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Foreclosure prevention application • Can be implemented expeditiously and within budget: Our office is currently working with 14 Northampton homeowners in arrears on their mortgage payments. With the additional targeted marketing, we could assist at least 45 LMI Northampton homeowners within the proposed 18 month period. • Community Preservation Criteria - Project Specific: The proposed Homeownership Sustainability Program meets most of the CPC's Project Evaluation Criteria as follows: • Create or preserve community housing: The Post - Purchase Program is designed to keep Northampton homeowners below 100% of area median income in their homes. We plan to achieve this goal by negotiating better loan terns for the homeowners and providing the homeowners with broader financial education as needed, as well as information and referral to other resources. • Promote and encourage use by diverse populations: Valley CDC will conduct outreach to minority and LMI communities within the City. • Promote the use of existing buildings: The program will serve Northampton homeowners in existing homes. • Give priority to Northampton residents, consistent with fair housing: We will be working with Community Legal Aid and sending loan docs to them, which we find to be in violation with fair housing laws. Sub -prime loans routinely violate RESPA, consumer laws and fair housing laws. Pro -bono and effective legal resources have been scarce throughout this crisis. As a result, there are very limited opportunities to pursue legal recourse. Only the most blatant and well - documented cases are currently pursued. • Provide services for underserved populations: The program funds will be directed only to households at or below 100% of area median income. Marketing efforts will include outreach to Community Legal Aid, Mass Justice Project, Mass Fair Housing Center, Casa Latina, Stavros, The Center for New Americans, The Northampton Council on Aging and the Northampton Senior Center. • Enhance non - profit capacity for providing housing and related services: The program funds will provide Valley CDC with the necessary funds to assist Northampton homeowners with the range of post - purchase needs they will face during the proposed 18 -month contract period. 4 levels have voiced public commitments to the goal of retaining economic diversity within the City, the difficult economy and ensuing financial pressures continue to force LMI homeowners out of the City. This program will assist some of the City's most vulnerable homeowners, who either purchased or refinanced their homes under unsustainable terms. Program funds will be leveraged to lower these households' costs of homeownership. Some program participants may be in prime loans with decent loan terms. Such households will be in arrears with their mortgage payments, due to situational events such as a reduction of income, a health event or other unforeseen expenses. • Is consistent with city -wide planning efforts that have received broad -based scrutiny Northampton Vision 2020, adopted by the Northampton Planning Board, 6/10/99 includes Goal 3 of 9 to "Enhance Residential Neighborhoods & Housing ". While Northampton is not likely to face vacant blocks of homes, scattered vacant properties in the City, due to foreclosures is highly undesirable. Scattered vacancies are directly in conflict with City planning goals. • Saves resources that would otherwise be threatened: The program will prevent some Northampton homes from becoming vacant and /or falling into disrepair due to foreclosures and /or exorbitant mortgage payments. Loan modifications, resulting in significantly lower monthly interest payments, reduce the money leaving the city for national lenders. • Serves under - served populations: LMI and minority homeowners have been disproportionately affected by this crisis, as those populations were targeted by sub -prime lenders • Receives endorsement by community groups or municipal boards: The Northampton Housing Partnership has provided support letters for similar applications. We will meet with the Northampton Housing Partnership on 9/10/12 to seek a support letter for this proposal. • Leverages additional public and /or private funds: Some homeowners will secure HAMP loan mods. Our office refers homeowners to MassSave for subsidies for insulation, air sealing, weatherization and the 0% Heat Loan. We refer homeowners to food pantries, Fuel Assistance, MassHealth/Commonwealth Care, Mass Justice Project, MassHousing, VITA tax prep, The Good News Garage and to subsidized rental housing, when homeownership is no longer financially feasible. • Demonstrates that other funding sources are not readily available or sufficient: Community Development Block Grant funds to the City of Northampton have been steadily decreasing, reflecting CDBG budget cuts. • Demonstrates a high benefit /cost value: The budget for dedicated Northampton post - purchase counseling requests $42,446 for 45 households, at a cost of $943 /household. Homeowners who have secured loan modifications through our office, are generally saving $400 - $1,200 /month on mortgage payments and have brought their mortgages current from their previous foreclosure status. Many of these homeowners don't have the funds (first, last & security deposit) or credit needed to secure a decent apartment. Any additional homeless families will create more pressure on scarce resources. 