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Neighborhood Stabilization in New York City


MISSION Founded as NYC’s foreclosure prevention response, CNYCN promotes and protects affordable and sustainable homeownership in neighborhoods across New York City. Owner Occupied Housing Owner occupied 1-4 family housing is concentrated in neighborhoods outside of Manhattan. Roughly 36% of all 1-4 family owner occupied housing includes rental units. Data Source: U.S. Census Bureau, 2011 American Community Survey 5-Year Estimates, Table B25032; U.S. Census Bureau Zip Code Tabulation Areas

Number of Houses with 1-4 Units 0 - 2,500 2,501 - 5,000 5,001 - 7,500 7,501 - 10,000 10,001 - 22,200

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HOME BY HOME: NEIGHBORHOOD STABILIZATION IN NEW YORK CITY CENTER FOR NYC NEIGHBORHOODS: 2008-2012


Our First Five Years In the five years since its founding in December 2007, the Center for New York City Neighborhoods (CNYCN) has played a critical role helping New Yorkers in mortgage distress navigate the foreclosure crisis. CNYCN’s efforts reflect the collaboration of Mayor Michael Bloomberg, the New York City Council led by Speaker Christine Quinn and CNYCN Board member Lewis Fidler, New York State Attorney General Eric Schneiderman, community advocates, corporations and foundations. Launched by current Secretary of Housing and Urban Development Shaun Donovan just before the first wave of foreclosures hit our city, CNYCN serves as the hub of a network of neighborhoodbased nonprofits (our “Network Partners”) that provide foreclosure prevention services free of charge. To date, CNYCN has administered $18 million dollars of funding to our network, assisting more than 18,000 homeowners through housing counseling, legal services, loan modification assistance and other services. Each client’s story reminds us of the complexity of the crisis and helps us refine our approach and provide crucial assistance to New Yorkers struggling to pay their mortgages and keep their homes. In the aftermath of Hurricane Sandy, the need

Herbert Sturz Chair, Board of Directors

for our network and the services we deliver is more pronounced. With homeowners confronting a new kind of crisis, CNYCN is uniquely positioned to deploy training and resources to Network Partners working with clients facing unprecedented loss and uncertainty. As New York City rebuilds, CNYCN remains committed to sustaining thriving neighborhoods, home by home. We are grateful to all of our partners for coming together to address recovery needs stemming from both Hurricane Sandy and the ongoing foreclosure crisis. The coalition of government leaders, lenders, mortgage servicers, philanthropists, direct service providers and homeowners that develop partnerships and share resources across disciplines has made it possible to launch comprehensive responses to whatever challenges New York City homeowners may face. Much work remains to be done, but CNYCN is steadfast in supporting homeowners now and through future hardships, be they natural or manmade, national in scope or focused on a single block. We look forward to building on what has been accomplished together. We strive to promote and protect affordable and sustainable home ownership so we can prevent the blight of foreclosure in New York City’s vibrant neighborhoods.

Christie Peale Executive Director

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Continuing Crisis The origins of the subprime mortgage crisis and its persistent impact on the nation’s housing markets are well known and well understood: the housing bubble burst when huge numbers of homeowners with nontraditional loans fell into default. These nontraditional loans, such as subprime and no-doc loans, were often unaffordable from origination, had balances that increased over time or included sudden rate adjustments. The economy collapsed along with the housing market, unemployment escalated and more and more homeowners found themselves unable to make their mortgage payments. As home prices declined, homeowners often had mortgage debt greater than the value of their homes and were unable to sell their properties.

Thousands of New Yorkers lost their homes. Tens of thousands of homeowners continue to fall behind, bringing them to the brink of foreclosure.

Defining Foreclosure and Mortgage Distress When homeowners are unable to make the payments on their mortgage loans, they become delinquent and the servicer begins the legal process of foreclosure. Lenders file a notice of intent or lis pendens and initiate litigation to recover the asset securing their loan. In NYC, many homeowners are in “mortgage distress” before foreclosure starts, as they struggle to make mortgage payments. They may be many months behind before the legal process of foreclosure begins.

HOMEOWNER SPOTLIGHT

Rashidul and Gulshan Amin

Several years after buying their Queens home in 2006, Rashidul and Gulshan Amin struggled to keep up with their payments when health issues prevented Mr. Amin from working full time as a taxi driver. With reduced income, Mr. and Mrs. Amin, immigrants from Bangladesh, were at risk of losing their home when they sought help from Chhaya Community Development Corporation in Queens. “Chhaya stood by us at a time of crisis and when we couldn’t stand alone,” says Mr. Amin. Chhaya helped prepare and submit loan modification applications for the Amin family. Mr. Amin notes that it was “very helpful to be able to speak in our own language, Bengali, with their staff because this allowed us to better understand the whole process and made us feel more comfortable.” After two years of advocacy and persistence,

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Chhaya’s efforts secured modifications for the Amins’ first and second mortgages. The Amins’ mortgage payments are now $1,500 less and significantly more affordable with their reduced income. “Chhaya helped us keep our home and avoid foreclosure,” says Mr. Amin, and since then “we have referred other families and friends to Chhaya who are facing similar problems.”

