Massachusetts bankruptcy clients often ask us if we can help them to get a lender to refinance their homes. They say that if they can discharge their credit card debts, and refinance their mortgages, they would be fine, financially. We can get most folks a bankruptcy discharge, however, we can’t usually help with refinancing; that’s up to their current lender, or finding a new lender. Of course, going through a Massachusetts bankruptcy and refinancing is not easy to do anymore. Except if you can find a program like SUN.
The Stabilizing Urban Neighborhoods, or SUN program, has now been around for enough time for an initial evaluation. What is it and how does it work? The goal is to help Massachusetts’s consumers who live in their own homes but are behind on their mortgages and are being foreclosed on by their lenders. They focus only on folks who have a stable monthly income and are unable to make the required monthly mortgage payments. The income can be from a pension, Social Security, worker’s comp or disability insurance. The income can be from more than one person.
SUN is a program based out of the Boston Community Capital, a 25 year old organization and its Community Development Financial Institution, which makes loans to affordable housing developers, charter schools, Head Start, and other urban programs throughout the country. Located in Roxbury, the SUN program claims to have helped 125 families stay in their homes following foreclosure. Their funding comes from borrowing from individuals who get a tax break because of the type of loans they are, or from foundations committed to helping individuals stay in their homes. All of the funding SUN receives is from loans; thus, the money paid by homeowners, in mortgage payments, is repaying those loans.
Their requirements to apply are simple: the paperwork includes copies of mortgage statements, paystubs, bank statements and tax returns. They also need information regarding credit cards and outstanding loans. They claim that a low credit score is not an impediment to qualifying for the program.
SUN will buy homes in short sales or help with refinancing the mortgage with the current or subsequent lending institution. If they buy the home in a short sale, they will sell it back to you with a new, affordable mortgage plan.
Bank of America is contributing to the SUN program. Why? If they can clear out mortgages that are unlikely to be repaid, they are helping their bottom line. Banks are generally losing money on foreclosures. This is because of the loss of income from the mortgages for a period of time, legal fees, court fees, and damages to homes reducing the value. A program keeping the current owner in the home, and refinancing through SUN enables BOA and other lenders to close out the “bad” mortgages and move on.
Many of our Massachusetts bankruptcy clients would benefit from the SUN or other similar programs. All too often we hear that our clients have enough money to pay the mortgage if only the interest rate was more reasonable. The banks typically don’t have a “program” to enable the current owner to refinance if they don’t meet the new, stringent, financial conditions; and, conversely, the owners don’t have the credit rating they now need. It’s a new world and the SUN program seems ideal to address it.
Call Neil Burns, a Boston bankruptcy lawyer with over 25 years of experience for a free consultation.