New Jersey Community Capital was chosen by the U.S. Department of Housing and Urban Development to purchase 399 troubled mortgages in order to help homeowners avoid foreclosure.
The purchase is part of HUD’s Neighborhood Stabilization Outcome component of the Distressed Asset Stabilization Program. They were part of the largest auction of distressed Federal Housing Administration-insured single-family home loans.
As a result of this transaction, NJCC will be able to preserve the homes of up to 150 mortgage holders in Essex County, N.J., and another 249 in Tampa. But since many of the mortgages are for properties of two or more units, NJCC said it will have the potential to save the properties of more than 600 families.
Through this effort, the New Brunswick, N.J.-based nonprofit community development financial institution that provides financing assistance to support the preservation and development of affordable housing, will implement its ReStart program to address the mortgage delinquency issue many homeowners currently face.
“The ReStart program is about financially helping families and communities facing distress. It is about changing the approach to solving the foreclosure problem that so many other families and communities face across the country,” said Wayne Meyer, president of New Jersey Community Capital. “Communities such as these often are left behind, even during the economic recovery, if we do not develop practical, effective, nonsubsidized solutions like ReStart to keep people in their homes and provide them with stable, long-term financial solutions.”
To acquire these foreclosed units, NJCC partnered with Prudential Financial, MetLife, and Newport Capital Bancorp. The three financial institutions provided almost $78 million in funding to support this initiative.
Additionally, this effort required the support of the New Jersey Housing and Mortgage Finance Agency, the City of Newark, the Housing and Community Development Network of New Jersey, NeighborWorks America, JPMorgan Chase, and the Florida Housing Finance Corporation.
The 150 Newark mortgages have an unpaid principal balance of almost $47 million, while the Tampa units have an unpaid principal balance of approximately $31 million.
In the program, NJCC will work with each homeowner to develop individualized mortgage repayment plans, in which the goal is to maintain ownership for as many people as possible. NJCC-trained ReStart specialists, employed by local nonprofit organizations, will guide eligible homeowners in how they can remain in their properties.
Furthermore, eligible homeowners will have an opportunity to receive a permanently modified, affordable, fixed-rate mortgage. In situations where this is not feasible, NJCC will help families transition to other stable living arrangements.
“The NJCC’s ReStart program is an innovative way to directly tackle the heart of the foreclosure and mortgage crisis,” said Lata Reddy, vice president of corporate social responsibility at Prudential. “If ReStart proves successful, it will be a deeply impactful model that can be exported to other distressed communities across the country.”