Massachusetts attorney general Martha Coakley unveiled one of the first foreclosure-prevention programs in the nation on Wednesday that uses proceeds from a landmark settlement with five major US banks to help struggling homeowners.
Called HomeCorps, the program will offer counseling and grants worth $16 million to Massachusetts homeowners, and another $10 million in grants to individuals and communities combating blight caused by foreclosures.
Coakley said many residents and neighborhoods are still suffering from the aftershocks of the housing crisis. Property values have fallen steeply, she said, and some areas remain scarred by swaths of abandoned and decaying homes. She also said that more than 1,300 homes went into the foreclosure process in February — evidence that foreclosures remain a serious problem in Massachusetts.
''This is a tragedy of individuals losing their homes and the destruction of neighborhoods,'' she said, ''and a lot of it was unnecessary.''
Earlier this year, attorneys general nationwide — including Coakley — reached a $25 billion deal with Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc., and Ally Financial Inc. over the lenders' role in the foreclosure crisis. As part of that agreement, the banks agreed to allocate $44.5 million in direct funding that the state can use to help distressed Massachusetts homeowners.
The banks are also required to provide $14.6 million in cash payments to borrowers in Massachusetts. The agreement calls for another $257 million in mortgage relief to flow into the state through the five companies. Details about how that money will be accounted for — such as through loan principal write-downs — have not been released.The attorney general's office said Wednesday that $1.5 million will be used just to implement the settlement in Massachusetts and ensure that funds are disbursed.
In addition to benefiting qualified homeowners directly, HomeCorps funding will be used to hire a program director, a team of 15 or more loan modification specialists, and for the expenses of attorneys and nonprofits across the state that are helping borrowers facing foreclosure.
HomeCorps will also offer $10 million in grants to those who come up with strategies to help fund statewide foreclosure prevention initiatives. Communities will also be allowed to apply for grant money to run programs that rehabilitate neighborhoods — mostly in urban areas — that have been blighted by foreclosures.
Coakley's office said Wednesday that it has also turned over $5.4 million in foreclosure-related civil penalties and legal expenses from the banks to the state's general fund.
Homeowners can find out whether they qualify for assistance through the program and receive other information by calling the HomeCorps hotline at 617-573-5333.
Megan Woolhouse can be reached at email@example.com.