A foreclosure relief program touted as a national model for keeping families in their homes is taking applications from New Jersey homeowners with underwater mortgages.
Called the Stabilizing Urban Neighborhoods (SUN) Initiative and run by Massachusetts-based nonprofit Boston Community Capital the program buys troubled homes from banks at current distressed market value to re-sell to homeowners at a fair market price.
Property owners witness average principal and monthly payment reduction of 40-percent.
As a result families receive an affordable 30-year fixed-rate mortgage from the nonprofit that they can afford. The program requires a family to submit to an underwriting process just as if they were freshly purchasing a home, put in a $5,000 down payment at closing, and receive a mortgage that comes with a 6.3-percent interest rate.
“Far too many homeowners remain underwater and at great risk of foreclosure. Often entire neighborhoods have never recovered from the artificial inflation of their housing prices,” head of the nonprofit Elyse Cherry said. “We see that clearly in New Jersey, where the foreclosure rate is more than double than the national average.”
New Jersey has the highest foreclosure rate in the country with foreclosure filing listed on one out of every 171 housing units, according to RealtyTrac which tracks housing data.
The program funded through foundations and private investors kept 600 families in their homes in Massachusetts, Maryland, Rhode Island, and Illinois. It expects to build on those successes in New Jersey.
SUN Initiative provided $94 million in mortgage financing for 460 properties. Nearly all of the families helped by the initiative pay on time.
Cherry said borrowers are encouraged to improve their credits and refinance for lower interest rates. The nonprofit guards against fraud and speculation by instituting a shared appreciation program that entitles Boston Community Capital to a portion of the value if a home appreciates over time. The proceeds are reinvested into the communities the nonprofit serves.
“Our track record shows that the SUN program can make a meaningful difference in communities where new solutions are badly needed,” Cherry said at the Housing and Community Development Network of New Jersey’s 2015 Conference & Meeting in East Windsor on Tuesday. “And we’ve proven that many struggling homeowners are ready and able to be good solid borrowers, if they have a mortgage that makes sense.”
The program is open to all New Jersey families, but is particularly targeting urban cities like Plainfield, Elizabeth, and Paterson.
In Paterson 1 in every 263 housing unit is in foreclosure, according to RealtyTrac.
“Unfortunately, the state of New Jersey and our city have been affected greatly by the foreclosure crisis,” said Mayor Jose ‘Joey’ Torres. “It is imperative that we help homeowners and working families not lose their hard earned investment. The SUN program offers an opportunity for many to stay in their homes, and we encourage residents facing difficulties to look into it.”
The hardest hit neighborhoods in the city are the Hillcrest and the Totowa sections in the 2nd Ward, according to RealtyTrac.
“People are thinking foreclosure is happening in the other side of town but it’s happening in the Hillcrest,” said Mohammed Akhtaruzzaman, 2nd Ward councilman.
Torres resides in the Hillcrest section.
“We need it desperately,” said Akhtaruzzaman of the foreclosure relief program.
Families interested in learning more about the SUN Initiative in New Jersey can dial toll-free at 855-604-HOME (4663), via email at email@example.com, or on the web at http://www.bostoncommunitycapital.org/foreclosure-relief.
Jayed Rahman contributed to this report.