Several foreclosed and bank owned REO properties in Boston, Massachusetts have been sold back or rented to their previous owners with the help of a program established by the nonprofit financial institution Boston Community Capital and the residential property advocacy group, City Life/Vida Urbana. The program is also participated in by professors and law students from Harvard Law School.
Bank Owned REO Properties
Under the program, the nonprofit buys Boston bank owned properties and foreclosed houses and then sell them to their former owners. If the previous owners cannot afford to buy the home, the institution allows them to rent the property. The program offers a revised mortgage package to the previous owners, often with lower rates, and also provides counseling to prevent them from getting foreclosed on again.
Boston Community Capital had so far purchased 50 foreclosed homes and bank owned properties in Massachusetts and sold them back to their original owners. A further 20 deals are currently in progress while the financial nonprofit tries to raise an additional $50 million for the program’s expansion.
While the financial institution and its partners are working on the process of acquiring the bank owned REO properties and preparing their sale to former owners, the same owners are allowed to stay in the house. The process provides homeowners with somewhere to live in, something that would have been difficult after foreclosure since it is to be expected that foreclosed homeowners will have a bad credit to their names.
Boston Capital has explained that they have discovered that majority of the housing industry is reluctant to make deals during pre foreclosures, but once the properties become bank REO foreclosure homes, lenders and banks are more willing to unload the houses because they have difficulties managing such properties.
The program also helps foreclosed homeowners by connecting them with the Harvard Legal Aid Bureau. Students who are members of the Bureau work by pressuring lenders to sell the property rather than evict the owners. The Bureau’s pressure prolongs the process of eviction and drives up the cost of litigation, making banks more willing to sell rather than shoulder the additional costs of lawsuits.
The effort to return bank owned REO properties to former owners under a more affordable mortgage package is being seen by Boston Community Capital and its partners as a way to help homeowners all around the city to avoid foreclosures and retain their homes.
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