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Nonprofit Advocacy Groups Help Homeowners Repurchase Foreclosed Homes

March 29, 2010

As Chino loan modification attorneys, we are always interested to read about help for homeowners that end-runs around banks' clear reluctance to grant loan modifications. So we enjoyed reading a March 21 article in the New York Times about a group of nonprofits in Boston who are doing just that. A nonprofit community development financer named Boston Community Capital has teamed with a real estate law clinic at Harvard Law School and a housing advocacy group called City Life/Vida Urbana. Together, they're buying foreclosed homes after the foreclosure is final, then selling or renting the home back to the original homeowner at market rate, which is usually much lower than the homeowner's previous mortgage.

The partnership has completed or almost completed about 50 deals on homes in greater Boston since last fall, when the program began. Another 20 are in the works. Boston Community Capital is the financing arm; it buys the foreclosed homes with borrowed money and also writes new mortgages when it sells the homes back to former owners. When homeowners receive a foreclosure notice, students from the Harvard Legal Aid Bureau defend them legally, using litigation and the legal process for eviction to slow down the foreclosure process. This is intended to pressure banks to sell to BCC rather than evict the homeowners. City Life puts further pressure on the banks through public demonstrations, educates homeowners and puts them in touch with Harvard and BCC. BCC typically pays market value for the home and sells it to the homeowner for slightly more, allowing it to make a small profit while dramatically lowering the homeowner's costs.

Our Los Angeles County loan modification lawyers are impressed by this innovative approach to keeping homeowners in their homes. In most ways, the plan has the effect of a loan modification that drastically drops the loan principal to market value, but without the endless waiting and runaround that most homeowners experience from their banks. The perceived or actual risks of a loan modification are transferred from lenders to BCC. Homeowners still have a foreclosure on their credit records, which is very bad for their credit -- but the BCC underwriters overlook this, eliminating a major hurdle for most foreclosed people who want to be homeowners again. The program also benefits the larger community by eliminating vacancies that attract crime and drive down property values. And unlike federal programs, it uses no tax money. We would be delighted to see similar programs appear here in hard-hit southern California.

Unfortunately, without the help of a nonprofit partnership like this, Californians still must rely on their lenders or loan servicers to offer fair and sensible loan modifications. Howard Law PC represents clients who need legal help convincing a lender to do this. Our Brea loan modification attorneys prefer to resolve cases out of court whenever possible, using negotiations and the facts to convince lenders that a loan workout makes more sense for them than yet another foreclosure. But whenever necessary, we can and will drive that point home with litigation against lenders who have broken the law or negligently failed to deal with our clients in good faith. Our goal is always to keep our clients in their homes at a reduced monthly mortgage payment, whether that means a lower interest rate or another change to loan structure.

If you've become frustrated by endless delays, miscommunications and bureaucratic screw-ups, Howard Law can help. To learn more at a free consultation, please contact us through our site or call 1-800-872-5925 today.