NYC Foreclosure Prevention Gap Loan Program
NEDAP's Foreclosure Prevention Gap Loan Program helps low and moderate income NYC homeowners at risk of foreclosure. To date, NEDAP's Gap Loan Program has helped more than 300 New Yorkers avoid foreclosure and stay in their homes. NEDAP operates the Program in partnership with the Lower East Side People's Federal Credit Union, a community development lender.
NEDAP launched the Gap Loan Program 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 Gap Loan Program was designed to complement existing foreclosure prevention efforts in NYC. Through the Gap Loan Program, 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 purchased her home in Queens in 2006. She received two predatory mortgages, an interest-only, adjustable rate mortgage and an extremely high-cost second mortgage. Ms. C had to work two jobs to keep up with her mortgage payments, and managed to do so for several years despite the exorbitant interest rate—13.75%—on her second mortgage. In 2009, Ms. C was laid off from her second job and was unable to secure another position. As a result, Ms. C could no longer keep up with her mortgage payments and sought help from a foreclosure prevention advocate.
The advocate helped Ms. C obtain an affordable loan modification for her primary mortgage, but she was still behind on her high-cost second mortgage. With a commitment for a NYC Foreclosure Prevention Gap Loan in hand, the advocate negotiated down the balance of the second mortgage, convincing Ms. C’s mortgage servicer to accept a short pay-off of $20,000 to satisfy her $83,000 mortgage. |
Gap Loans have been used, for example, to:
- Make an up-front payment needed to qualify for an affordable loan modification
- 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, x201 or alexis@nedap.org. |
