Without this help, many families would have lost their homes
Rachel G. Bratt’s Sept. 12 op-ed, “The hitch? That small print in SUN mortgage documents,” was missing some important context that would have informed readers of the important purpose and need for the loan product in question. During the Great Recession of 2008, a combination of predatory lending and economic circumstances left hundreds of homeowners behind on their mortgage payments, with their properties underwater, meaning they owed more on their mortgages than their homes were worth. Housing counselors and servicers worked with many of these borrowers who were on the verge of losing their homes to foreclosure, but sometimes loan modifications were not an option.
BlueHub SUN was a new and innovative program that worked with homeowners to save their homes and allow them to earn equity over time. It’s a program of last resort for distressed borrowers, but there are benefits to homeowners, including principal balance forgiveness of nearly $100,000 on average on their previous mortgage and average monthly savings of $600. In addition, homeowners who got out from “underwater” mortgages thanks to SUN can now earn equity — above and beyond any equity they have to share with the nonprofit. Hundreds of families were able to stay in their homes because of the SUN program.
The writer did foreclosure prevention counseling in 2014 and ’15. She is executive director of the Midas Collaborative, a nonprofit working to advance the financial security of low- and moderate-income residents in Massachusetts, and president of the board of Abundant Housing MA. The views expressed here are her own.
If only government had promoted this in 2008 when the bubble burst
I have to disagree with Rachel G. Bratt’s unfavorable view of shared appreciation mortgages. They would have been a godsend if the government had adopted them during the collapse of the housing bubble in 2008.
If it had, then over time, both property owners and the government would have built up a proportionate share of equity in the property. More homeowners would have been able to stay in their properties, which would have contributed to stabilizing the housing market. The continuation of residence in the same neighborhood would have reduced the possibility of foreclosure blight, which afflicted some streets in towns and cities. For those homeowners with children, their education would not have been disrupted by a move to a new area.
This would have been a better solution than bank bailouts.
Martin G. Evans
The writer is a professor emeritus at the Rotman School of Management, University of Toronto.