New program helps people avoid foreclosure
There were a million foreclosures of American homes last year. And there are expected to be nearly another million this year. A lot of folks are desperate, so we asked CBS News chief business correspondent Anthony Mason to look for an innovative program somewhere - that's keeping people in their homes.
He found it in Boston, where a new kind of financial institution is buying foreclosed homes and selling them back to the original owners.
RANDOLPH, Mass. - Monica and Mike Bassila's housing nightmare started like so many others, with foreclosure and the threat of eviction.
Monica teared up when she said there were 80 people standing outside her house, wanting to buy it.
But their story has a different ending. The Bassila's house was sold to a nonprofit financial group called Boston Community Capital, which, this week, agreed to sell it back to them.
"We're prepared to schedule your closing," said Elyse Cherry. "So you can have your home back."
"I know I'm gonna cry," Monica said. "I'm sorry." (9:03:56)
Cherry, CEO of Boston Community Capital said, "The goal really, is to keep as many people who are going through this foreclosure process in their homes as possible."
"Has it been difficult to persuade the banks to do this?" Mason asked.
"Well, it has been difficult," Cherry said. "And it continues to be difficult."
But here's how BCC is doing it: the Bassilas had a $330,000 mortgage, but the value of their house plunged to 180,000. BCC bought the foreclosed property from their bank at that lower price, and is selling it back it Bassilas for $233,000. That lowers their monthly payment by 25 percent.
But this is not a charity. Bcc is financed, in part, by big investment funds that expect a return.
Amy Domini manages the Sustainability Group - a billion dollar fund for wealthy investors. "My investors want to be part of the solution. That's what I attempt to give them. When they call and ask what their portfolio is doing, this is what they're talking about."
BCC makes sure clients like the Bassilas can afford even the lower mortgage and have steady paychecks. Monica works at the state Department of Health. Mike is on disability.
In a little over a year BCC has helped 125 Boston area families. Only one has defaulted.
"There will be people who are paying their mortgages who see this and say, 'why should those people be helped,'" Mason said.
"I'm hard pressed to see how we're helped as a country by making more people homeless and putting more people out of their homes," Cherry replied.
BCC hopes to roll this program out nationally. In Boston alone, 1,700 are in foreclosure.
But now, Monica and Mike Bassilla, who have two daughters and a son in the Marines, won't have to move.
"Today is a day I've waited for, for the past 3 years," Monica said. "I want to take that sign down."
After a three year fight to keep her house, Monica Bassila is finally home again.
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