Protesters say new mortgages designed to prevent foreclosures are trapping them in debt

Cheryl and Dante Ortiz were diagnosed with different types of cancer in the same week. delinquent on their mortgage. The day after their doctor’s appointment, they rushed out of the hospital to sign papers in an attempt to save their home in Southbridge, Massachusetts.

“We had a biopsy, taped his neck all over, and went straight to Boston to sign the mortgage papers,” Cheryl Ortiz recalls. “The only thing I remember about October 31, 2013 is that I signed the papers there and was on the verge of losing her husband. I don’t ask what newspapers were there or who was there. Please—I don’t know.”

The couple signed a “gratitude sharing” mortgage with a Roxbury-based nonprofit, which it says will help distressed homeowners avoid foreclosure.BlueHub Capital bought Ortiz’s home from the bank and sold it back to the couple. When she refinanced three years later, Cheryl Ortiz says she wished she had read the fine print. The mortgage they signed locked them into paying 52% of BlueHub’s stake. House. She owed her $40,000 to the lender before taking out her new loan.

On Tuesday, Cheryl Ortiz and dozens of other homeowners rallied against the company’s lending practices at a protest outside BlueHub’s Roxbury headquarters, formerly Boston Community Capital. Cheryl, her husband, and her 17 others called the nonprofit’s practices “predatory” and “deceptive” in a lawsuit filed in Suffolk Superior Court two years ago. They all received mortgages through BlueHub’s Stabilizing Urban Neighborhoods (SUN) program.

Cheryl Ortiz stands outside BlueHub headquarters in Roxbury, Tuesday, June 14, 2022.

Tori Bedford / GBH News

“They sounded like a godsend and we were saved and got a home,” Cheryl Ortiz said. They told us we didn’t need a lawyer as they provided and every step of the way they assured us it was in our best interest and that we were safe. ”

BlueHub has defended its lending practices as beneficial to borrowers in distress.

“Nearly all homeowners are significantly wealthier by participating in the BlueHub SUN program than they would have been if they had defaulted or remained in foreclosure,” the spokesperson said in a statement to GBH News. says. It runs a similar program but not at a much lower price. ”

Since 1985, the foreclosure prevention nonprofit says it has worked with more than 1,000 families in 29 states through its Gratitude Shared Mortgage Program. A spokesperson said BlueHub has “fully disclosed its terms to all homeowners on multiple occasions. All complaints filed by plaintiffs with the Massachusetts Banking Division have been formally dismissed.”

According to Molly Goodman, executive director of Midas Collaborative, a nonprofit focused on economic stability and affordable housing in Massachusetts, homeowners facing foreclosure from the 2008 housing crisis Shared assessed mortgages have emerged as an option for

“It was very unique in that no one had ever experienced a significant drop in real estate prices before, and it was kind of a last resort to keep homeowners at home,” she said. “This isn’t the kind of mortgage program that first-time homebuyers go out and use for their buying program, but it’s a response to all the negative and predatory options that already existed.” and an effort to keep people in their homes and communities.”

The agreement to pay above-market interest rates and a portion of the home equity was created as a stopgap measure to protect lenders like Blue Hub from what began as a financially risky practice, Goodman said.

“From 2009 to 2015, I don’t think a lot of people could have predicted that the housing market would be as bullish as it is now,” she said. “At the time, there was really a risk that they could lose money. They also have investors who fund the program and that’s why you see higher interest rates. .”

Homeowners like Nardella Thomas, who signed up for a shared-evaluation mortgage with BlueHub in 2012, said she was not transparent about owing 42% of the stake. Thomas has taken on two jobs to keep her home in Webster, Massachusetts on payroll.

“It’s predatory and they have the audacity to say they’ll work with the home owner if we sign the deed,” Thomas said. We didn’t sign up for this.”

In response to the criticism, a BlueHub spokesperson said, “Homeowners who exit the program are enjoying substantial home equity, personal wealth, that would otherwise not have been available.”

In 2020, BlueHub made about $21 million in interest on loans, according to the company. financial statementIn a 2020 legal complaint against the nonprofit, attorneys representing Ortiz, Thomas, and other plaintiffs described the proceeds from shared valuation mortgages as “exorbitant profits.”

The lawsuit, filed by legal and financial resources provided by Neighborhood Assistance Corporation of America, is currently in the deposition stage, CEO Bruce Marks said.

“We intend to dismiss all their executives who are masterminds of this predatory fraud,” he said. “Regulators have dropped the ball on this. The Massachusetts banking commissioner has dropped the ball on this. [Massachusetts] The Attorney General dropped the ball on this one. That is why we are suing. ”

The lawsuit alleges that BlueHub’s lending practices are “disliked.” existing state law This requires lenders to inform borrowers of the most affordable loan options.

The case is scheduled to go to Suffolk Superior Court in Boston later this year.

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