Governor Patrick Applauds $54.8 Million in Federal Funds to Fight Effects of Foreclosure
Federal funds targeted to acquire, redevelop and reoccupy foreclosed properties
The funds are part of a nationwide $3.92 billion allotment to be used by communities to acquire and redevelop foreclosed properties and they will further support comprehensive foreclosure prevention initiatives already being implemented in the Commonwealth by the Patrick Administration.
"In this difficult economic climate, these federal funds are critically important in leveraging state and local efforts well underway to combat the effects of foreclosures on Massachusetts communities," said Governor Patrick. "We are grateful to the Massachusetts Congressional delegation for their efforts and support, and in particular those of Congressman Barney Frank."
The funding from HUD is provided through its Community Development Block Grant Program under the Housing and Economic Recovery Act of 2008. The funds will be used to purchase foreclosed homes at a discount and to rehabilitate or redevelop them in order to respond to rising foreclosures and falling home values. Of the $54.8 received in Massachusetts, the City of Boston will receive $4,230,191; Brockton, $2,152.979; Springfield, $2,566,272 and Worcester, $2,390,858.
The new funding will support the Patrick Administration's comprehensive foreclosure initiative to assist homeowners and stabilize neighborhoods across the Commonwealth, which includes recent statewide foreclosure prevention workshops to pair homeowners with their lenders to secure loan modifications and other restructuring agreements that will keep them in their homes.
The funding will also enhance a unique state-sponsored, low-interest loan fund - announced by Governor Patrick in July - for developers to buy abandoned and at-risk properties, and get them quickly reoccupied with new homeowners or renters. The $20 million acquisition loan program, which does not use public dollars, is available to non-profit and for-profit developers, and targets communities with a high concentration of vacant properties including Boston, Brockton, Chelsea, Lawrence, New Bedford, Springfield and Worcester.
"Today's award is a very important step in the Patrick Administration's ongoing efforts to prevent foreclosures and keep neighborhoods stable," said Housing and Community Development Undersecretary Tina Brooks. "These funds will be used for property acquisition, rehabilitation and demolition, if necessary along with homebuyer assistance and support for mortgage products to purchase foreclosed properties."
The Administration has also been implementing key provisions of Chapter 206, An Act to Preserve Homeownership, a new law the Governor signed in November 2007. The statute requires a foreclosing lender to provide notice of a mortgage delinquency to a borrower, and then provide 90 days for the homeowner to resolve the delinquency.
Homeowners were previously only entitled to 30 days notice, and the lender did not have to give the homeowner an opportunity to pay the arrearage, cure the default, and avoid foreclosure. The Governor and Attorney General Martha Coakley have both urged lenders to use this time period to restructure more loans and avoid unnecessary foreclosures.
The Governor has also directed the Division of Banks to promulgate regulations that evaluate all state licensed mortgage lenders on the number of loan modifications they complete for delinquent borrowers. This first in the nation action builds on the extension of the Community Reinvestment Act to non-bank mortgage lenders called for by Chapter 206 and puts additional pressure on lenders to make loan terms more affordable for the state's homeowners.