Letter to HUD (Homeowners signed letter to Secretary Fudge), see below.
June 7, 2021
Dear Madam Secretary Fudge:
June 1, 2021, shoulder to shoulder with President Joseph Biden you stood at the Greenwood Cultural Center in Tulsa, Oklahoma. Together, you both went back to a dark time in our nation’s history. President Biden did what no President before him did, affirmed the truth of a massacre. There was an extinction of generations, opportunities suppressed for Americans by fellow Americans. Yet, on June 1st you bore witness to a President speaking on reconciling our past for our present. It is on this premise of working for a better society, holding accountable people, acts, policies, which do damage towards fair, equal opportunity, the signatories below write to you as Secretary of Housing and Urban Development.
The undersigned homeowners are requesting, the Department of Housing and Urban Development (HUD) send a directive to HUD agencies and HUD counselors to immediately cease business with BlueHub Capital LLC (BHC) and their mortgage broker subsidiary Aura Mortgage Advisors LLC, and NSP Residential. More specifically, we appeal that HUD agencies cease making referrals to BlueHub Capital’s, Stabilizing Urban Neighborhoods (SUN) foreclosure prevention program. We strongly believe such a directive will save vulnerable homeowners on the verge of foreclosure from becoming trapped in predatory mortgages, by this toxic non-profit organization.
The following statement is found on your leadership biography page from the Housing and Urban Development (HUD), website (HUD, gov, 2020).
Secretary Fudge believes our housing issues do not fit into a one-size-fits-all approach. We need policies and programs that can adapt to meet a community’s unique housing challenges. She is committed to making the dream of homeownership - and the security and wealth creation that comes with it - a reality for more Americans.
BlueHub Capital, previously known as Boston Community Capital, based in Roxbury, Massachusetts was formed in 1994 supposedly as a Massachusetts charitable corporation pursuant to G.L. c.180. It is also a tax-exempt 501(c)(3) organization that claims to be a publicly supported charity whose charitable, tax-exempt purpose is to keep low- and moderate-income homeowners facing foreclosure in their homes with mortgages they can afford. BlueHub Capital’s mortgage units, Aura Mortgage Advisors and NSP Residential LLC hold themselves out as nonprofits. BlueHub claims it “improve(s) the housing and economic and general living conditions'' of low-income and disadvantaged people.
Aura Mortgage Advisors, LLC (“Aura”), originally known as “BCC Mortgage LLC,” is a Massachusetts limited liability company. Formed in 2006 it is licensed by the Massachusetts Division of Banks as a mortgage broker and lender. Aura supposed to engage in “foreclosure relief” for low-income people and communities. Aura has been granted status as a Community Development Financial Institution (“CDFI) by the U.S. Department of the Treasury, and in 2017 entered into a $100 million loan under the CDFI Bond Guarantee Program. As a CDFI, Aura is required to support economically disadvantaged communities and inject new sources of capital into neighborhoods that lack access to financing. Originally offering mortgages in Massachusetts, they have expanded into Connecticut, Illinois, Rhode Island, New Jersey, Pennsylvania and recently Maryland.
NSP Residential, LLC (“NSP” or “NSP Residential”) is a Massachusetts limited liability company. Formed in 2008, is supposed engaged in taking title to property then sold back to homeowners and mortgaged to Aura. NSP held a Massachusetts Real Estate business license (#8997), by the Massachusetts Division of Professional Licensure, that expired on 2/15/2021. NSP holds itself out as being in the business of “mortgage foreclosure relief,” and it typically buys and then re-sells the homes in question, and holds the shared appreciation note and mortgage.
In fact, BlueHub Capital, through Aura and NSP affiliates and the SUN program, is a profit-making powerhouse that shifts giant amounts of home equity from low-moderate income homeowners to BlueHub itself through complicated, little understood and explained transactions with no regulated oversight and accountability. In its totality all the entities Aura, NSP, and SUN Initiative comprise a new type of predatory lending that is nothing short of a modern-day sharecropping to underserved homeowners.
BlueHub Capital serves as borrowers’ agents and fiduciaries to negotiate with a foreclosing lender a discount on what the borrower owes based on the appraised value of the home. The borrower typically sells his or her home to NSP for its appraised value, NSP pays that amount to the prior lender (which takes any and all loss), NSP flips the home immediately back to the borrower at a 25% upcharge, and Aura finances this full amount (more than the full value of the home) and saddles the borrower with a 30-year fixed rate mortgage loan with an interest rate that is nearly 2/3 above current market interest rates.
BlueHub Capital initially screens potential homeowners to weed out poor credit risks, while it cherry picks hard-working people in distress because of events not likely to reoccur (loss of a job, an accident or illness, and the like), BlueHub takes little risk, and reports that well over 90 percent of its borrowers pay on time. We borrowers become saddled with a unique “shared appreciation mortgage” (SAM) held by NSP that will require homeowners to pay a significant share of the home’s appreciation to Aura/NSP when and if the home is sold or refinanced, or in any event at the end of the 30 years.
