$40 Million To Help Homeowners. Only Thing Missing: Homeowners
The idea is to avoid this. Marcio Jose Sanchez/AP hide caption
A Boston nonprofit wants to help homeowners who are in foreclosure stay in their homes.
The strategy: Buy houses in foreclosure at a steep discount, and give the homeowners a new, smaller mortgage that they can afford.
The nonprofit, Boston Community Capital, thought raising the money to buy the houses would be the tough part. Turns out, that was the easy part. The tough part was convincing homeowners that this wasn't one more foreclosure scam.
The group has raised more than $40 million for its Stabilizing Urban Neighborhoods program. And the banks are glad to sell to BCC, because it pays cash and buys houses fair-market value, the CEO, Elyse Cherry, told me.
But the group is spending only half as much as it hoped -- $1.4 million per month, instead of $3 million-- to buy houses out of foreclosure, according to Cherry.
"The biggest difficulty has really been pulling enough people in who are appropriate candidates for this program," Cherry told me. "The money came in. The outreach has really been a challenge."
Once your home goes into foreclosure, it's listed in public records. You start hearing from lots of people who say they want to help you.
One family in foreclosure had paid more than $8,000 to people who promised to help them with foreclosure, then didn't, Cherry said.
What's more, people in foreclosure often have a long history of bad experiences with the finance world, according to the CEO of Opportunity Finance Network, a national network of organizations like Boston Community Capital.
"These people have been sold a lot of bad products for a very long time," Mark Pinsky, the CEO, told me. "At some point, you're just not going to trust anybody."