HOME BY HOME: NEIGHBORHOOD STABILIZATION IN NEW YORK CITY CENTER FOR NYC NEIGHBORHOODS: 2008-2012


Mortgage Delinquency in New York City Over 145,000 households since 2010 have been behind on their mortgage payments and received a preforeclosure notice. Data Sources: New York State Department of Financial Services 90-Day Pre-Foreclosure Notices from February 2010 to December 2012; U.S. Census Zip Code Tabulation Areas

Number of Households 0 - 1000 1001 - 2000 2001 - 3000 3001 - 4000 4001 - 5000

The Spillover Effects of Foreclosure For a homeowner, the loss of a home to foreclosure is devastating: one must find new and affordable housing, which is a daunting challenge in New York City. This housing insecurity is often coupled with serious deterioration of the homeowner’s credit score. Blemished credit can impact an individual’s ability to secure employment, a loan for educational or career advancement, or a rental apartment. Children in the household are especially vulnerable to the effects of foreclosure as they often

move to new neighborhoods and new schools; displaced children uprooted by foreclosure are more likely to enroll in schools of lesser quality than the ones they left.1 One foreclosure filing within 250 feet of a home reduces its sale price by 2%.2 As the area suffers and property values decline, the likelihood of petty crime and vandalism increases, perpetuating the foreclosure cycle and destabilizing once thriving neighborhoods. While foreclosures occur (and can be prevented) home by home, the effects of foreclosures are felt by entire communities.

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Foreclosure in New York City

35,000

30,000

Every month, more homeowners enter the foreclosure process. Few foreclosures are resolved quickly and the number of homes in foreclosure continues to grow.

25,000 20,000

Courtesy of the Federal Reserve Bank of New York. As of 8/1/2012. Databases do not include all mortgages.

15,000 10,000 5,000

2005

2006

2007

2008

Mortgage distress is a hidden but pervasive problem in NYC. One in ten New York City homeowners is seriously delinquent, meaning they are either 90 days late on their mortgage payment or already in foreclosure proceedings. The rate of foreclosures in NYC, at 6%, is higher than the national rate of 4%.3 Mortgage foreclosure and delinquency are primarily concentrated in minority and low-income neighborhoods. Those neighborhoods hardest hit by the foreclosure crisis have a foreclosure rate reaching 12% and are concentrated in central Bronx, southeast Queens, north-central Brooklyn and the north shore of Staten Island. More than 9,000 properties (26% of all 1-4 family properties) have entered foreclosure in Jamaica, Queens since 2007. In East New York, Brooklyn, more than 4,500 homes (29% of 1-4s) have entered foreclosure. In contrast, Rego Park, Queens has seen less than 300 homes (3% of 1-4s) enter foreclosure.4 6

2009

2010

2011

0

2012

While New York City is thought of as a city of renters, one-third of New York City residents are homeowners and roughly 36% of all 1-4 unit owneroccupied housing includes rental units. This means that when homeowners are at risk of foreclosure, their tenants are also at risk of displacement.

HOME BY HOME: NEIGHBORHOOD STABILIZATION IN NEW YORK CITY CENTER FOR NYC NEIGHBORHOODS: 2008-2012


Homeowners in Need CNYCN serves New York City homeowners who are struggling to keep their homes. As many as 4,500 New Yorkers miss mortgage payments each month.7 On average, CNYCN’s clients spend a staggering 76% of their monthly income to pay their mortgage. In many cases, our clients report that reduced income, or high medical bills from a catastrophic illness or disability, pushed them over the edge of financial stability. Such life-altering events strain all aspects of household economics and are often magnified by other issues such as the challenges of budgeting

and unmanageable consumer debt. When seeking solutions, many homeowners are caught in loan modification scams. These scammers pose as experts, promising to save the home and make the mortgage affordable, but they generally take up-front cash payments and defraud trusting homeowners. CNYCN alerts homeowners to such scams and advises them to work only with no-fee housing counselors or legal services providers. Homeowners can call 311 or the CNYCN Call Center at (646) 786-0888 for a referral to an appropriate nonprofit service provider.

3.1 people AVERAGE HOUSEHOLD

53%

HOUSEHOLDS WITH CHILDREN

55%

LIS PENDENS FILED

17%

$405,110

MEDIAN INCOME

AVERAGE LOAN AMOUNT

21%

AFRICAN AMERICAN

26%

$50,595

19%

HISPANIC

OVER 8% INTEREST

35%

50%

Loan Status

OVER 8% INTEREST

DELINQUENT

78%

FIXED RATE MORTGAGES

CURRENT

7%

UNKNOWN

Mortgage Type

0.2%

FORECLOSED

22%

ADJUSTABLE RATE MORTGAGES (ARM)

2,017 Data collected from CNYCN clients at intake.

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INTEREST ONLY MORTGAGE

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Hub of a Network CNYCN serves as the coordinating hub for an extensive network of partners providing expert legal and housing counseling services to New York City homeowners at risk of losing their homes. CNYCN leverages public and private resources

and promotes a seamless provision of services. We identify and highlight neighborhood and citywide trends. We promote systemic reforms to encourage household and neighborhood stability.

We do all of this to ensure the stability of our city’s neighborhoods.

Households Assisted in NYC More than 18,000 households since 2008 have received assistance from CNYCN Network Partners. Data Sources: CNYCN Intake data, July 2008 to December 2012; U.S. Census Zip Code Tabulation Areas

Number of Households 0 - 175 176 - 350 351 - 525 526 - 700 701 - 875

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HOME BY HOME: NEIGHBORHOOD STABILIZATION IN NEW YORK CITY CENTER FOR NYC NEIGHBORHOODS: 2008-2012


Our Partners Housing Counseling

CNYCN works with 39 Network Partners, providing resources and referrals to these nonprofit groups, which then offer direct assistance to homeowners and share best practices across the Network.

Asian Americans for Equality Bridge Street DC* • CAMBA Brooklyn Housing & Family Services Community Organization of South Brooklyn Chhaya CDC* • Grow Brooklyn Cypress Hills LDC* Greater Sheepshead Bay DC Margert Community Corporation NHS* of Bedford Stuyvesant Legal Services Brooklyn Legal Services Corp A NHS of East Flatbush The Hub: City Bar Justice Center NHS of Jamaica Common Law NHS of Northern Queens The Legal Aid Society NHS of Staten Island Legal Services NYC—Bronx NHS of the North Bronx MFY Legal Services Inc. NHS of the South Bronx New York Legal Assistance Group Northfield CDC Queens Legal Services The Parodneck Foundation Queens Volunteer Lawyers Project, Inc. Pratt Area Community Council South Brooklyn Legal Services Mutual Housing Association of New York Staten Island Legal Services Ridgewood Bushwick Senior Citizens Council JASA/Legal Services for the Elderly Queens Rockaway Development & Revitalization Corporation Bedford Stuyvesant Community Legal Services West Bronx Housing & Neighborhood Resource Center Neighbors Helping Neighbors, Inc. Brooklyn Bar Association Volunteer Lawyers Project, Inc.

