Federal Funds Add to New Bedford Efforts to Fight Foreclosures
FORECLOSURE
The New Bedford Standard-Times
Courtney Hime
Boston University Washington News Service
October 8, 2008
WASHINGTON – Two new federal foreclosure relief programs will help New Bedford’s efforts to deal with the home mortgage crisis.
The U.S. Department of Housing and Urban Development on Sept. 26 allocated $3.92 billion for its Neighborhood Stabilization Program. Five days later, HUD kicked off the Hope for Homeowners program. Both programs aim to alleviate the problems of foreclosures.
Patrick Sullivan, director of the New Bedford Office of Housing and Community Development, said the federal programs will provide resources to continue local efforts and initiatives already in place to fight foreclosures in the New Bedford area.
Foreclosure prevention efforts
The Hope for Homeowners program is a three-year initiative that will allow qualifying homeowners to refinance their mortgages. The new loan, insured by the Federal Housing Administration, would be for 30 years at a fixed rate.
The program aims to prevent foreclosure on up to 400,000 homes nationally over the next three years. Kristine Foye, spokeswoman for the New England region of HUD, said via e-mail that the success of the program depends largely on communication between lenders and borrowers.
Initiatives are already in place in New Bedford to collaborate with lenders, Sullivan said. Along with Fall River, the city began working with lenders two years ago to prevent foreclosures.
“We’ve been a little bit proactive on the local level working with these community banks,” he said. “We’ve formed a nice little collaboration with local lenders [and with] non-profits [on] the prevention side and educating everyone about what’s out there for assistance.”
Still, more work is needed beyond the local level, Sullivan said. Local banks, he said, do not hold a lot of properties facing foreclosure, so working with larger, national banks would be a necessary step.
“That will be a challenge for us to kind of reach out and work with those banks that are not local in trying to implement this new mechanism,” he said.
Sullivan said he hopes the Hope for Homeowners program would help overcome that challenge to allow banks to negotiate for a lower mortgage to help people remain in their homes.
“That’s something that’s beyond the control of local governments,” Sullivan said.
New Bedford Mayor Scott Lang said he believes the program would offer another tool for foreclosure assistance.
“It gives us the ability to rework these mortgages, provided that the lenders are in agreement with that type of approach,” he said. “I would think most lenders would be from the standpoint that they don’t want to end up with a vacant piece of property.”
Nationwide, 50 lenders had signed up for the program as of Wednesday, according to Lemar Wooley, spokesperson for HUD. As far as Sullivan knew, no local banks had signed up for the program.
Aftermath of foreclosures
The Neighborhood Stabilization Program is targeted at acquiring and redeveloping foreclosed homes. HUD allocated $54.8 million for Massachusetts, including $4.2 for Boston, $2.2 million for Brockton, $2.6 for Springfield and $2.44 for Worcester. The remaining $43.4 million will be divided among the rest of the state.
Sullivan said he had hoped his office would receive a direct allocation from HUD instead of vying for its share of the $43 million. As part of the preparation, Sullivan said, 25 properties were located that could be acquired quickly and turned around to be sold as rental properties or even homes for first-time buyers.
“We’ve been anticipatory of this funding and have put some things in place to help us be prepared to spend some of that money,” Sullivan said.
He said his office would be working closely with the state Department of Housing and Community Development “to ensure that we get some direct money.”
Phil Hailer, a spokesman for the state agency, said it is unclear how the funds will be divided. The state must submit an action plan to HUD by Dec. 1 explaining how the funds will be distributed, he said.
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