ADDRESSING THE FORECLOSURE CRISIS | FINACIAL FITNESS SERVICESS | SUPPORTING HOMEOWNERSHIP DEVELOPMENT
Preserving Assets and Wealth
Addressing the Foreclosure Crisis
Foreclosure prevention counseling continued to be the central focus of our Economic Development work this past year. Almost 200 people were served. Approximately 50 homeowners were saved from foreclosure, primarily by negotiating a modification of their loan. Too many people continue to be in jeopardy of losing their homes due to rate resets on their mortgage loans, loss of jobs, unscrupulous lending practices, and other issues.
We expect to serve more people in the coming year for two reasons; the moratorium period that some banks had put in place for foreclosures, recently expired. Given recent incentives announced under the Obama Administrations’ Making Home Affordable program, we hope to see more homes saved from foreclosure and are actively seeking partnerships with banks to support them in working with delinquent homeowners, as well as those in jeopardy of becoming delinquent, under this and other programs.
Second we recently entered into an agreement to expand our foreclosure prevention services into Hyde Park and Roslindale. This is the result of a new supportive collaboration we are crafting this year, with our sister CDC Southwest Boston CDC. In 2008, there were approximately 110 foreclosures in Hyde Park and Roslindale, so foreclosure prevention services are much needed, and Codman Square NDC is pleased to partner with SWBCDC to prevent homeowners from losing their homes.
We also continued and expanded our partnerships around this work with the City of Boston and HomeFree USA, through NeighborWorks America. Our Foreclosure Counselors attended 5 foreclosure prevention workshops over the past year sponsored by our partners in which they met with over 50 homeowners. Additionally, Codman Square NDC is working to strengthen formal partnerships with local churches, to extend foreclosure prevention services to congregations, and has outreached to the Black Ministerial Alliance for these purposes.
Foreclosure Prevention Success Stories:
Client A and her husband purchased a home in 2004, at the height of the market. They worked with a subprime lender to finance their home. They were not aware that they had a 3 year fixed rate that would then adjust to an undetermined amount. When the rate adjusted, Client A had to dip into her limited savings account, each month, to pay the mortgage, and other monthly bills. She wrote to her subprime lender asking for a modification, but kept getting the run around. With the help of Veronica Truell, Codman Square NDC’s Community Mortgage Lender, she was able to do a joint conference call with the lender and submit all needed paperwork for a loan modification.
Her mortgage loan rate was subsequently reduced from 7.5% to 5.5%. She credits Veronica for getting her through a very bureaucratic and stressful process with her lender. She is now able to afford the reduced payments on her mortgage.
Client B is a beautician, with her own shop. A reduction in the amount of business led to her being delinquent on her mortgage loan. She was carrying two loans with her lender, with a combined interest rate of 10.3%. While her income decreased, her expenses went up because of having to maintain upkeep of her shop, as well as her own household expenses. She worked with Codman Square NDC’s Financial Fitness Specialist, Keyna Samuel, to get a modification agreement on her loan that included a much lower interest rate. She went from a combined interest rate of 10.3% to 5.7%. She is now able to make her mortgage payments.
Financial Fitness Services
The goal of the Financial Fitness component is to help residents and businesses effectively manage their assets and wealth, no matter how limited. This is achieved via one on one budget counseling, as well as through 3-5 week group sessions. The group sessions use the MyMoney curriculum developed by the FDIC and endorsed by NeighborWorks America. Topics include: basic budgeting, managing and repairing credit, saving for financial goals, the use of insurance, etc. Experts such as local bank branch managers, facilitate the sessions. Additionally, all those receiving foreclosure prevention services are provided with one on one budget counseling. Through these means we assisted almost 350 people this past year. Over 185 of these gained financial stability as evidenced by opening bank accounts, saving at least 3 months of living expenses, reducing bad debt and establishing good credit.
Many of those served were clients that our Financial Fitness Specialist, working in conjunction with DotWell's Earned Income Tax Credit (EITC) Program, provided income tax assistance to. Through these means, one quarter of a million dollars in federal income tax return funding flowed into the community, strengthening the financial position of its recipients.