3 The volume of calls and emails our office receives seeking assistance with existing home mortgages remains steady. The primary reason for the continued demand for loan modification assistance is that most of the homeowners we work with have already sought assistance directly through their loan servicer and they have been turned down at least once. Therefore, in order to begin new loan modification applications, we must first provide clear financial evidence that the homeowners have the ability to sustain payments. We can only begin these processes, once we have demonstrated successfully to the loan servicer that the previous loan modification application was denied erroneously. Self - employed borrowers often need assistance in generating profit and loss statements that clearly document their repayment ability. Many have also paid scammers $2,500 or more and received no substantive help. The homeowners are routinely told that they don't qualify for programs, for which they do qualify. Homeowners are strongly encouraged to sell their homes, regardless of whether or not they have successfully made substantive household income and competing debt adjustments; to again sustain timely payments. If a homeowner has missed payments, their damaged credit is most likely to be a barrier to securing an apartment. Homeowners are routinely told to sell their homes or get a second job. These choices are often neither options nor desirable outcomes for the homeowners. Local bank collection departments refer some of their customers to us, as do local bank loan originators, when they are unable to refinance prospective customers. The program will assist each resident LMI homeowner to keep their home, in the event that it is a viable option. Either way, the counseling will be directed to improve the homeowner's understanding of their options and how to attain them. The homeowners will increase their financial literacy as a result of the individualized counseling. Homeowners will be assisted in developing realistic monthly budgets. They will be coached in negotiations with other creditors. By reducing the money leaving the community due to homeowners with high cost mortgages and other high cost debts (credit cards, personal loans, predatory home equity lines and high interest rate vehicle loans) the counseled Northampton homeowners will have more funds available to make timely payments on property taxes and water and sewer bills. Some of these homeowners will gradually have more money available to spend in and around the City of Northampton. Our office also assists homeowners with negotiations for affordable repayment plans with the IRS and Mass DOR. We refer post - foreclosure residents to Boston Community Capital's SUN Program for prospective opportunities to buy back their properties, following foreclosure. Community Preservation Criteria - General: The proposed Homeownership Sustainability Program meets most of the CPC's General Criteria as follows: • Contributes to the preservation of Northampton's unique character: Northampton is struggling to maintain its historical socio- economic diversity, especially among homeowners. While City officials and many City residents of varying income 2 Valley Community Development Corporation Post - Purchase & Foreclosure Prevention Program Program Description: Valley CDC will provide individualized household counseling for at least 45 Northampton homeowners, at or below 100% of median income (LMI), who are either immediately facing foreclosure or are at risk of foreclosure as evidenced by mortgage delinquency or high cost mortgages and /or other high cost household debt. We will also provide post - purchase counseling for Northampton homeowners considering their options for refinancing, those in need of funds for home repairs and /or energy efficiency upgrades. Some households will have sub -prime /predatory loans on their homes and other households may have conventional mortgages, but will be struggling due to loss of income, income reduction, household composition changes, illness or death of a household member, or non - paying