I-Team: Homeowners Claim Boston-Based Non-Profit Sold Them Predatory Mortgages
BOSTON (CBS) - Several local homeowners claim the Boston-based non-profit BlueHub Financial sold them predatory mortgages.
Nardella Thomas says she feels trapped in the Webster home she's faithfully made mortgage payments on for 8 years.
"I'd say it's like a modern-day sharecropping," she told WBZ-TV.
The single mother says after the home was foreclosed back in 2012, she heard about BlueHub, a non-profit that says it has saved 1,100 homeowners from eviction. BlueHub bought her home from the bank and sold it back to her, refinancing the mortgage.
"I was really happy I was able to get a second chance," she said.
But Nardella says she was stunned years later when she tried to refinance to a lower rate. She claims that's the first time BlueHub explained the true cost of the mortgage.
"When you refinance, you are going to give us 42% of your equity. I was like what?" she said, remembering a phone conversation with BlueHub when she tried to get a new loan with a different bank.
Nardella says she understood she was paying a high interest rate to BlueHub because of the foreclosure. But she says she had no idea that she agreed to a SAM, or shared appreciation mortgage. That means in order to transfer the mortgage to a new bank, she would have to give BlueHub $50,000.
"I was devastated. This home will never be mine," she said.
Margaret and Tony Oates needed a home equity loan to finish their Dorchester fixer-upper. That's when they found out they needed to pay BlueHub more than $100,000 to refinance out of their shared equity mortgage.
For Eljon Williams, the number was $58,000 to refinance out of the BlueHub mortgage.
"This has been a nightmare," he told WBZ.
Jeffrey Wiesner is an attorney who represents Nardella as well as the Oates' in a lawsuit against BlueHub.
"The loans themselves are unusual, outside standard lending practices and oppressive," he said, adding that BlueHub failed to make sure the homeowners understood the terms of the loans.
"They [BlueHub] really came to borrowers as wolves in sheep's clothing," he said.
BlueHub filed a counterclaim denying all of the allegations.
We asked for an interview with the BlueHub CEO, Elyse Cherry, who earned $750,000 running the non-profit according to documents obtained by the I-Team. Instead, we got this statement from a company spokesperson.
BlueHub Capital is proud of the SUN Program's success in helping distressed homeowners avoid foreclosure and eviction. We categorically deny the allegations brought against BlueHub and its affiliated nonprofits by several of current and previous clients.
All of the plaintiffs willingly joined the SUN Program to save their homes, including by signing agreements that fully described the transactions. And they have all benefitted from the SUN Program. Plaintiffs collectively saved over $500,000 in monthly mortgage payments and gained almost $1 million in home appreciation. Most importantly, they all avoided eviction, and were given the chance to rebuild credit, reduce debt and earn home appreciation that would otherwise have been lost due to foreclosure."
Additional material:
Since the SUN Program began in the wake of the 2009 foreclosure crisis, we have purchased qualified homeowners' "under water" homes, paid off the old mortgages, and resold those homes to the original homeowners. The SUN Program has kept those homeowners in their homes and communities with homeowners granting affordable, 30-year, fixed rate mortgages and "shared appreciation" mortgages payable only if the homes increase in value over time. Funds generated by paid-off shared appreciation mortgages go back into the SUN Program to help more families stay in their homes and avoid foreclosure and eviction.
We categorically deny the allegations brought against BlueHub and our affiliated nonprofits by several current and previous clients. We are defending against the claims and have counterclaimed to vindicate the SUN Program. That case is now pending. Though we would prefer to deal with this through the legal system, the public airing of allegations warrants a response.
BlueHub and our affiliated nonprofits are dedicated to complying with all applicable state and federal laws and regulations.
For background: BlueHub SUN has two affiliate nonprofits that you will see cited in the court documents. Aura Mortgage Advisors, LLC, is a nonprofit licensed mortgage lender (NMLS #23467). NSP Residential, LLC, is a nonprofit that purchases properties, pays off the existing mortgages, and sells the properties back to resident homeowners for less than the balance of the paid-off prior mortgages. NPS also holds the shared appreciation mortgages (SAM). Collectively, we refer to them as BlueHub SUN.
All three of the homeowners say they feel like even if they paid off the mortgage, the would have to take out another mortgage to pay off the shared appreciation, which in 10 or 20 years could be significantly higher.
"This company said they can help you, come to us, we are your friend. It was all a lie," Eljon Williams said. "If you think BlueHub is giving you a second chance, you've got another thing coming," Thomas said.
The Massachusetts Attorney General has received several similar complaints about BlueHub. Nardella says she's been in contact with nearly 100 home owners from Massachusetts and several other states.