CNYCN

an affiliate of Fifth Avenue Committee

*DC: Development Corporation

CDC: Community Development Corporation LDC: Local Development Corporation NHS: Neighborhood Housing Services

18,000+

Households Served

12,000

Housing Counseling Clients

6,000

Legal Services Clients

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Our Partners Housing Counseling Defined A housing counselor helps current and prospective homeowners understand their housing options and existing financial profile. Counseling often includes advice on budgeting that can improve a borrower’s financial status as well as assistance in negotiating with mortgage lenders or servicers. A foreclosure prevention counselor will determine whether a homeowner qualifies for loan modification or refinance programs and advise homeowners about non-retention foreclosure prevention options, such as short sales, if necessary. The goal of all housing counseling is to help clients live in housing that is affordable and sustainable for the long term.

“CNYCN’s training and assistance were essential as we launched our housing counseling program and prepared to advocate for homeowners at risk of foreclosure. And since facing the effects of Hurricane Sandy, CNYCN has again been instrumental as we transition our services to help homeowners seeking assistance with insurance and disaster relief.” —Janet Miller

Senior Vice President, Homelessness Prevention/ Legal Services/Food Programs, CAMBA

Legal Services Defined CNYCN’s legal services partners provide free legal representation for clients who cannot otherwise afford it and guide homeowners through 10

“CNYCN works with us to take on the challenge of widespread foreclosure both individually and systemically— from each homeowner’s foreclosure case, to industry-wide practices, to state or federal policy. Between funding and training that supports our staff and direct loans to qualified homeowners at risk of foreclosure, CNYCN provides a unique package of services that helps us reach and serve homeowners.” —Margaret Becker

Director of Homeowner Defense Project, SILS New York State’s judicial (court-based) foreclosure process. New York State law mandates settlement conferences where the homeowner and mortgage servicer have a chance to resolve a mortgage delinquency before continuing the foreclosure. Attorneys and paralegals provide legal representation in the courts as well as direct negotiations with the servicer in settlement conferences. CNYCN’s legal services providers help level the playing field for homeowners who may be unfamiliar with, or overwhelmed by, the legal process of foreclosure.

Technical Assistance Partners CNYCN’s technical assistance partners— Legal Services NYC (LSNYC), Neighborhood Economic Development Advocacy Project (NEDAP) and New York Mortgage Coalition (NYMC)—support the direct services of our Network Partners with regular trainings and targeted assistance. CNYCN’s Network Partners receive the latest information on new programs and changing regulations to help them give their clients the best chance of avoiding foreclosure.

HOME BY HOME: NEIGHBORHOOD STABILIZATION IN NEW YORK CITY CENTER FOR NYC NEIGHBORHOODS: 2008-2012


76%

DEBT-TOINCOME RATIO

$2,728 AVERAGE MONTHLY MORTGAGE PAYMENTS

BEFORE

CNYCN Services AFTER (among clients who achieved a mortgage modification)

$1,878

43%

DEBT-TOINCOME RATIO

AVERAGE MONTHLY MORTGAGE PAYMENTS

5,500 HOUSING UNITS STABILIZED

HOMEOWNER SPOTLIGHT

Wilmet Colon

Wilmet Colon, a United States veteran, purchased his home on the North Shore of Staten Island in 1999 and refinanced in 2004 in order to complete necessary home repairs. After injuring his back, Mr. Colon was unable to return to work and subsequently retired. With his income limited to social security and pension payments, he could no longer afford his mortgage. Over the next four years Mr. Colon attempted to resolve his delinquency directly with Wells Fargo, but he was not successful and entered foreclosure in 2009. As his delinquency dragged on, Mr. Colon’s arrears grew to over $64,000. After the servicer filed the foreclosure action, Staten Island Legal Services began representing him in state-mandated settlement conferences. As Mr. Colon explains, “I worked with the bank and the courts to modify my loan for eleven months, but after being denied a loan modification, I was about to lose hope.” Although not eligible for the federal

Home Affordable Modification Program (HAMP), his servicer offered to modify his loan with terms that resulted in a relatively affordable payment. But the servicer required $8,000 in a good faith payment. Mr. Colon pulled together $2,000 of his savings to contribute to the down payment and CNYCN’s Mortgage Assistance Program (MAP) stepped in to provide a loan for the remaining $6,000. In order to ensure the modification’s long term affordability, MAP provided an additional $12,000 loan to reduce Mr. Colon’s principal so that the modification was more affordable. He continues to enjoy his retirement in his home of almost fifteen years saying, “without MAP, my family and I would be homeless.”

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Response

RELIEF

CNYCN’s response to the foreclosure crisis encompasses three major strategies: providing relief, fostering recovery, and advocating for reform. CNYCN provides relief to homeowners facing foreclosure by connecting them to the direct services of our Network Partners. We support our Network Partners by providing funding, up-todate knowledge, and programs specifically designed to support the demanding work of foreclosure prevention.

Funding Direct Service CNYCN aggregates funds from a variety of generous supporters including government, foundations, banks and corporations. Leveraging these public and private resources, CNYCN re-grants the majority of these funds to our Network Partners to support their housing counseling and legal services. The grant process builds in goal-setting and assessment for the Network’s activity as a whole and incorporates comprehensive data collection on each homeowner’s intake, services and

$18 million

REGRANTING TO NETWORK PARTNERS

outcome. This data helps CNYCN track program effectiveness, provides critical perspective on the realities of the foreclosure crisis and informs the development of innovative new programs that allow our network to help more homeowners.

