New York City is implementing a new program, the Community Restoration Program, to assist those in foreclosure from losing their homes. Under the program, the city will buy several mortgages owned by the Federal Housing Administration (FHA). The program, according to Bill de Blasio, mayor of New York City, is unique. It is designed to put the government and struggling homeowners on the same side.
The initial program will provide the city with funds to buy 24 mortgages for single and multifamily homes. In total, there will be 41 units located in Brooklyn, the Bronx, Staten Island, and Queens. Mayor de Blasio added that, while New York City's housing market is strong, there are several neighborhoods that have not recovered from the recession. In these areas, some homeowners are facing foreclosure.
The Community Restoration Program will have a $13 million budget to start with. This funding comes from several sources, including the New York City Council, Goldman Sachs' Urban Investment Group, a Local Initiatives Support Corporation grant, and funds from Morgan Stanley.
Before revisions made by the Department of Housing and Urban Development in 2015, this program could not so easily have existed. After HUD revised the Distressed Asset Stabilization Program, municipalities were given the option of buying distressed mortgages by direct purchase. Before that, these properties were auctioned, and most municipalities would have been unable to purchase as many.