Program will help owners of distressed homes refinance

In New Bedford, where the consequences of the nationwide downturn in home values four years ago continue to linger, city officials are promoting a program that enables homeowners facing onerous mortgages to establish more favorable terms.

The Stabilizing Urban Neighborhoods Initiative, known as “SUN” and capitalized with $50 million from the nonprofit Boston Community Capital, was established in 2009 and initially focused on Boston and Revere.

New Bedford Mayor Jon Mitchell noted that while many of the homes in the Boston area have regained much of their value over the past several years, a sizable number of homeowners in New Bedford remain “underwater” – owing their mortgage companies more than their houses are worth.

To remedy that, SUN arranges to purchase distressed owner-occupied homes in a foreclosure sale, and then resells the home to its owner at a much lower price. According to a flyer that SUN is distributing, owners of a typical two-family home in New Bedford could reduce their monthly mortgage from $2,385 to $1,460, a decline of nearly 40 percent.

Mitchell described the SUN program as part of a broader effort to keep city neighborhoods vital, including expanding first-time home ownership opportunities and boosting the city’s code enforcement capacity.

“All these efforts are done with a view toward stabilizing and re-growing neighborhoods,” he said.