CNYCN Call Center The CNYCN call center serves as the Attorney General’s Foreclosure Prevention Hotline where homeowners across New York State are connected to a free, quality, non-profit foreclosure prevention expert who can best address their needs. Homeowners that call NYC’s 311 with questions about mortgage help or foreclosure issues are also transferred to the CNYCN Call Center. The CNYCN Call Center also proactively reaches out to homeowners in mortgage distress by mailing flyers to homeowners that have fallen behind on their payments and calling homeowners scheduled for settlement conferences. These efforts make accessing foreclosure prevention services simple and easy.

Training & Technical Assistance

$2 million

TECHNICAL ASSISTANCE TO NETWORK PARTNERS

$550,000

OUTREACH SERVICES

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CNYCN’s Technical Assistance (TA) Program provides monthly trainings and targeted oneon-one assistance for Network Partners. LSNYC works to expand Network Partner coordination and settlement conference efficiency while also providing litigation support to legal services practitioners. NEDAP helps train and guide the network on local, state and national policy issues. NYMC helps to organize CNYCN’s monthly training sessions and regularly visits CNYCN’s housing

HOME BY HOME: NEIGHBORHOOD STABILIZATION IN NEW YORK CITY CENTER FOR NYC NEIGHBORHOODS: 2008-2012


counseling partners for on-site trainings. Each TA partner helps CNYCN identify and respond to agency-specific and network-wide needs.

Mentoring Program CNYCN’s Mentoring Program provides an avenue for experienced housing counselors and paralegals to share information and techniques with apprentice counselors so that best practices are well understood and widely adopted. We want to make sure all our Network Partners have what they need to provide the best assistance possible to homeowners, so CNYCN offers regular testing for individual counselors and paralegals to identify gaps and then show progress once new skills are mastered. CNYCN’s mentors have shown high proficiency in evaluating credit, assets and income for loss mitigation and are paired with apprentices. By shadowing as

their mentor works directly with homeowners, apprentices learn by example, gaining valuable skills and tools and maintaining the high quality of services across our network.

Listserv CNYCN and its Technical Assistance Partners, in partnership with the New York State Coalition for Excellence in Homeowner Education, administer a listserv for use by housing coun­selors and legal services providers. Reaching over 250 foreclosure prevention specialists across the country, the listserv acts as an important tool for sharing news about trainings and events as well as providing updates on critical foreclosure issues with a wider network of partners. This powerful resource provides an opportunity for service providers to seek advice on specific problems and provide assistance to their peers.

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Response

RECOVERY

CNYCN understands that a bright future for our city’s communities and neighborhoods is heavily dependent on the recovery of the housing market. Our work in foreclosure prevention speeds up the recovery process by expanding the resources available to our Network Partners and bolstering their efforts to provide long-term relief to homeowners in need.

Mortgage Assistance Program The Mortgage Assistance Program (MAP) lends up to $25,000 to qualified NYC homeowners at risk of foreclosure. Funds for MAP are provided by the City of New York’s Department of Housing Preservation and Development (HPD) and leveraged by private sources. These deferred repayment, 0% interest loans require no monthly payments. MAP loans are commonly used to pay arrears and reinstate a “healthy” mortgage, pay off a second mortgage or make a down payment on a non-HAMP modification. As of January 2013, MAP has made 81 loans totaling over $1.5 million to borrowers across the city, helping them stay in their homes and their neighborhoods.

$807

AVERAGE MONTHLY MORTGAGE SAVINGS FROM MAP ASSISTANCE

Financial Counseling with NYC DCA Office of Financial Empowerment High consumer (non-housing) debt is a common problem for homeowners in mortgage distress. Unmanageable consumer debt can include 14

a combination of credit card, student loan, or medical debt and often interferes with a homeowner’s ability to make housing payments in full and on time. The City of New York’s Department of Consumer Affairs’ Office of Financial Empowerment (OFE) has a network of financial counselors trained to help New Yorkers take control of their debt, improve their credit and reach their financial goals. CNYCN and OFE have developed a close partnership to coordinate the provision of these complementary services. With early funding from New York State Homes and Community Renewal (HCR), CNYCN helped co-locate OFE financial counselors at select Network Partner sites, leveraging city funding to maintain and expand the program. OFE counselors helped eliminate over $2.4 million in consumer debt for over 1,200 CNYCN clients served with the HCR funding. Improving homeowners’ financial stability helps prevent future mortgage problems and increases the long-term success rate of CNYCN’s foreclosure prevention interventions.

Escalations Program CNYCN established its Escalations Program in 2009 to speed up and improve the loan modification process for counselors and homeowners. By coordinating directly with senior staff at Bank of America, Chase, Wells Fargo, Citigroup and other servicers, the Escalations Program has helped Network Partners and their clients get better results. After encountering repeated delays or rejections through standard modification processes, housing counselors can refer a homeowner’s case to the Escalations team. CNYCN’s Escalations staff works with a dedicated team at each servicer making it possible to clear obstacles and expedite modification results. The program has

HOME BY HOME: NEIGHBORHOOD STABILIZATION IN NEW YORK CITY CENTER FOR NYC NEIGHBORHOODS: 2008-2012


escalated almost 800 cases and reduced the standard processing time by almost 50%. The resulting modifications save clients an average of $778 per month on their mortgage payments. Building on the success of these efforts, CNYCN, with support from Attorney General Schneiderman’s statewide Homeowner Protection Program (HOPP), has expanded the Escalations Program to serve homeowners across New York State.