tenants. Household financial hardships due to income reductions, which we have most commonly seen in the past few years, include unemployment, under - employment, reduction in work week hours or wages, business failure, reduction in self - employment income & loss of rental income. Many of our clients, who lost their jobs early in the first recession dip in 2007 - 2008, have found replacement employment, but their new salaries or self - employment generate significantly less annual income than their pre- recession historical income. Over the past year, national loan servicers have finally revamped their loan modification departments to make quicker decisions. Homeowners are therefore asked to submit more documents, which underwriting departments are reviewing with greater due diligence. In the event that documents aren't submitted by given short deadlines, borrowers who are 90 -120 days in arrears will proceed to immediate breach notices. Since the recent settlement between 46 attorneys general and 5 large national banks, the loan servicers seem to be operating with a new carte blanche to foreclose. The good news is that loan modifications are coming through much quicker, but the flip side is that loan servicers are proceeding with foreclosures at a much brisker clip, than we've seen over the past six years. Some homeowners, who have conventional loans with local lenders, need assistance, because the homeowners often don't understand what information will be most successful in convincing the lender to restructure their mortgage. Our office will assist homeowners in writing effective hardship letters. In the event that the homeowner's mortgage or home equity line or loan is serviced by a sub - prime loan servicer, a homeowner will need significantly more assistance, due to the challenges of communicating with large, out -of -state corporations. We will assist the homeowners to understand their options, choose an attainable option, sort out the steps to attaining their goals and plan for implementation. The sub - prime mortgage industry remains a difficult moving target and our staff has the benefit of daily communication with staff at sub -prime servicers and updating best practices and information with other foreclosure counselors, bankruptcy attorneys and consumer law advocates statewide. During the six years of this crisis, much of the sub -prime loan servicing has been bought up by BOA, Wells Faro & Chase. While their staff is now better trained, sympathetic and polite, these burgeoning loan servicers' various departments and computer systems remain difficult to navigate, both for their customers and, most notably, for these servicers' staff at all levels. We understand most staff at these servicers to be potential allies and advocates for our client homeowners. 1 .. E. ox X 0 E o s £ \ . 0 2 $ ° @ a e» 0 E m ° a) » ■ 3 = E ] \ $ k $ $ CD 3 / \ ƒ % ? \ 0 O \ 5 § O 3 C\ � / "0 �} \/ 0 ° e . « ° an _ 1 g / m a)§ = ® ��o o 1 8 2 A # =wo Iv C0 F g . C 2 /// /R k n 0- - a w 0 a 0 0 0 (0 -0 ( ° f k ) / / k E ® \ J 0 0 E r+ i \ = E 0 0 ID = 0 & < C2 = - f ] 0 \ / § - n < ] ° ® / $ 2 7 _. E \ $ Q \ / _. = 2 .R == �• CD 2 / 5 :: ' < E _ 0 / c a 0 m \/ c \ R ] \ -.- \ e = 0 ° = 7 -- '. 0 J 0 k /) ®] 9 c £ ° ° ° /� (a k ' °° 3 2 $�n \ � - § m \ 0 a £ / /) \ ® & ] E 0 = e = < 0 -" n e o / ƒ $ c \ O § k 0 / cn k / a / T O e -< o c # ) 0 0 0 O F $ « \ < < 0 (/) • SNMp\ 1:14 COMMUNITY PRESERVATION PROJECT APPLICATION COVER SHEET I Project Information Project Title: Post - Purchase and Foreclosure Prevention Counseling Program Project Summary: Valley CDC will provide comprehensive post - purchase counseling, primarily focused on foreclosure prevention. Northampton homeowners with incomes below 100% of AMI will be assisted in attaining financially sustainable mortgage payments. Homeowners to be served will include both those who are still struggling with sub - prime or predatory loans and those who have conventional loans, but are at risk of losing their homes due to financial hardships. Estimated start date: 3/1/13_ Estimated completion date:_8/31/14 CPA Program Area (check all that apply): ❑ Open Space ❑ Historic Preservation X❑ Community Housing ❑ Recreation II: Applicant /Developer Information Contact Person and or /primary applicant: Michele Morris Property Owner (if applicable): N/A Organization (if applicable): Valley Community Development Corporation Mailing Address: 30 Market Street, Northampton, MA 01060 Daytime phone #: 413 - 586 -5855, ext. 18 Fax #: 413 - 586 -7521 E -mail address & Website: mmvalleycdc.com www.valleycdc.com III: Budget Summary Total budget for project: $106,696 CPA funding request: $42,446 CPA request as percentage of total budget: 40% Applicant's Signature: �, - � - ►�.,.C,% � .x_1 Date Submitted: September 4, 2012