What is more pertinent to fighting foreclosures in Worcester, buying property at all or buying it now?
City officials want both.
So a new program, dubbed “Buy Worcester Now,” sees the city, 11 local lenders and Worcester-area businesses encouraging home-buying within its borders by offering state-subsidized down payment assistance and discounted loan rates, legal fees, title insurance and consumer products to buyers.
“This is about being proactive and going after a challenge. We hope to reverse the effects of the foreclosures,” said City Manager Mi-chael V. O’Brien.
Many buyers, he said, are still waiting for house prices to drop more.
But the incentives Buy Worcester Now has to offer amount to the equivalent of at least a half percentage-point drop in interest rates – which many participating banks will be offering to borrowers, and which could save borrowers thousands of dollars right now, he said.
“For me as city manager, working with all the partners across the spectrum, we knew we could act locally by creating demand for what we know is a high-quality product,” O’Brien said.
Still, lenders are foreclosing upon Worcester homes at a rate of 50 or more per month, according to Banker & Tradesman publisher The Warren Group, which tracks foreclosure data. O’Brien said Buy Worcester Now is an attempt, in part, to reverse those effects.
In addition to lower interest rates offered by participating lenders, several Worcester employers will also offer down-payment assis-tance of up to $5,000 for their employees, in addition to a state match through MassWorks, a Massachusetts Housing Partnership prod-uct developed earlier this year.
Buy Worcester Now is not connected with Buy Brockton, a recent initiative of that city in which eight lenders pooled $35 million to offer loans to buyers of foreclosed-upon homes.
Buy Worcester Now loans and discounts are for buyers of any home in the city. Participating banks and credit unions have put up ap-proximately $60 million, and buyers must have credit scores of 660 or greater and incomes of less than $96,000 for a family of two. Loans are available for the purchase of any condo or home of up to four units costing $417,000 or less.
The lenders will offer state-backed loans from MassHousing and Massachusetts Housing Partnership, as well as individual bank prod-ucts – although not every lender will offer every product.
Bay State Savings Bank, for example, will offer its own 30-year mortgage product at a 50-basis-point discount, in addition to waiving its loan processing fee of $350 for borrowers, said Vice President and Retail Lending Manager Paul Buonopane.
Other businesses involved in Buy Worcester Now will offer additional services to those who buy a home, including discounted phone and cable hookups, furniture and theater tickets.
Separately, late last week, Worcester officials submitted a separate proposal to state lawmakers, similar to one already submitted by Boston city officials that asks the Legislature to give the city authority to put a stay on subprime foreclosures for six months, give added protections to tenants, and force judicial review of foreclosures – something many states have, but Massachusetts does not.
The national Mortgage Bankers Association has stated it believes blanket policies such as moratoriums will not work as well as individu-alized loan solutions.
