Syracuse Home Equity Protection Program
Featured in Wall Street Journal Article
February 19, 2004 -- A Syracuse, N.Y., NeighborWorks
organization is capturing national attention for a program that
was created to encourage people to buy homes and stay in the area.
A Feb. 3, 2004 Wall Street Journal article by Daniel Nasaw, entitled
"For Some Home Buyers, a Nice Hedge," focused on a Syracuse
home equity protection program (HEP) administered by Home HeadQuarters,
Inc., that protects more than $4.7 million in home equity against
declines in the value of local house prices.
Virginia Smith, coordinator of the program, said the article
helped show that "Central New York is taking tremendous strides
in building better neighborhoods and creating innovative incentives
for people who want to live and remain in the area." The
program, she said, was created to give peace of mind to people
who want to stay in their Syracuse homes but are concerned about
real estate market values. Currently, 67 homeowners are protected
through the program.
Protection is available for between 50 and 150 percent of a home's
assessed value for a one-time fee of 1.5 percent of the value
protected. Policyholders who sell their home after three years
receive a payment if the home prices have dropped where they live.
For example, in the case of a homeowner whose $60,000 home was
protected for 100 percent of its value, the program would pay
$6,000 if prices dropped 10 percent in their zip code—even
if the home sells for more than $60,000. By basing the payment
on the average home value in their zip code rather than the selling
price and by allowing protection up to 150 percent, owners are
encouraged to improve and maintain their properties.
Neighborhood Reinvestment Corporation, which founded and supports
the NeighborWorks network, provided financial and in-kind support
for the home equity protection product. Funding for the program's
initial capital reserve was provided through a $5 million federal
grant from the Syracuse Neighborhood Initiative, a public-private
partnership launched in 1999 to revitalize neighborhoods in Syracuse.
Other program participants include the Yale School of Management,
Freddie Mac, Real Liquidity LLC, and HSBC.
FleetBank recently announced it would pay HEP premiums for Syracuse
residents who obtain home loans through the company. "This
new HEP initiative provides a great opportunity for Syracuse residents,"
said Smith. "It is a win-win situation—the customer
receives protection, Fleet receives an added benefit to its lending
portfolio, and Syracuse gains a new homeowner."
For more information, visit the home equity protection section
of the Neighborhood Reinvestment Corporation Web site [www.nw.org].
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