Skip to main content

SF Chronicle Article on Our Project

See the entire article here.
Menlo Park's City Council tonight will consider an innovative approach to preventing foreclosure for struggling homeowners - but one that comes with a big up-front price tag for the city.

"To me, the most important thing is to keep people in their homes and not disrupt families, not take kids out of school," said Councilman Andy Cohen. "This is the only program on the horizon that does that."

The Foreclosure Prevention Program targets owner-occupied homes with mortgages more than 90 days past due. Program administrators would approach the bank that holds the defaulting mortgage and ask it to sell the mortgage at the home's current fair market value - the same amount the bank would receive if the home went through foreclosure, but with fewer expenses and less time and trouble for the bank, said David Shapiro, CEO of the EARN Group, a Los Gatos company that develops real estate financing tools.

A local community bank would then refinance the mortgage for about 70 percent of the home's fair market value. In what is essentially a "silent second mortgage," the city would put up about 30 percent of the home's value as a cash investment, leaving the homeowner with a mortgage for 70 percent of the home's fair market value at today's low interest rates. The homeowner's monthly housing costs potentially could be halved, EARN said.

The city would have an equity stake in the home. It would get repaid when the home is sold (assuming it sells for more than today's price) and would also receive half of the home's appreciation above the current market value. If the home sells for less than today's price, or is lost to foreclosure, the city could lose part or all of its investment, because it would be in second place after the bank that did the refinancing.

EARN, a for-profit company, teamed with the nonprofit Northern California Urban Development, an East Palo Alto group that works to alleviate poverty, to develop the program, and is now seeking cities to serve as testing grounds. Shapiro said large banks have expressed interest in the plan, and a small credit union, Community Trust in East Palo Alto, is willing to do the refinancings for Menlo Park, as well as for East Palo Alto, which also is considering the plan.

"This is aimed at keeping people in their houses in their communities, rather than having the houses turn over and flip," said Marc Prioleau, a founding board member of NCUD.

Labels:

Comments

Post a Comment

Popular posts from this blog

YWAMers Praised for Faith and Leadership

The Denver Post reports on the memorial service at the Denver YWAM base: "We're going to celebrate a life, we're not accentuating a death," said Faith Bible Chapel pastor George Morrison, in opening a memorial service today for two people killed at a missionary training school in Arvada . The service is called "A Celebration of Life for Tiffany and Philip." Philip Crouse and Tiffany Johnson died Sunday when a gunman opened fire at the school's dormitory. Youth With a Mission director Peter Warren said today both Crouse and Johnson embodied the spirit of the group. First the service focused on Crouse . "Phil gave his life to Jesus Christ and was never the same again," said Zach, a friend of Johnson's who met him years ago at a youth ministry in Alaska. At the time, Crouse was tough and wouldn't let people get close to him. "Over the years, Phil became a humble, teachable, sweet guy" who was able to reach kids with rough e...
Post a Comment
Read more

Book: White Man's Burden - thoughts for Labor Day Weekend

I'm reading a fascinating book that has some of the same themes that run through Bob Lupton's recent writing. It's called 'White Man's Burden" by William Easterly. (I get the feeling some of you have read this already.) You can find it here. The title of the book is somewhat unfortunate, it's meant to be sarcastic. There are some amazing points here, stuff NCUD and others at CCDA have been talking about for years. I encourage you to check it out - here's a couple of great excepts from the first chapter: "But I and many other like-minded people keep trying, not to abandon aid to the poor, but to make sure it reaches them. Rich countries have to address the second tragedy if they are going to make any progress on the first tragedy. Otherwise, the current wave of enthusiasm for addressing world poverty will repeat the cycle of its predecessors: idealism, high expectations, disappointing results, cynical backlash." "Let’s call the advocates...
2 comments
Read more

Big Gifts, Tax Breaks and a Debate on Charity

New York Times Article on the debate regarding the societal benefits of non profit donations. It's a somewhat rambling article, but my feeling is that this is a brewing debate. Eli Broad, a billionaire businessman, has given away more than $650 million over the last five years, to Harvard and the Massachusetts Institute of Technology to establish a medical research institute, to the Los Angeles County Museum of Art and to programs to improve the administration of urban schools and public education."What smart entrepreneurial philanthropists and their foundations do is get greater value for how they invest their money than if the government were doing it." "I got a plaque in the mail and an invitation to an awards ceremony. I never gave them another nickel. What were they spending money on plaques for?" The rich are giving more to charity than ever, but people like Mr. Broad are not the only ones footing the bill for such generosity. For every three dollars the...
1 comment
Read more