Boston Community Capital secured a $25 million investment from East Boston Savings to fund a program for distressed homeowners.
The nonprofit community development firm said East Boston Savings' investment is backed by revenue from a pool of mortgages tied to the Boston Community Capital's Stabilizing Urban Neighborhoods program.
The SUN initiative offers borrowers facing foreclosure a chance to save their properties by acquiring the distressed real estate and giving the original homeowner a chance to buy back their property with a new mortgage featuring lower monthly payments.
In exchange for its investment, East Boston Savings Bank will receive streams of revenue from 30-year, fixed-rate mortgages developed for previously troubled borrowers.
"Our model works, and our transaction with East Boston will help us expand the SUN Initiative here in Massachusetts and beyond, potentially keeping thousands of families in their homes," said Boston Community Capital CEO Elyse Cherry.
"What’s innovative here is that we’ve taken a transaction that is routine in the residential mortgage market but applied it to a new group of borrowers – those who were facing foreclosure. This new infusion of capital proves financial institutions can invest with confidence and be part of a nationally scalable, sustainable solution to the mortgage crisis that keeps defaulting and foreclosed homeowners in their homes as productive members of their communities."