private non-profit foundations
The Boston Foundation will contribute $2 million to the fund, and the Boston-based Hyams Foundation will add another $1 million, which will be targeted specifically to the purchase of foreclosed properties in the city of Chelsea. MHIC will implement and administer the funds and the state Department of Housing and Community Development (DHCD) will oversee the program.
“Neighborhoods that took decades to revive can unravel overnight as a result of the foreclosure crisis," said Paul S. Grogan, President and CEO of the Boston Foundation. "This targeted intervention can limit the damage and contain what could otherwise spread, causing blight and disorder.”
“Many vulnerable people are being affected by the current mortgage foreclosure crisis, including scores of unsuspecting renters. This is an especially critical time to preserve rental housing while also protecting the significant investments we have all made in revitalizing low-income communities," said Beth Smith, Executive Director, The Hyams Foundation, Inc.
Part of Patrick Administration's foreclosure initiative
The acquisition fund is part of the Patrick Administration’s comprehensive foreclosure initiative to assist homeowners and stabilize neighborhoods across the Commonwealth. A series of state-sponsored foreclosure prevention workshops paired more than 350 homeowners from the Western and SouthCoast regions of the state with their lenders. These face-to-face meetings helped homeowners secure loan modifications and other restructuring agreements that will keep them in their homes. The Administration will host workshops in Worcester on July 16th and in Lawrence on July 17th. For more information, please visit www.mass.gov/foreclosure.
The Administration has also been implementing key provisions of Chapter 206, An Act to Preserve Homeownership, a new law the Governor signed in November 2007. The statute requires a foreclosing lender to provide notice of a mortgage delinquency to a borrower, and then provide 90 days for the homeowner to resolve the delinquency. Homeowners were previously only entitled to 30 days notice, and the lender did not have to give the homeowner an opportunity to pay the arrearage, cure the default, and avoid foreclosure. The Governor and Attorney General Coakley have both urged lenders to use this time period to restructure more loans and avoid unnecessary foreclosures.
The Governor has also directed the Division of Banks to promulgate regulations that evaluate all state licensed mortgage lenders on the number of loan modifications they complete for delinquent borrowers. This first in the nation action builds on the extension of the Community Reinvestment Act to non-bank mortgage lenders called for by Chapter 206 and puts additional pressure on lenders to make loan terms more affordable for the state’s homeowners.