Supporting Homeownership Development
Individual Development Account Program
Last year we partnered with the Massachusetts Individual Development Account System (MIDAS) on a proposal to the Department of Housing and Community Development to garner funding for a new Individual Development Account (IDA) Program. The IDA is a wealth generation program which provides cash support to low and moderate income homeowners to assist them in achieving their goals to either own a home, start a business, or pursue higher education. Through this partnership, we were awarded four IDA "slots." We partnered with the Mt. Washington Bank to match the IDA funding received.
In keeping with our mission of supporting homeownership development, we will use the funds to help first time low/moderate income homebuyers make down payments on affordable homes, or make equity investments related to purchasing shares in limited equity housing cooperatives.
We've outreached to residents living in CSNDC-developed rental housing who are paying close to market rate rent to avail themselves of this resource. Our goal is to match these residents to homeownership and limited equity housing opportunities that CSNDC is currently developing, for example, at 157 Washington Street (see Real Estate Development section of this report for more details on that development project).
We are also pleased that one of the residents in the foreclosed property acquired this past year by Codman Square NDC, and who led her co-tenants in the fight against the lien holder to preserve their tenancies, may be able to take advantage of this IDA down payment opportunity to purchase that same property.
Pre-Homeowner Education Services
There are some silver linings to the cloudy economic environment that this country has experienced this past year, one is that it has never been a better time to buy a home. Home prices are down significantly and there a glut of relatively affordable foreclosed properties. To support first time homebuyers in taking advantage of this ripe environment, this past year, we partnered with the Department of Neighborhood Development (DND) to offer homebuyer education training, on site at Codman Square NDC. As a result, over 155 potential first time homebuyers received training certification on the home buying process. The 4-session educational series covered topics such as, financial and grant support available to first time homeowners, budgeting for homeownership, what lenders look for and how to structure a loan package, how to work with realtors and how to safeguard against property physical defects. For the first time this past year, specific training and workshops were also offered in the area of purchasing and renovating foreclosed properties. We will continue to work with DND to provide these timely and important educational services.
Know Your Home Post Purchase Training
The Know Your Home Program provides direct services to first time homeowners after they have moved into their home and have had the chance to settle in. This is a post purchase home training and education program. It is focused on new homeowners, particularly those purchasing homes developed by Codman Square NDC. Our financial fitness and asset management staff provide these new homeowners with knowledge and guidance that is tailored to specific features of their homes, as refreshers or new learning in basic homeowner issues, such as budgeting for repairs.
The goal of the program is to help homeowners get to know the operating characteristics of their homes, understand how to plan financially for the upkeep of their home, and to avoid foreclosure. We also help homeowners get to know neighborhood and their neighbors by encouraging the development of block associations. The Program has several components designed to:
- Build skills for new homeowners to better manage their biggest and most valuable asset, their homes
- Foster a sense of community by building a platform for new and current neighbors to form neighborhood or homeowners associations
This past year, the primary target population for the Know Your Home Program, were the 11 new low- to moderate-income first time homeowners who recently the newly developed Norwell Whitfield Homes in 2007.
Upon graduating from the three week training series, these new homeowners are provided with $250 checks that are intended to seed “rainy day” funds for their homes. We are proud of the 11 new homeowners who completed the program in 2009.
Rehab Lending and Lead Abatement
Codman Square NDC continues to offer low interest rehab and deleading loans to eligible owner occupants of 1 to 4 family properties. As mentioned above, a result of our new collaboration with, and in support of the Southwest Boston CDC, we will be expanding these services into Hyde Park and Roslindale this coming year.
These loan funds will support homeowners in Dorchester, Hyde Park and Roslindale in making repairs, deleading properties, or installing infrastructural improvements such as new furnaces, porches, roofs, baths, etc. In many cases, without the renovation work that these affordable low interest loans allowed for, homeowners would be unable to rent out the vacant units in their properties. The availability of this capital also helped homeowners avoid “borrowing trouble” by going to predatory and subprime lenders for capital. We expect to make about 4 such loans over the coming year.
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