$778

AVERAGE MONTHLY MORTGAGE SAVINGS FROM ESCALATIONS INTERVENTION

Neighborhood Improvement Project with Wildcat/Fedcap The Neighborhood Improvement Project (NIP), a partnership with Wildcat (now part of Fedcap), puts transitional workers on the ground in hard-hit neighborhoods to tackle the physical blight associated with distressed and abandoned properties. Since 2010, NIP has cleaned nearly 3,400 miles of streets and created close to 200 jobs for long-term unemployed residents, many of whom were residents of homeless shelters. With CNYCN’s support, the project launched in Queens, Brooklyn, and the Bronx and has since expanded citywide. In addition to helping residents maintain their neighborhoods, Wildcat workers have distributed 7,450 consumer education flyers about mortgage fraud and foreclosures to connect residents to CNYCN’s services.

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RECOVERY FEMA/Ryan Courtade

Response

Hurricane Sandy The infrastructure developed to respond to the mortgage crisis put the CNYCN network in a strong position to help homeowners affected by Sandy. Neighborhoods already struggling with mortgage delinquency were hit hard by the storm. In response, CNYCN raised over $1.25 million to support new Network Partner staff to ensure any homeowner affected by Sandy had access to service, made possible by significant funding from the Mayor’s Fund to Advance New York City. CNYCN also identified existing clients living in flooded areas, and shared this information with our Network Partners who reached out to offer additional assistance. We continue to seek out best practices in disaster relief, learning much from organizations that navigated the aftermath of Hurricane Katrina in Louisiana and Mississippi. Feedback from our initial Sandy relief efforts confirmed and underscored the need for significant federal funds for grants to repair damaged homes. While advocating for federal support, CNYCN has taken steps to ensure that homeowners are 16

able to access capital to make repairs by establishing the Neighborhood Recovery Fund (NRF), an emergency grant and loan program funded by Goldman Sachs Gives and the Robin Hood Foundation. NRF provides eligible homeowners with up to $5,000 in either a grant or interest-free loan to cover expenses incurred due to Hurricane Sandy when other sources of funds, such as the Federal Emergency Management Agency (FEMA) and homeowners or flood insurance, are not available or do not cover the types of expenses incurred. In only 3 months of operation, NRF disbursed grants and loans totaling $535,000 to 112 households, mostly with incomes below the area median. Hundreds of applications have been received and our Network Partners could submit hundreds more were funding available. Given the immense need, CNYCN is working to raise funds to provide grants or loans to 800 households. By filling the gaps left by other programs, NRF ensures that homeowners can maintain affordable and sustainable housing even after weathering Hurricane Sandy.

HOME BY HOME: NEIGHBORHOOD STABILIZATION IN NEW YORK CITY CENTER FOR NYC NEIGHBORHOODS: 2008-2012


RESEARCH TO REFORM CNYCN collects, analyzes and shares data to inform our work and to maximize the impact of the services we deliver to homeowners. Servicelevel information from across the CNYCN network helps us better understand the outcomes our Network Partners achieve and how our resources help homeowners. With information on over 18,000 households, we have a detailed picture of the mortgage crisis in New York City, how our services make a difference and the need for new policies and programs. Our Average Homeowner Profile is an example of the kind of insight our data can provide. Looking at zip codes with the highest volumes of intakes, we can compile an Average Homeowner Profile for each neighborhood. This profile offers a glimpse of the median income, monthly mortgage payment, family size and overall debt burden of the New Yorkers we serve across diverse communities (see pages 7 and 11 for a citywide Average Homeowner Profile). We also rely on delinquency

Response

data from New York State’s Department of Financial Services (DFS) to map NYC homeowners that are falling behind on their mortgages and to track trends like rising or stabilizing rates of delinquency in certain neighborhoods. These thousands of data points present a unique perspective on the struggles of individual households and a broader picture of entire neighborhoods burdened by unmanageable debt. Moreover, it informs how we direct resources to where they are most needed. With the DFS delinquency data, the CNYCN Call Center proactively reaches out to at-risk homeowners alerting them to their rights and connecting them to our foreclosure prevention services. Our data “snapshots” of families in crisis help us focus on key strategies for achieving housing affordability and sustainability for middle income families such as: principle reductions to stay in the home, increased down-payment assistance for initial purchase, and access to housing mobility to relocate to more affordable housing if necessary.

HOMEOWNER SPOTLIGHT

Ryan Letts

Ryan Letts once owned and lived in a two-family home in East New York, Brooklyn. He had a decent job, paying tenants and good credit. But the same month he purchased the home, he lost his job. “Everything went downhill from there,” Ryan says. “My tenants didn’t pay their rent. I got behind on the mortgage. It was overwhelming.” Ryan spoke to the representatives at his bank, but found the experience daunting. “At first they were willing to negotiate,” he said, “but their terms were very unreasonable.” Ultimately, he decided he needed help from an

outside source. “I didn’t want to lose my home, but my counselor at Grow Brooklyn took a hard look at the numbers and said sometimes it’s better to cut your losses and walk away. I knew in my heart she was right. So that’s what I decided to do. It wasn’t an easy decision, but it gave me a chance to start over.” Ryan sold his home for less than he owed on his mortgage, an option called a short sale, but the remaining debt was forgiven. In the end he did not owe the bank anything. He is slowly getting back on his feet. “It’s a wonderful feeling,” he said, “not having that debt hanging over my head.”

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Impact CNYCN’s work to support distressed homeowners in New York through individual and systemic interventions radiates beyond the neighborhoods where they live. Not only do homeowners, their neighbors and community benefit from CNYCN interventions; the mortgage servicer and investor gain as well. Given that the average cost of providing foreclosure prevention services to a homeowner is under $1,000, the return on our collective investment to individuals, lenders and local communities is substantial.

