SUN Initiative- Foreclosure Intervention

SUN Initiative – Foreclosure Intervention

Partners Community Benefits Program, along with Partners EAP recently hosted a presentation by this organization.

The SUN Initiative (Stabilizing Urban Neighborhoods), a program run by non-profit organization Boston Community Capital, helps homeowners and tenants facing eviction due to foreclosure remain in their homes with mortgages they can afford. Since its launch in late 2009, SUN has helped over 125 Massachusetts residents repurchase their homes, reducing average monthly housing payments from $3300 to $1700. By preventing the displacement of homeowners and tenants, SUN helps prevent the neighborhood destabilization caused by vacant and abandoned properties.

SUN works with individuals to purchase their homes through short sales, from banks following foreclosure, or at foreclosure auctions. The program works with banks or attorneys to stop the eviction process, purchase foreclosed properties at current market values, and resell those properties to their current occupants at a significant discount of the prior mortgage value. SUN provides foreclosed homeowners with a new 30-year, fixed rate mortgage at approximately 6.25% interest rate (Annual Percentage Rate of approximately 6.385%). A bi-weekly payment plan helps homeowners build up reserves that can be used to pay down the mortgage principal and reduce the length of the loan, or to pay for necessary repairs. The program also has safeguards to prevent against predatory lenders convincing homeowners to refinance at unfavorable terms.

SUN is a program of Boston Community Capital, a non-profit organization that invests in communities – financing affordable housing, child care facilities, schools, community health centers and community programs. The program’s funding comes primarily from individual investors and foundations interested in helping stabilize individuals, families and neighborhoods hard hit by the foreclosure crisis. The program also has funding from the U.S. Department of Treasury’s CDFI Fund and the Massachusetts Department of Housing and Community Development.

Eligibility

You may be eligible for SUN if

you are late on your mortgage, going through foreclosure or facing eviction due to foreclosure

you have a steady income from employment or another source – such as Social Security Insurance, a pension or disability insurance, or from a friend/family member who lives with you and is willing to apply for the program; and

you are a Massachusetts resident.

Those with poor credit history or who have filed for bankruptcy may be eligible and are encouraged to apply; so are individuals who have been turned down for participation in the federal mortgage modification programs. SUN is different from federal mortgage modification programs because it often reduces the principal balance of the mortgage. The federal mortgage modification programs typically help homeowners reduce their monthly payments by lowering the interest rate and extending the term of the loan, for example from 30 to 40 years.

More About the Program

There are safeguards in place to prevent the SUN initiative from being used for profiteering such as house “flipping”. For example, if the homeowner resells the house and realizes a profit based on the reduced price that they obtained through SUN, SUN has the right to a percentage of the profits equal to the amount by which their original mortgage was reduced. For example, if the original mortgage amount was $300,000 and the new SUN mortgage is $150,000, when the homeowner sells, SUN has the right to 50% of the profits. So if the borrower sells for $200,000, the profit is $50,000, and SUN and the homeowner would each be entitled to receive half of that amount ($25,000).

After SUN negotiates a price with the mortgage holder, they add 25% to the price that they then sell the home back to the homeowner. These funds are part of a “loan loss reserve” to protect their investors. For borrowers at certain income levels, SUN is able to waive this requirement, funding the reserves through grant funding.

The application process typically takes 2-3 weeks. The process involves an application, appraisal of the home, inspection of the home and approval of the mortgage holder. Typically the longest part of the process is getting approval from the banks/mortgage holders, which can take as little as a month, but often takes 3-6 months and can take a year or more. Homeowners can do their part to speed the process by submitting all paperwork in a timely manner.

They have staff members who speak Spanish, Haitian Creole, Portuguese and Korean, but they’ll work with clients who speak any language.

For more information

For more information on the SUN Initiative or to determine if you or someone you know may be eligible, contact Boston Community Capital’s office at (617) 933-5880, via email at info@sunhomehelp.org or on the web at www.sunhomehelp.org. SUN is an equal housing opportunity lender.

Learn more about SUN at: http://www.reverejournal.com/2011/03/30/sun-rising-program-povides-dynamic-assistance-to-homeowners-in-crisis/ .

-Thanks to Kim Simonian, and Alison Goodwin for arranging the SUN presentation at MGH, and Lesley Salado and especially Jessica Brooks from SUN for their help with this article.

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