In what officials are calling a “first of its kind” program, the city of New York announced Thursday that it is plans to buy a number of delinquent loans from the Federal Housing Administration as part of an effort to keep struggling homeowners from losing their homes to foreclosure.
According to the office of New York Mayor Bill de Blasio, the “Community Restoration Program” will see the city purchase 24 distressed mortgages for one- to four-family homes – with a total of 41 residential units – in the Bronx, Brooklyn, Queens, and Staten Island.
The goal of the program? According to de Blasio’s office, the program is designed to stabilize neighborhoods that are not yet recovered from housing crisis.
And what makes this program unique, according to de Blasio’s office, is that marks “one of the first times” that a municipality buys distressed Federal Housing Administration mortgages that would otherwise have been sold at auction to the highest bidder.
“We are fighting to help homeowners stay in the neighborhoods they helped build. And we won’t let predators force them out,” said Mayor Bill de Blasio. “The Community Restoration Program is the first of its kind, and it puts government squarely on the side of struggling families so they can keep their homes.”
The program will cost $13 million, which is being funded by a combination of several sources.
According to de Blasio’s office, the $13 million program is being funded with $1 million in seed money allocated by the New York City Council, $6.9 million in private financing from Goldman Sachs’ Urban Investment Group, and a $2.2 million grant from the Local Initiatives Support Corporation, a major national affordable housing group, that was funded by a bank settlement obtained by the New York State Attorney General.
The program will also be funded by $2.9 million received from Morgan Stanley as part of their $3.2 billion settlement for “deceptive” mortgage bond practices, which was announced in February.
According to de Blasio’s office, after purchasing the mortgages, the non-profit partner organizations will do “active outreach” and work one-on-one with homeowners, providing counseling and identifying potential solutions to keep current homeowners in their home.
The primary goal is home retention through mortgage modification or refinancing, de Blasio’s office said. “When neither is feasible, for example if a home has been abandoned or a homeowner is not eligible for a modified loan, the fund will work to ensure that the homes are repositioned as affordable homeownership or rental housing opportunities,” de Blasio’s office added.
“With this program, New York continues to lead the path forward in our collective efforts to rebound from the depths of the foreclosure crisis,” Schneiderman said.
“It’s one more tool in the City’s and State’s arsenal for preserving affordable housing and helping homeowners still reeling from the housing crash,” Schneiderman continued.