The great majority of SUN Program homeowners never understand that they actually have two mortgages until they try to refinance. Shockingly some homeowners were not aware that they had a shared appreciation mortgage until they were contacted by homeowners fighting back against BlueHub Capital. BlueHub Capital fails to explain the future impact of how having a SAM would affect our largest investment should the value of our homes rise in appreciation. Our advocacy empowerment homeowners did our own research to find a few organizations operate shared appreciation programs. BlueHub Capital’s SAM’s have no limit on how much the borrower will owe at the end, no requirement that borrowers receive advice from neutral counselors before agreeing to the SAM, or any program that will help the borrowers refinance. Additionally, BlueHub Capital overcharges the borrowers for shared appreciation by using a formula that fails to include the borrower’s actual cost to acquire the home back from NSP, omits closing costs in the beginning of the transaction and closing costs at any later transaction, and otherwise disadvantages the borrower. These foreclosure prevention operations are unique to BlueHub Capital’s two-mortgage scheme.
On February 14, 2020, in Massachusetts Superior Court in Suffolk County, Massachusetts residents filed a class action suit as plaintiffs against BlueHub Capital, formerly known as Boston Community Capital “BCC” (Oates, Humes, Thomas et al. vs. BlueHub Capital aka Boston Community Capital Inc., et al., 2020). The lawsuit arose individually and as a group, homeowners sought resolution from BlueHub Capital. The hundreds of phone calls, emails, letters, and in person arrival at their Roxbury, Massachusetts headquarters were either ignored or refused.
In February 2020, the Boston Globe front page story recounted the distress of homeowners at the hands of BlueHub Capital and its SUN program. John Taylor, President and Founder of the National Community Reinvestment Coalition, understanding the Shared Appreciation Mortgage of the SUN program said, “If it's to help traditionally underserved people struggling with homeownership, is this the best solution?” (Estes, p 1). In a recent podcast April 2021, Marcos Morales, Executive Director of Hogar Hispano (Spark 101 FM), stated that shared appreciation mortgage is where both lender and borrower assumes some risk and that the shared appreciation mortgage should be administered fair and equitable. However, in the case of the SUN program, he noted that the benefit is favorable to BlueHub Capital who assumes no risks and benefits from the SAM profits.
The Aura Mortgage Advisors, NSP Residential, SUN Initiative and BlueHub Capital are a legacy killer. The financial and emotional impact upon the homeowner is enormous. Our homes have become BlueHub Capital’s cash cow. BlueHub’s CEO Elyse Cherry’s, salary since the inception of the SUN program has substantially increased from 2010 to 2018 to over $750,000. Notably the rise occurred when their SUN program was at its highest peak in 2012.
In November 2020, several organizations who supported the SUN program through millions of dollars commissioned an independent review of the SUN program by the Lincoln Institute of Land Policy to assess the program and its impact to the financial investors. The findings of the report, independent of the direct advocacy campaign from homeowners, is stunning. The report acknowledges the reality that homeowners are stuck in high interest rate mortgages unable to refinance out of the SUN program. (Lincoln Institute of Land Policy, November, 2020)
In BlueHub’s variation of this model, SUN provides a high-cost primary mortgage, builds a solid equity cushion and takes a large share of appreciation. Although BlueHub serves declining neighborhoods, it presumably serves them when they are near the bottom of the price cycle, so future appreciation would be anticipated.
The Lincoln Land Institute concludes the following (Lincoln, 2020):
As it is currently structured, BlueHub hedges itself so completely that it effectively eradicates any meaningful risk to the organization and instead transfers it almost entirely to the borrower. That decision stands in conflict with the stated goals of a mission-driven lender like BlueHub and needs serious reconsideration. Moreover, under almost any reasonable assumptions regarding house price appreciation, mortgage rates, and borrower income, it is unlikely that a borrower will be able to exit the program by refinancing.
The net interest earnings from the SUN program rose from 7.3% to 41.8% of BlueHub’s total revenue between 2010 and 2019 (Lincoln, 2020). By 2019, net interest on SUN loans exceeded all BlueHub’s other net revenue ($7.9M compared to $7.4M). Rather than building wealth in low-income communities, BlueHub transfers wealth from the residents of those neighborhoods to itself and its high-paid executives.
This is why the homeowners who have signed this letter are reaching out to you Madam Secretary Fudge, to directly ask HUD to stop BlueHub Capital, their mortgage lender Aura Mortgage Advisors, LLC, NSP Residential LLC from peddling their oppressive foreclosure prevention mortgages to underserved homeowners.
100 years ago, in Tulsa the tragic events were a massacre not a riot. Today 1159 homeowners believed the Stabilizing Urban Neighborhoods Initiative was a second chance to own their homes again after foreclosure or a short sale. The truth about the SUN program is that it is a modern- day sharecropping scheme. While BlueHub Capital the CEO Elyse Cherry deliberately marginalize and attempt to re-victimize homeowners into a cycle of oppression. Instead of wringing our hands, we are raising our voices and submitting keystrokes to advocate for sustainable homeownership rights. We have forged support with industry intellectuals, foreclosure prevention leaders, nonprofit organizations, news outlets and social media influencers. Homeownership is personal and supports the vitality of diverse communities for minorities, low-moderate income citizens. Our families and neighborhoods must be sustained, we need your help.
This administration under your leadership is on a course to reconcile past harms and protection and equality all citizens can benefit from. We humbly implore you as the federal moratorium on evictions is coming to an end this month, Madam Secretary Fudge, to direct your agency and its counselors to cease business with BlueHub Capital, Aura Mortgage Advisors LLC, NSP Residential LLC, and Stabilizing Urban Neighborhood (SUN) Initiative foreclosure prevention program.
Your attention to the plight of many homeowners in advance is respectfully appreciated. We understand your time is valuable, thank you for hearing our collective appeal.
Sincerely,
Several past and present homeowners of BlueHub Capital aka Boston Community Capital