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On the hot seat

Foreclosure fight continues for troubled homeowners

Josh Reynolds For the Boston Globe

Elyse Cherry, chief executive of the nonprofit lender Boston Community Capital, recently announced plans to expand her institution’s efforts to help troubled homeowners avoid foreclosure through a $25 million loan from East Boston Savings Banks. Globe reporter Jenifer B. McKim spoke with Cherry about her innovative organization, the rebounding housing market, and why key national lenders still fight her initiative.

Massachusetts housing prices are up and foreclosure activity is down. Many housing specialists are declaring the foreclosure crisis over. Are they right?

One of the interesting things about the foreclosure crisis is that it does not hit all communities the same way. If you live in Newton or Weston or one of the other middle class or upper middle class suburbs, your housing value is probably back up. If you are located in an urban area, like Roxbury, Dorchester, or Lynn, foreclosures are still happening and your housing prices are not up. If fact, you might still be down as much as much as 40 or 50 percent.

How long will it take before do-gooder efforts like yours are no longer needed?


I would love that to be tomorrow. I don’t think it will be. There is still a significant problem not just here in Massachusetts but in other hard hit areas across the country.

Your organization has helped nearly 400 struggling families since 2009 repurchase their properties at market-based rates, cutting hundreds of dollars off of their monthly mortgage payments. Why should we, the public, care?

There’s been lots and lots of research establishing that when urban areas lose their vitality, it has a negative effect that ripples out to the suburbs. Even if we didn’t care about our neighbors, which I think the people of Massachusetts clearly do, we ought to care from a self interested perspective. Foreclosure is fundamentally a community issue.


For years you have complained that certain lenders, particularly mortgage giant Freddie Mac, have squashed your efforts to help distressed mortgage holders repurchase their homes at lower prices. They argue that such financial help promotes fraud and incites others to make poor financial decisions. What’s wrong with this thinking?

It’s magical thinking not backed up by evidence. It ignores the impact that foreclosure has on a family’s financial future. Foreclosure is the equivalent of financial suicide. People would not rationally choose that course.

But what about the financial windfall for troubled homeowners who, for whatever reason, couldn’t make mortgage payments?

We require homeowners to share any profits from a later sale or refinance, and those funds will be reinvested in the community. We have a lot of people who got caught up in a financial spiral that was unsustainable. Now, rather than assessing blame, the question is how to move the economy forward. We feel that stabilizing families and stabilizing households is the way to do it.

How can you be confident that troubled homeowners won’t default again?

We put people through a real intense underwriting process. If you have somebody who had a predatory mortgage, and the size of their mortgage no longer reflects the value of the home, you have someone with an unsustainable mortgage. We have been able on average to reduce monthly housing expenses and outstanding principal amounts by about 40 percent. Nearly all of our mortgages are paid on time and in full. People want to stay in their homes.

What do you plan to do with new funding from East Boston Savings Bank?

When we first started the [Stabilizing Urban Neighborhoods] initiative, we went out and raised enough to do about $50 million worth of lending. The East Boston Savings Bank loan allows us to recapitalize so we can continue to do exactly the work we are doing, which is lending all over Massachusetts. And it allows us to expand outside of the state.


I hear some eager investors are scooping up people’s homes before your organization can help turn them around.

Neighborhoods are best off when housing is owned by owner-occupants who have interest in maintaining their homes. The more we can assist that process the better off communities are. What I hope is that people coming in and buying recognize their obligation to maintain housing.

Jenifer B. McKim can be reached at jmckim@globe.com. Follow her on Twitter @jbmckim.