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Program aims to sell homes back to those going through foreclosure

Data compiled from dllr.state.md.us
Data compiled from dllr.state.md.us (Carroll County Times)

Maryland residents will soon have the help of a nonprofit to help buy back their home from foreclosure.
Friday, an organization called Boston Community Capital announced it would expand its stabilizing urban neighborhoods program to Maryland. To be clear though, the stabilizing urban neighborhoods initiative isn't based on solely urban areas, Elyse Cherry, the CEO of Boston Community Capital, said.
It can apply to any Maryland home in foreclosure.
Residents must qualify for the program by fulfilling three requirements: They must currently live in Maryland, have a steady income - whether that's through Social Security insurance, a pension, disability insurance or employment - and be involved in a foreclosure.
According to RealtyTrac, which keeps records of foreclosures, there are currently 314 homes in Carroll County in some stage of foreclosure, whether that is default, auction or currently bank owned.
Additionally, the Department of Labor, Licensing and Regulation keeps monthly records of "Intent to Foreclose," which keeps track of possible foreclosures in the state. In the most recent data available, July 2013, Carroll County just misses the top 10 counties for most homes in the state with foreclosure notices since April 2008.
An intent to foreclose notice is the first step in a foreclosure but doesn't necessarily mean the house will stay in foreclosure. Homeowners often have the option to sign up for mediation for programs like the Home Affordable Mediation Program, which helps to lower mortgage payments.
Programs like HAMP have been criticized for high default rates after a mortgage is modified. Data from the U.S. Treasury show the longer homeowners remain in HAMP, the more likely they could re-default out of the program. As of March 2013, the oldest modifications which began in 2009 are re-defaulting at a rate between 39.1 and 46.1 percent. It can leave homeowners losing the home they were trying to save in the first place.
As of July 2013, Carroll County has had 13,918 intent to foreclose notices since April 2008, which ranks 11th highest among the state's counties. Since 2008, the state has had 690,686 intent to foreclose notices. Topping the list is Prince George's County, with 168,076 notices through July 2013.
Boston Community Capital will buy the home and sell it back to the owner at fair market value, which often reduces both the principal reduction and monthly reductions by 40 percent on average, Cherry said. Most homes that are underwater on mortgages were purchased during the housing bubble, which means the current market value is much lower. Selling the property back lowers the overall monthly payments and principal on the loan.
"We recognize that people will have credit scores that are terrible," she said. 'We don't mind that they've been in bankruptcy. We don't mind that they've been unemployed."
The nonprofit began by borrowing money largely from foundations and private investors, but recently it has adopted a new business model.
To raise money to lend out more, the organization takes a cut of about 40 percent of the appreciation rate. That's led to $62 million in lending, with more than 425 homes saved, she said.
"Our goal is to get people as close to equity as possible," she said.
Marceline White, the executive director of the Maryland Consumer Rights Coalition, said while the project is great, it should not replace government programs intended to help people get their homes out of foreclosure.
The Maryland Consumer Rights Coalition releases a quarterly report on how big banks have handled the National Mortgage Settlement. The settlement is the result of the five largest mortgage services engaging in foreclosure practices such as robo-signing, which creates foreclosure documents without verifying their accuracy.
Wells Fargo, Bank of America, Citigroup, JPMorgan Chase and Ally Financial entered a settlement last year with 49 states and the federal government to give $25 billion to consumers.
In May, the Maryland Consumer Rights Coalition looked at data that noted most of the money paid out to those who were wronged in the foreclosure process did not help to reduce principal reductions.
Of the 16,627 Maryland consumers helped up to March 2013, the most recent data available for the National Mortgage Settlement, most homes have been short sold or banks have forgiven second loans.
"It's a little too little to really be a help to homeowners," White said.
White said she'd prefer to see the banks take the model of what Boston Community Capital has done.
"It should be complementing what the banks are doing and not taking the place of what the five banks are required to do," she said.
She said an ultimate solution would be to fix problems in programs like the Home Affordable Modification Program, or to hold policy makers accountable, because many people in Maryland are still facing foreclosure.
Cherry, of Boston Community Capital, said any project that helps consumers stay in their home is helpful.
"Our goal is to work with people who are eager to keep their homes," she said. "It's not a handout. It's really a partnership."

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