Value to Homeowners In a study using CNYCN data, homeowners who receive foreclosure prevention counseling from CNYCN Network Partners are 30% more likely to receive a modification.8 On average, CNYCN clients that received a modification experienced a $1,262 reduction in their monthly mortgage payments. For some homeowners, especially those that owned their homes well before the crisis, retaining their homes also means preserving future home equity, often a family’s largest asset.

$1,262

AVERAGE MONTHLY MORTGAGE SAVINGS

When keeping their homes becomes unaffordable, homeowners in CNYCN’s network are informed of their non-retention options. With assistance, these homeowners are able to negotiate 18

9,595

HOUSEHOLDS WITH CHILDREN ASSISTED

short sales or deed-in-lieu of foreclosure transactions which are faster and less damaging to a homeowner’s credit score. CNYCN is also working to ensure that these homeowners receive support during their relocation to new housing through a Housing Mobility Program pilot launched in 2013. CNYCN provides homeowners with support, guidance, critical information and representation to help them in their struggle to keep their homes. With the knowledge that they have options and advocates, these homeowners are able to push beyond the uncertainty of foreclosure and take action to secure affordable housing for the long term. Since Hurricane Sandy, the presence of a coordinated network that serves homeowners and has the ability to rapidly and efficiently deploy resources has been incredibly important in responding to the devastation brought by the storm. From disseminating information to training counselors on navigating post-Sandy legal, mortgage, insurance and housing issues, CNYCN’s network has been instrumental in reaching and guiding homeowners in need.

Value to Lenders CYNCN works with homeowners and mortgage servicers to transform nonperforming loans into performing assets. Through CNYCN’s interventions, $1.3 billion in assets have been restructured. By securing sustainable, non-foreclosure outcomes, CNYCN helps lenders avoid the costs of fore-

HOME BY HOME: NEIGHBORHOOD STABILIZATION IN NEW YORK CITY CENTER FOR NYC NEIGHBORHOODS: 2008-2012


Area of Impact When CNYCN prevents one foreclosure, all homeowners within 250 feet share the benefit. 250 foot radius

lis pendens

2%

REDUCTION IN SALE PRICE OF HOMES WITHIN THIS RADIUS

Value to the Community

$1.3 billion ASSETS RESTRUCTURED

closure, estimated at over $50,000 per loan.9 For the loans that CNYCN has assisted with restructuring, reinstatement or other alternatives to foreclosure, lenders have saved an aggregate of $192 million.

$192 million SAVINGS FROM FORECLOSURES AVOIDED

CNYCN’s work reduces the number of neighborhood foreclosures, thereby decreasing the potential for a negative impact on a community. Preventing foreclosures preserves equity across the neighborhood. As the rate of foreclosures rises, research shows that crime increases too.10 Neighborhoods struggle with vacant and abandoned buildings and the spread of disinvestment and disengagement. With CNYCN’s assistance, more homeowners resolve their mortgage distress and, especially after a modification, are better positioned to reinvest in their homes and communities. In the end, neighborhoods reap the benefits of less crime and more stability. The positive contagion effect of homes stabilized through modifications, MAP loans or other sustainable mortgage relief can help assure neighbors that home values will level out and their community will thrive.

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Collective Power of the Network With the support of our government, foundation and bank partners, CNYCN and our Network Partners are able to reach and assist more and more homeowners, as those we help recommend our services to their friends and neighbors. From homeowners to advocates to partners in government, we have the opportunity to change the face of lending, servicing and foreclosure practices in this city and beyond. In June 2012, Attorney General Eric Schneiderman named CNYCN one of two Anchor Partners in the state’s Homeowner Protection Program (HOPP). Drawing on the experience of the past five years, CNYCN now provides contract management, data

collection and program evaluation services for the New York City grantees in the AG’s statewide program, which will commit $60 million over three years to fund housing counseling and legal services for struggling New York State homeowners. CNYCN manages over $8 million in awards to 39 groups in New York City, operates the AG’s statewide foreclosure prevention hotline and provides loan escalation services to the HOPP statewide network. The AG’s innovative program has drawn on key components of CNYCN’s model, serving as an endorsement of the vision of our founders and early supporters, and recognition of the importance of a coordinated and integrated response.

5 Years of Funding

Flow of Funding

$18 million $2 million DIRECT FORECLOSURE PREVENTION SERVICES

TECHNICAL ASSISTANCE TO NETWORK PARTNERS

BANKS

FOUNDATIONS

$2.2 million $550,000 MAP AND NRF LOANS OR GRANTS

OUTREACH SERVICES

TECHNICAL ASSISTANCE

5 Years of Reach

18,000+

NETWORK PARTNERS

HOUSEHOLDS SERVED

5,500

3,179

UNITS STABILIZED

PERMANENT AND TRIAL MODIFICATIONS

HOMEOWNERS

$1,262

AVERAGE MONTHLY MORTGAGE SAVINGS

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NEIGHBORHOODS

HOME BY HOME: NEIGHBORHOOD STABILIZATION IN NEW YORK CITY CENTER FOR NYC NEIGHBORHOODS: 2008-2012

GOVERNMENT


Consolidated revenue and expenses for 2008-2012. Complete audited financial statements available upon request.

