Impact Profile: BlueHub Capital

Credit: Marilyn Humphries Photography

Over the last decade, Natural Investments clients and other accredited investors have contributed more than $173 million to a unique and highly impactful initiative by BlueHub Capital called Stabilizing Urban Neighborhoods (SUN). The nonprofit program has helped more than 1,000 homeowners in foreclosure avoid eviction by purchasing homes at a deep discount from mortgage lenders and then selling the homes back to the former owners immediately, so they don’t have to move. The SUN initiative provides the owners with fixed-rate, thirty-year mortgages with monthly payments that are 30% lower, on average, than prior to foreclosure. This ingenious initiative stabilizes both individual households and neighborhoods by securing the foundation for sustainable, long-term home ownership.

Founded in 2009, on the heels of the financial crisis, the SUN Initiative was designed to mitigate the destructive impacts of foreclosure evictions on families and communities. Over the last decade, more than 6.4 million families have lost their homes to foreclosure, leading to widespread displacement and disrupted lives. Lower income communities are far more impacted than others. Homes in foreclosure (and their occupants) often suffer from deferred maintenance and neglect because there are few incentives or resources to keep up the home. In turn, neighborhoods with many foreclosures can become blighted, lowering the quality of life for many. These are the type of neighborhoods and homeowners that the SUN Initiative focuses on within its geographic target areas of Connecticut, Illinois, Massachusetts, Maryland, New Jersey, Pennsylvania, and Rhode Island.

The SUN Initiative works by identifying and pre-qualifying homeowners in foreclosure that have a good chance of succeeding with new, lower mortgage payments. They developed an underwriting process tailored for borrowers whose credit has been damaged by foreclosure proceedings. Once they have a signed commitment from the occupant to repurchase the home, SUN begins negotiations to acquire the property. If SUN succeeds in purchasing and reselling the property to the occupant, the new mortgage agreement contains several unique provisions to maximize the owner’s chances of long-term success:

  • SUN identifies any major repairs needed and builds the cost into the new mortgage, getting the home back into shape right away.
  • SUN creates a Capital Reserve Account for each borrower that is available for personal emergencies or unexpected home expenses that might otherwise compromise mortgage repayment. It’s funded with 1.5% of the initial loan amount and a portion of ongoing mortgage payments. Unused funds are ultimately applied back to the principal of the mortgage for the benefit of the borrower.
  • SUN matches the mortgage payment schedule to the borrower’s paychecks, to help keep payments on track.
  • SUN reports to credit agencies, helping borrowers rebuild their credit.

Thanks to the innovators at BlueHub Capital and the support of investors like yourself, the SUN Initiative continues to report outstanding community impact and serves as a model that can be replicated nationwide.

Photo Credit: Marilyn Humphries Photography

James Frazier

James Frazier

Welcome to my archive of newsletter articles and blog posts. For more information on my service offerings, please go to my advisor webpage.