Early nineties: Boston began closely tracking foreclosure activity in the city after the foreclosure boom in 1992. Anticipating a new foreclosure problem with the rise of subprime lending, the City saw the earliest signs of the coming storm with a sharp rise in foreclosures at the end of 2005. This enabled the City to take action in 2006 and ramp up its foreclosure intervention services almost a year before the issue began claiming headlines in early 2007.

1996: The Boston Home Center opened, offering financial and educational services to help more Bostonians buy their first home and become successful homeowners. A key part of the Center’s services is educating would-be homeowners on finding fair and affordable financing for their first home purchase. Since 1996, Over 20,000 would-be homebuyers have been educated through the Home Center. Of the 4,400 homebuyers that received financial assistance from the City; their foreclosure rate to date is only 0.7% -- less than one-third the rate in the overall market.

1999: The Don’t Borrow Trouble campaign was launched in recognition of the perils of the growing subprime and predatory lending industry, warning the public about the hidden dangers of many of the new loan products being pushed on consumers. The City, with support from Freddie Mac, created television public service announcements, billboards, bus shelter and transit ads to advise consumers to think twice before accepting a too-good-to-be-true mortgage offer.

2004: The City enhanced the Home Center’s educational services by entering into a new partnership with Freddie Mac, to create a new program called Credit Smart. Residents were now able to take advantage of expanded financial educational services beyond the previous home-buying process.

2006: Mayor Menino gathered together major Boston banks to develop strategies to combat the coming foreclosure boom, from which the First Choice Lenders program ultimately evolved. Participating Boston Banks agreed to 1) adhere to model loan origination and foreclosure prevention business practices, 2) help refinance people out of bad loans and 3) provide financial backing to the Foreclosure Prevention Fund that supports foreclosure prevention counseling and financial assistance.

Boston expanded its in-house foreclosure intervention counseling capacity and established its foreclosure call center (617.635.HOME) to help homeowners in foreclosure trouble. In late 2006 four community-based agencies were selected to provide expanded foreclosure intervention counseling and received training from experts in the field such as the National Consumer Law Center and NeighborWorks America.

2007: 617.635.HOME began working in conjunction with the newly established Foreclosure Prevention Counseling Network including, Esac, Urban Edge, Nuestra Communidad, and the Mattapan Family Service Center, significantly enhancing the City’s capability to help homeowners avert foreclosure.  In addition to being able to route callers to the most appropriate service, a network client-tracking and information system was put in place to enable the Home Center to keep track of all of its referrals as they progress through the foreclosure intervention process.

Mayor Menino, with the support of Boston’s Legislative Delegation, filed State legislation to 1) require truthful labeling in all mortgage offers and advertising, 2) require licensing of mortgage originators, and 3) establish a statewide foreclosure prevention counseling network and a 60-day foreclosure freeze for homeowners signed up with one of these agencies. By the end of 2007, all three elements were largely enacted either through regulation or through the anti-foreclosure law signed by the Governor in October 2007. 

Expanded educational services were put in place including Meet The Lenders workshops to help homeowners and homebuyers connect with First Choice Lenders.

At the year’s close, 200 homeowners had averted foreclosure with assistance from the Home Center and the Foreclosure Prevention Counseling Network, preserving more than $64 million in home values throughout Boston.  (Without the assistance of the Home Center, Boston’s 2007 foreclosure rate would have been nearly 30% higher than it actually was.) What’s more, over $3 million in refinance loans have been issued by First Choice Lenders to get homeowners out of bad loans.

2008 - and ahead: In early 2008, Boston expanded the Counseling Network by adding ACORN Housing Corporation and began a new partnership with the Real Estate Bar Association to provide free legal assistance to moderate and middle-income homeowners. The City of Boston’s Rental Housing Resource Center began reaching out to tenants in properties that are in foreclosure to help them keep their apartments.

As Boston’s expertise in foreclosure intervention expands, Mayor Menino continues to add to the Foreclosure Prevention Initiative. Two new seminar programs “Can You Really Afford “That” Mortgage?” and “What Homeowners Need To Know About Foreclosures, Before It’s Too Late” are now being offered to residents. These seminars are being directly marketed to homeowners whom have recently taken loans from lenders known to the City to specialize in risky loans. New education and outreach efforts include a doorknocker campaign in communities with high foreclosure rates and outreach through community health centers.

In March of 2008, Mayor Menino organized a Servicers Workshop where several of the largest loan servicers met with homeowners face-to-face to discuss their options for getting a more affordable loan. 135 homeowners participated.

In April of 2008, the Boston Home Center was awarded $224,000 from the State to support an expansion of its Foreclosure Prevention Counseling Network and funded Codman Square NDC and Dorchester Bay EDC to provide expanded foreclosure prevention counseling services in the areas of the city where there are the highest concentrations of foreclosures. 

A new financial product is planned for later in 2008 that should enhance the ability of the Foreclosure Prevention Counseling Network to achieve positive outcomes for their clients. Homeowners that might otherwise qualify for a more affordable refinance loan or a loan modification are frequently thwarted because they have spent down all their savings trying to keep on top of their mortgage and don’t have the cash needed to get the new loan. The City’s Affordable Mortgage Assistance Loan will provide a subordinate deferred loan of up to $5,000 to bridge this gap.

Foreclosed Property Reclamation

Despite the City’s efforts, not all foreclosures can be prevented. Only about half of foreclosures in Boston are on owner occupants, with the other half on investor-owners, many of whom are investors caught at the end of the property-flipping boom. These properties end up in the hands of the servicers for the foreclosing lenders. Usually, these properties are emptied of their tenants and can remain vacant for many months as the lender prepares to sell the property. As of May 2008, there were 794 of these properties representing almost 1,500 units of housing in Boston. About 30% of those properties were either abandoned or showing signs of significant neglect. In April 2008, the Boston City Council passed a new Ordinance that requires these servicers to register with the City, so that the City can locate the responsible party when their property not properly managed.

Recognizing the devastating impact that concentrations of foreclosed and neglected properties were beginning to have on some communities, in February 2008, Mayor Menino organized the Foreclosure Intervention Team (“FIT”) to deliver coordinated and focused City attention on areas most heavily impacted by foreclosures. The first of these areas was the Hendry Street area of Dorchester. These services included: increased police activity, street improvements, new street trees, stepped up code enforcement, graffiti removal, acquisition of foreclosed properties and targeted assistance to existing homeowners. As of June 2008, four properties with 12 units were under City control and four developers had submitted proposals to renovate the properties and return them to homeownership. Another foreclosed property was purchased by a homebuyer that is now working with the City to undertake the necessary renovations. Another distressed property has been put under a court-ordered receivership. Over 70 homeowners in the area participated in a homeowner’s workshop, many of whom are now following through with City assistance for home repairs and deleading.

In May of 2008, two new FIT areas were designated by the City: the Dacia-Quincy Street area and the Langdon-Clarence Street area, both in Roxbury.

For the 70% of the lender-owned properties that were in fair-to-good condition, these properties represent a real opportunity for new homebuyers. To promote the purchase of these properties by owner-occupants and not speculators, the City sponsored a trolley tour of available properties at the end of May 2008, and is sponsoring a workshop program to educate would-be homebuyers about the benefits and the risks of buying a foreclosed home.

For more information: Contact the Boston Home Center at 617.635.HOME (4663) or e-mail HomeCenter.DND@cityofboston.gov.

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