NYC Foreclosure Prevention Gap Loan Fund
NEDAP's Foreclosure Prevention Gap Loan Fund helps low and moderate income NYC homeowners at risk of foreclosure. To date, NEDAP's Loan Fund has helped more than 250 New Yorkers avoid foreclosure and stay in their homes. We expect to help many more homeowners in the coming years as we increase capital for the fund, which NEDAP operates in partnership with the Lower East Side People's Federal Credit Union, a community development lender.
NEDAP launched the Loan Fund in 2008, after receiving a $1 million start-up grant from an anonymous donor. Every penny of the $1 million -- and funds raised since -- is used to fund or partially secure Foreclosure Prevention Gap Loans. This structure has enabled NEDAP to leverage the donated funds several times over.
NEDAP's Loan Fund was designed to complement existing foreclosure prevention efforts in NYC. Through the Fund, NEDAP provides low-cost loans, generally up to $25,000, to eligible homeowners who are fighting foreclosure. Loan terms are flexible and are based on each borrower’s circumstances and ability to repay.
Borrower Profile - Ms. C
Ms. C, a retired homeowner, cares for her disabled son and a foster child. When Ms. C bought her home in Jamaica, Queens, in 2001, the builder that sold her the home also made her a subprime, interest-only mortgage, with a huge balloon payment due in February 2009. With her income limited to Social Security and payments from the Administration for Children’s Services, there was no way Ms. C could afford the balloon payment, and she feared her family would face foreclosure.
Ms. C reached out to the Parodneck Foundation, which provides loan remediation services to seniors, for help. Her mortgage counselor at Parodneck helped her secure a reverse mortgage of $251,000 – which fell short of the $290,000 she owed on her subprime loan.
To help close the shortfall, NEDAP approved Ms. C for a Foreclosure Prevention Gap Loan of $25,000. With NEDAP’s loan commitment in hand, Ms. C’s counselor was able to forcefully negotiate with the mortgage lender to forgive the remaining balance of $14,000. |
Gap Loans have been used, for example, to:
- Make an up-front payment needed to qualify for an affordable loan modification
- Close a gap to enable a senior citizen to pay off a high cost mortgage with an affordable reverse mortgage
- Make a short pay-off on a second mortgage.
To apply, a homeowner must work with a foreclosure prevention counselor, attorney or other advocate. The advocate will work with the homeowner to ensure that the Gap Loan is part of a sustainable long-term mortgage plan. The advocate will complete the Gap Loan application and communicate with NEDAP during the loan approval and closing process.
Click here for the Program Guidelines and Application. For more information, contact Alexis Iwanisziw at (212) 680-5100, x209 or alexis@nedap.org. |