Financial Summary 39%

GOVERNMENT CONTRACTS

40%

FOUNDATION CONTRIBUTIONS

$28.4 million* REVENUE

21%

CORPORATE CONTRIBUTIONS

35%

LEGAL SERVICES

9%

30%

GENERAL & ADMINISTRATIVE

HOUSING COUNSELING

79% 7% TECHNICAL

REGRANTING

ASSISTANCE

$27.3 million EXPENSES

2%

12%

DIRECT PROGRAM

EDUCATION & OUTREACH

5%

OTHER REGRANTING

*$803k of the excess revenue is temporarily restricted. CRISIS  RESPONSE  IMPACT  ONWARD

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Looking Ahead With the cloud of mortgage distress hanging over many NYC neighborhoods, CNYCN is committed to helping New York homeowners weather the financial crisis and beyond. The devastation of Hurricane Sandy has reinforced the need for comprehensive, city-wide services for homeowners and strengthened our resolve to help those in need. This commitment comes from our conviction that homeownership is a critical element of vibrant and strong communities. Homeownership is a vital means of conferring social and economic benefits to many families and has historically helped lift lower income families into the middle class. Neighborhoods with high rates of

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homeownership show increases in property values and decreasing turnover in occupancy over time.11 The foreclosure crisis has challenged, but not erased, the importance of homeownership as an asset and community building tool. New national regulations on mortgage servicing and mortgage securitization from the Consumer Financial Protection Bureau will certainly impact the NYC housing market and CNYCN will monitor local effects on homeownership and affordability going forward. Over its first five years, CNYCN has built a strong network of providers across the city. With pro-bono legal counsel from Sullivan and Cromwell LLP, we have developed sound programs

HOME BY HOME: NEIGHBORHOOD STABILIZATION IN NEW YORK CITY CENTER FOR NYC NEIGHBORHOODS: 2008-2012


and policies. Our longstanding relationships with funders such as the Open Society Foundations and the Ford Foundation continue to provide the support to reach homeowners in need. A special project with Bank of America’s Customer Assistance Center has helped us understand how to reach homeowners and has shown that customers with housing counselors achieved markedly improved results. New partnerships have expanded CNYCN’s community of service providers from 26 to 39 so we can reach even more homeowners facing foreclosure. Providing foreclosure prevention services to over 18,000 homeowners, first in the wake of the housing crisis and now in the wake of Sandy, has taught us that families need access to high quality information and assistance to understand and address the financial, legal and material challenges of purchasing and maintaining a home. Hurricane Sandy struck many of the neighborhoods hardest hit by foreclosure, but also demonstrated the need for services in other neighborhoods now ravaged by the storm. Securing the legal and financial resources necessary to rebuild or relocate will be critical to homeowner and neighborhood recovery. Sandy also revealed that homeowners need much more information

about property and flood insurance. CNYCN will ensure homeowners have resources and representation when negotiating with lenders and insurers for adequate coverage. In the coming years, CNYCN will continue to weave new resources and solutions into its existing network and hub structure in order to quickly, effectively and efficiently respond to homeowner needs.

Working together, we will fulfill the needs of current and future homeowners: • Families considering purchasing a home will have support and access to mortgages they can afford. • Homeowners struggling to keep up with their payments will have help in understanding their options. • Lenders must offer all households fair mortgage terms and consistent treatment if they fall behind.

• Homeowners with affordable options can stay in their homes and those who cannot afford to stay will have a safety net to ensure access and mobility to new housing. • Families impacted by disasters will have knowledge of, and access to, the resources and services they need to get back on their feet, restore their property, secure appropriate housing and rebuild smarter together.

CRISIS  RESPONSE  IMPACT  ONWARD

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Join Us CNYCN’s accomplishments are shared by our Network Partners, government officials, foundation leaders, corporate and bank executives, and nonprofit advocates, who generously contribute their financial resources, time and programmatic expertise. Together, we have built a powerful network helping thousands of homeowners in neighborhoods across New York City. Our list of supporters continues to grow. Mayor Bloomberg, Speaker Quinn and her colleagues

in the Council, such as Councilman Fidler, have been joined by Attorney General Eric Schneiderman in providing critical leadership in government. The Attorney General has pledged to support homeowners struggling through the foreclosure crisis with funding from the New York State allocation of the National Mortgage Servicing Settlement. Join our partners in our commitment to neighborhood stabilization and to keeping the dreams of homeownership alive.

Funding Partners Altman Foundation Astoria Federal Savings New York Attorney General Eric Schneiderman’s Office Bank of America Charitable Foundation, Inc. Bank of New York Mellon Booth Ferris Foundation Capital One Foundation Citi Foundation Deutsche Bank Enterprise Community Partners, Inc. F.B. Heron Foundation Fannie Mae Ford Foundation Freddie Mac Goldman Sachs Gives HSBC Bank, USA, NA

International Advertising Association JP Morgan Chase Foundation Living Cities M&T Charitable Foundation Mayor’s Fund to Advance New York City Merrill Lynch Mizuho USA Foundation Morgan Stanley Private Bank, N.A. NeighborWorks America New York City Council New York Community Trust New York State Division of Housing and Community Renewal New York State Office of the Attorney General NYC Department of Housing Preservation and Development

NY Women’s Foundation (RISE-NYC!) Ocwen Open Society Foundations Paulson & Co. Inc. Robin Hood Foundation Rockefeller Foundation Rockefeller Philanthropy Advisors— Durst Family Foundation Seth Sprague Educational and Charitable Foundation Sovereign Bank Foundation State Bank of India United Way of New York City Union Bank Wachovia Wells Fargo Foundation Washington Mutual Wells Fargo Housing Foundation

Our work would not be possible without the extraordinary efforts and support of the City of New York and New York State. Close relationships with elected officials and civil servants, especially our partners in the City’s Department of Housing Preservation and Development and the State’s Office of the Attorney General, have made possible so many of our accomplishments in our first five years and will allow us to expand our services in the coming years.

