Boston Community Capital’s staff pride themselves on looking around the corner—that is, on paying close attention to emerging trends and how they might impact communities. Back in 2006 and 2007, the particular corner they looked around was the mortgage market, and they couldn’t quite believe what they were seeing. “We were looking at rising home prices in the neighborhoods and did not understand how those prices could be sustainable over time,” says Elyse Cherry, the organization’s CEO. “We saw income levels in the neighborhoods that were roughly flat. Meanwhile home prices were rising dramatically. We knew we had a problem coming.”
The problem did come, of course, and as the foreclosure crisis deepened, BCC took action. A highly effective community lender since its founding in 1985, the organization decided to start a mortgage brokerage company. Their idea was to refinance people into better mortgages, but they soon discovered that the people they wanted to help owed so much more on their mortgages than their homes were worth that they could not be refinanced.
Undeterred, BCC became a licensed mortgage lender and launched a new initiative called Stabilizing Urban Neighborhoods (SUN) to help homeowners struggling with their mortgages to stay in their homes.
The basic strategy is simple but innovative. BCC buys—at deeply discounted prices—the homes of people who are in foreclosure and facing eviction, then sells the homes back to them, providing a new mortgage that is properly underwritten and affordable.
Since launching the SUN Initiative in early 2010, BCC has provided $9.9 million in mortgage financing and enabled 90 families facing eviction to remain in their homes. On average, the new mortgages have reduced homeowners’ monthly mortgage payments by 46%. There has not been a single delinquency.
Currently, the SUN Initiative is limited to selected low-income neighborhoods of Boston and Revere. However, BCC plans to use the Wachovia Wells Fargo NEXT Award for Opportunity Finance to expand the program to other communities in Massachusetts.
Looking around yet another corner, Elyse Cherry can see important things ahead. “Today we’re trying to be a mortgage lender to folks in foreclosure, but it’s hard to imagine why we or some similar organization can’t become the go-to lender for everybody in the community,” she says. “The key is that we don’t want to simply fix things for the moment and then have the next round of predatory lenders come in. There is clearly an opportunity for Boston Community Capital and other CDFIs to take a much more significant role in the lending market. To us, it’s not just an opportunity; it’s an obligation.”
