It’s obvious it would be a bad idea to offer principal reduction through government programs, or through the GSEs – homeowners would default intentionally to qualify and the owners of those mortgages would be in effect subject to uncompensated takings.
But a Boston non-profit has another approach, and they say it’s fighting blight without involving anyone who doesn’t want to be involved, the Washington Post reports.
The nonprofit group Boston Community Capital buys homes in Massachusetts, Maryland and Rhode Island that are in foreclosure or close to it, and then resells or rents them to the former owners at a price that reflects the property’s current market value. Some housing experts say the group's initiative — known as Stabilizing Urban Neighborhoods (SUN) — offers an interesting model for buy-back programs. Massachusetts Attorney General Martha Coakley has singled it out as a way to address blight in hard-hit neighborhoods.
The initiative has kept about 500 families in their homes since its launch in 2010, said Elyse Cherry, the group’s chief executive. It has foreclosed on three homes since then, and it's default rate is below the national average at under 5 percent, Cherry said. Borrowers who are late on their mortgage payments due to hardship or in some stage of foreclosure are eligible to apply if they have a steady income. The program generally reaches out only to people who are in their homes, and works to keep them there.