In 2008, at the peak of the foreclosure crisis, New Economy Project launched a foreclosure prevention loan fund that over the next five years helped almost 400 low-income New Yorkers avert foreclosure and keep their homes.
Fueled by Wall Street, banks and mortgage lenders had for more than a decade pumped unaffordable mortgages into New York City’s neighborhoods of color – leading to skyrocketing rates of home foreclosure well before a national crisis was declared. While policy talk about how to stem the crisis dragged on, tens of thousands of New Yorkers were losing their homes.
An engaged donor, intrigued by our organization’s foreclosure prevention advocacy, pledged $1 million dollars in lending capital, if we could come up with a viable loan program to help people targeted for predatory loans to avoid foreclosure and stay in their homes. We designed the loan program to operate with next to no bureaucracy, to respond quickly to lending requests, and to help New Yorkers fight back. The idea was to make small “gap” loans that low-income New Yorkers and advocates could use to negotiate effectively with banks and loan servicers. And the overall impact was tremendous.
Through the loan program, we were able to:
- Preserve more than $20 million in home equity in NYC neighborhoods of color.
- Help low-income NYC families eliminate almost $5 million in mortgage debt.
- Significantly lower families’ monthly housing costs (by $566, on average).
Read more about the loan program’s impact.
New Economy Project operated the loan program until 2013, and is pleased that New York City and State have replicated the program on a much bigger scale. We owe the program’s success in no small measure to our lending partners, Lower East Side People’s Federal Credit Union and FJC, as well as the many foreclosure prevention advocates across New York City who used the loan program to help New York homeowners avert foreclosure and stay in their homes.