Almost a decade after the foreclosure crisis, New Yorkers and their communities are still feeling the effects. One of the most persistent problems in New York State is the inventory of distressed, underwater mortgages which have been in foreclosure for years. Due to the state of the economy, lender delays, a lengthy judicial process, and a backlog of foreclosure cases, many homeowners are neither able to afford their monthly mortgage obligation nor able to successfully negotiate with their creditors to modify their loan.
In June 2016, NY State Governor Andrew Cuomo signed legislation authorizing the Community Restoration Fund (CRF), which can buy and modify delinquent mortgages to provide relief to struggling homeowners still reeling from the financial crisis. The Fund acquires the notes on properties believed to be occupied, connects borrowers with nonprofit advocates to help negotiate their debts on affordable terms, and, in case borrowers cannot support the restructured debt, provide transitional support to families and then attempt to resell the properties as affordable housing. The Fund’s operations reinforce local efforts to prevent blight and keep communities vibrant.
Leveraging $7 million in Morgan Stanley settlement dollars, the State of New York Mortgage Agency (SONYMA)/New Jersey Community Capital joint venture purchased 398 distressed mortgages in 10 New York counties. By February 2018, the CRF had purchased an additional 172 mortgages in a strategic effort to bring owners in out of foreclosure and prevent property abandonment. This latest effort brings the total investment through the Fund to $10 million, which has leveraged more than $112 million in private funds and enabled the purchase of the distressed mortgage loans to date.
The CRF is also working to ensure that vacant properties are quickly renovated and returned to the market, and that homes where a mortgage modification is not possible are renovated and sold to owner occupants to support reinvestment in those neighborhoods. The ingenuity of this program is that the full $10 million public investment will be returned over a 5-year period, allowing SONYMA CRF to reinvest those dollars to continue helping others.
The SONYMA CRF is a truly innovative and groundbreaking public private partnership that has already successfully demonstrated how thoughtful interventions in the foreclosure and abandoned property space can expedite significant community renewal, bringing stability back to the housing market in even the most hard-hit neighborhoods across the state.