Get SF Weekly Newsletters

Thursday, May 3, 2012

S.F. Housing Advocates Hope Private Investors Will Help Calm Foreclosure Crisis

Posted By on Thu, May 3, 2012 at 7:30 AM

Perhaps there is hope.
  • Perhaps there is hope.
There is at least one potential solution to the foreclosure crisis. Many housing advocates in San Francisco favor a strategy called Stabilizing Urban Neighborhoods, or the SUN model.

The SUN model was first initiated and has drawn positive reviews in Boston, a city with a similar housing market to S.F. Alliance of Californians for Community Empowerment and the San Francisco Housing Development Corporation, two nonprofits that assist foreclosed upon homeowners, have been promoting SUN.

In SUN, nonprofits, investment funds, or private investors buy foreclosed properties and then sell them back to the previous owner for a discounted price-- a price much lower than post-refinance mortgage. In essence, the model works like a loan modification.

In Boston, the pilot initiative cost less than $4 million, and recouped around 60 homes for displaced residents. The challenge is securing the funds. But investors do get a portion of the profit if a homeowner eventually sells the house for a price higher than the SUN mortgage.

As  Boston Community Capital, a community development financial institution, described:

If your original mortgage was $400,000 and your SUN mortgage is $200,000, your new mortgage represents 50% of your original mortgage. If you sell your house for $250,000, SUN is entitled to 50% of the proceeds over $200,000, or $25,000.

Ed Donaldson, a housing counselor at SFHDC, believes that the SUN model is the most promising solution to the foreclosures. According to Grace Martinez, an advocate at ACCE, foreclosed-upon homeowners in the Bay Area are hoping to find solace in the model.

"The SUN model gives another tool in the toolbox because there aren't a lot of options," she says.

Geary Brown, one of the homeowners in this week's feature, "The Dispossessed," is waiting to see if private investors will buy his foreclosed home for him. (In the meantime, he remains in his home.) For the SUN strategy to work out, though, the bank must still agree to sell the home to the trust representing the investors. That, Martinez notes, is why Brown and other homeowners see much importance in the protests and rallies.

"It's the organizing that has really put people in a position to go after the banks," she says. "It puts pressure on the banks to work with people."

Follow us on Twitter @TheSnitchSF, and @SFWeekly

  • Pin It

Tags: , , , ,

About The Author

Albert Samaha

Comments

Subscribe to this thread:

Add a comment

Popular Stories

  1. Most Popular Stories
  2. Stories You Missed

Like us on Facebook

Slideshows

  • clipping at Brava Theater Sept. 11
    Sub Pop recording artists 'clipping.' brought their brand of noise-driven experimental hip hop to the closing night of 2016's San Francisco Electronic Music Fest this past Sunday. The packed Brava Theater hosted an initially seated crowd that ended the night jumping and dancing against the front of the stage. The trio performed a set focused on their recently released Sci-Fi Horror concept album, 'Splendor & Misery', then delved into their dancier and more aggressive back catalogue, and recent single 'Wriggle'. Opening performances included local experimental electronic duo 'Tujurikkuja' and computer music artist 'Madalyn Merkey.'"