Designed to keep people in their homes, Massachusetts state and local officials, nonprofit leaders and mortgage lenders joined together with homeowners to unveil an ambitious five-point foreclosure-prevention plan targeting seven of the state's hardest hit cities.

The strategy, fashioned after New York's plan, consists of targeted neighborhood stabilization pilot programs in six Bay State cities. The plan expands upon the $250 million State Housing program, announced in July. To increase utilization of Massachusetts' Housing's loan refinancing program, transition resources from lenders, consumer outreach to education and lending best practices coordinators have joined forces to address the national problem at a state level.

In the past 12 months, more than 25,000 foreclosures were filed in Massachusetts, a 76 percent increase over the same period last year.

The Details

The stabilization pilot programs calls on participating lenders to provide $5,000 to the housing counseling agency working with an eligible homeowner who loses a home to foreclosure, or provides a deed in lieu of foreclosure. Part of that money will go to the homeowner, to enable him or her to pay for first and last month's rent and moving expanses, while the remainder will be retained by the nonprofit to help offset counseling expenses.

The transition assistance will be limited to borrowers who have an adjustable-rate mortgage (ARM) as their first mortgage, own a one to four family home, and among other criteria are working with a housing counselor approved or sponsored by the U.S. Department of Housing and Urban Development (HUD). The program also provides counseling and fixed-rate refinancing to struggling sub-prime borrowers with credit scores as low as 560. That program is privately financed through a $190 million commitment from Fannie Mae and a $60 million commitment from Massachusetts Housing.

Government agencies will partner with lenders and nonprofits to reclaim pre-foreclosure and foreclosed properties in those designated communities. The properties will be sold to qualifying first-time homebuyers with the goal of returning them to fully-occupied status as quickly as possible.

But visions of purchasing a property for a substantial discount need to be balanced with a realistic view of what it actually takes to buy a pre-foreclosure: caution, patience and flexibility. It's a process that's trying very hard to address a critical problem, still there are options during the pre-foreclosure stage available to the homeowner.

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