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HOME BY HOME: NEIGHBORHOOD STABILIZATION IN NEW YORK CITY CENTER FOR NYC NEIGHBORHOODS: 2008-2012


CNYCN Board

Herbert Sturz, Board Chair Vicki Been Deborah Boatright Lewis Fidler, ex officio Colvin Grannum, Treasurer Cathie Mahon Ronay Menschel, Board Secretary Jonathan Mintz Shola Olatoye Denise Scott Mathew Wambua, ex officio

Emeritus Members Rafael Cestero Shaun Donovan Daniel Nissenbaum Jack Rosenthal Abby Jo Sigal Michael Weinstein

CNYCN Staff

Christie Peale, Executive Director Candybelle Acevedo Winston Berkman Alan Biller Clementine Brown Chris Cardinal Brian Cruz Ronnie Delli Carpini Sage Erskine Gail Flowers Matthew Hassett Braden Listmann Anna Masilela Alana Massey Brendan McMullen Lucy Raimes Rudy Ulin Caitlin Valley Patricia Vera Courina Yulisa Michael Hickey, Founding ED

CRISIS  RESPONSE  IMPACT  ONWARD

WRITING

Noam Gross-Prinz Enid Harlow EDITING

Alana Massey DESIGN

Leylâ Heckrotte PRINTING

FEDCAP

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Sources 1 Isaacs, Julia B. “The Ongoing Impact of Foreclosures on Children” The Brookings Institution, 2012. 2 Schuetz, Jenny, Vicki Been, and Ingrid Gould Ellen. “Neighborhood Effects of Concentrated Mortgage Foreclosure.” Journal of Housing Economics 17.4 (2008). 3 Regional Mortgage Brief. New York: Federal Reserve Bank of New York, 2011. Available from http://www. newyorkfed.org/regionalmortgagebriefs/index.html. 4 Furman Center for Real Estate & Urban Policy. Calculations of Public Data Corporation (PDC) Lis Pendens data. January 2007 to September 2012. “The analysis includes all mortgage related lis pendens filed. In many cases, the filing of a lis pendens does not lead to an actual foreclosure; instead the borrower and lender work out some other solution to the borrower’s default or the borrower sells the property prior to foreclosure. Occasionally, multiple lis pendens will be filed on a property within a short time period. If a lis pendens is filed on a property within 90 days of the original notice, it is not included in our data.” 5 U.S. Census Bureau. Census 2010 Summary File 1 Table QT-H3 – New York City, New York. Household Population and Household Type by Tenure. 6 U.S. Census Bureau, 2011 American Community Survey 5-Year Estimates, Table B25032 - New York City, New York. Tenure by Units in Structure.

8 Been, Vicki, et. al. “Determinants of the Incidence of Loan Modifications” New York University: Furman Center for Real Estate & Urban Policy, 2011. 9 Focardi, Craig. “Servicing Default Management: An Overview of the Process and Underlying Technology.” TowerGroup Research Note #033-13C. November 2002. As cited in:

Getter, Darryl E. “Understanding Mortgage Foreclosure: Recent Events, the Process, and Costs.” Congressional Research Service, 2008; and,

U.S. Congress. Joint Economic Committee. The 2007 Joint Economic Report. (110 S. Rpt. 251.) Available from http://jec.senate.gov/public/?a=Files.Serve&File_ id=618bf038-5dad-4ff1-b7ad-e685c2b6bb77.

10 Ellen, Ingrid Gould, Johanna Lacoe, and Claudia Ayanna Sharygin. “Do Foreclosures Cause Crime?” New York University: Furman Center for Real Estate & Urban Policy, 2011.

Immergluck, Dan, and Geoff Smith. “The Impact of Single-Family Mortgage Foreclosures on Neighborhood Crime.” Housing Studies 21.6 (2006): 851–66.

11 Rohe, William M., and Leslie S. Stewart. “Homeownership and Neighborhood Stability. “Housing Policy Debate” 7.1 (1996).

7 New York State Department of Financial Services. Mortgage Delinquencies. Monthly average of new delinquencies (0-60 days late) from February 2010 to February 2012.

NOTE Majority of data are as of December 2012. For specific figures, contact CNYCN.

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HOME BY HOME: NEIGHBORHOOD STABILIZATION IN NEW YORK CITY CENTER FOR NYC NEIGHBORHOODS: 2008-2012


Glossary delinquency

loan modification

A homeowner who does not make payments as required by the terms of the mortgage loan becomes delinquent. Ninety days or more in arrears is considered seriously delinquent. Once a homeowner is seriously delinquent, the mortgage servicer files a lis pendens and commences foreclosure proceedings.

A negotiated change made to an existing home loan (changing principal due, interest rate, payment structure or term). Ideally, this reduces the home loan payments to an amount the homeowner can better afford to pay.

foreclosure A foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a homeowner who has stopped making payments to the lender. The mortgage lender (bank or other lien holder) may force the sale of the home used as the collateral for the loan.

HAMP Home Affordable Modification Program—the Obama Administration’s primary foreclosure prevention program—modifies the mortgage terms to result in a monthly mortgage payment of 31% of a homeowner’s verified monthly gross income.

home retention A homeowner can retain his/her home after delinquency or foreclosure proceedings begin by reinstating or modifying the mortgage loan, thus avoiding foreclosure.

lis pendens From the Latin for “suit pending,” a lis pendens is the first filing made during the foreclosure process. After a mortgage has gone unpaid for three consecutive months, the lender files a lis pendens, suing the homeowner for non-payment of the mortgage.

mortgage A mortgage provides security, in this case, a specific piece of real property, for the debt agreed to under the note. In the event that the debtor is unable to repay the loan, the creditor takes ownership of the security, in this case, the home.

non retention Homeowners unable to retain ownership of their homes have options for avoiding a judgment of foreclosure that include leaving the home, such as deed-in-lieu of foreclosure transactions and short sales.

note A note is an obligation by, in this case, a homeowner to repay a debt to a lender. The note details the specific conditions, including term and interest rate, which govern the repayment of the loan.

short sale An agreement by a lender allowing a delinquent homeowner to sell his/her property for less than he/she owes. Short sales are faster than foreclosures and less costly to lenders. In some cases, the homeowner is responsible for repaying the difference between the debt and the sale price (deficiency). In other cases, this difference can be forgiven.

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Home by Home: Neighborhood Stabilization in New York City