Lydia Smith takes great pride in her Hyde Park home, especially after she was very close to losing it.
“My husband lost one of his jobs, so he fell back on the mortgage and we were trying to get a modification, and they kept telling us to send in a different document. We were sending in documents over and over,” she said.
Unfortunately, thousands in Massachusetts are in Lydia’s situation, underwater in their homes, with mortgages for far more than what the home is now worth. Most think foreclosure is the only option, but a local program is hoping change all that.
After spending 27 years lending to community groups and developers of affordable housing, non-profit Boston Community Capital decided to do something about the many people losing their homes. They raised money and through donations from foundations and individuals, got into the mortgage business.
“The fundamental difference is we are trying to keep people in their homes as opposed to dealing with homes once they’ve become vacant,” said Boston Community Capitol CEO Elyse Cherry. She said they came up with a first in the nation program to actually buy back foreclosed homes from the bank and sell them back to the original owner, at a fair price.
For instance: Lydia’s original mortgage was for $329,000. At the time of foreclosure, it was valued at $208,000
B.C.C. negotiated to buy the home from the bank for $165,932. Lydia bought back the home for $214,400 allowing for loan loss reserves, and any repairs the property needed. Lydia’s monthly payment went from $2,550 to $1,685 a month.
“We can work with homeowners at all stages of the foreclosure process. Sometimes we work with the post-foreclosure but pre-eviction. Sometimes we work with them pre-foreclosure in a short sale setting. We can even buy the promissory note if we can get somebody to sell that to us. From the homeowner perspective, they need to have enough stable income to be able to support a mortgage at current market prices,” Cherry said.
But BCC isn’t always able to strike a deal. Some lenders reject the offer because BCC wants to sell back to the original owner. “They’re afraid it provides a benefit to the defaulting homeowner, from our perspective, and we don’t think that anyone is better served by letting these homes go vacant,” Cherry said.
Back in Hyde Park, it has been a year since Lydia Smith bought her home back. “We caught up with our lights, our gas, our mortgage. We’re able to keep up with now.”