I-Team: Housing activists try to expose 'predatory lenders' getting government support
BOSTON - "I'm here to get the message out," said Derrick Harper as he walked by the Massachusetts State House in Boston with fellow activist Nardella Thomas. As the state legislature closes in on the end of its current session, Harper and Thomas have been telling legislators about the nonprofit financial company called BlueHub Capital. "They duped a lot of homeowners who are struggling, or fear foreclosure," said Harper.
As the WBZ I-Team first reported back in 2020, some homeowners say BlueHub promised to save them from losing their homes to foreclosure, by buying their property, then selling it back to the homeowner and refinancing the mortgage. It came at a cost. "Unbeknownst to me, in the paperwork was something called a shared appreciation mortgage, SAM." A BlueHub spokesperson tells us homeowners are always notified of the terms. "There are disclosures provided to clients at multiple points in the months-long process to enter the SUN program. This has always been part of SUN's process, consistent with regulatory obligations," said Autumn McLoughlin, VP of Communications and External Relations.
Today, BlueHub's website does clearly say most homeowners end up with a shared appreciation mortgage, but Harper says 11 years ago, it was hidden in the fine print. "I didn't know we signed it," he said. Now if he refinances or sells, he says the shared appreciation obligates him to give BlueHub half of the equity. "So, if your house is worth $400,000, they would get 200 of that," said Thomas. But according to McLoughlin, that means BlueHub would have given Harper "a 50% discount off of his mortgage balance when he joined the program."
Thomas calls it a trap. "They're literally taking equity away from brown and Black and lower to moderate income homeowners," she said. It's an accusation BlueHub denies. "BlueHub has put $55 million in home equity back into low-income communities through its foreclosure relief mortgage lending," said McLoughlin. "64% of SUN clients are people of color."
Thomas is among 17 named plaintiffs in a proposed class action lawsuit accusing BlueHub of predatory lending. The attorney says more than 100 people have brought concerns to him about the company.
Now they're worried about proposed amendments that almost made it into an economic development bill legislators have to vote on before this Sunday, July 31st. "It completely disallows any kind of legal process," said Bruce Marks, CEO of the Neighborhood Assistance Corporation of America. He says the amendments would have nullified the lawsuit against BlueHub. Even though it's not in the latest version of the bill, the fact that some lawmakers fought for it, has him concerned. "They hide this clause somewhere in these massive bills and then that prevents any kind of civil litigation, going past or going forward," said Marks.
BlueHub sent the I-Team a statement. "BlueHub SUN has played an important role in saving the homes of families faced with foreclosure and eviction...On average SUN Massachusetts borrowers save…per month on their mortgage payment (about 30%)…" The company also says it supported the proposed amendments. "...the legislative language, which is not under consideration in the pending economic development bill, would confirm that programs like ours remain a critical tool..."
While homeowners have planned a protest on Beacon Hill this weekend, they were surprised to discover something else: the federal government is awarding BlueHub millions of dollars. "Grant money that's our taxpayer money," said Thomas. "They want to keep this dirty little secret of oppressing the homeowners quiet. So that's why we're out here." The $7 million grant from the US Department of Treasury marks the sixth time BlueHub has been awarded federal money. The company says the money will "enable BlueHub Loan Fund to expand financing for affordable housing in low-income areas nationwide."
Critics like Marks say the Treasury Department should have done more research. "The government, the Department of Treasury should not be out there financing predatory lenders," he said. Bluehub says it's not a predator. "In the 11 states we operate, never have any compliance issues been raised, never mind 'predatory' practices," McLoughlin said.
The I-Team reached out to the Department of Treasury but got no explanation. State Attorney General Maura Healey's office says her team has been looking into complaints about BlueHub since it operated under a different name, Boston Community Capital, in 2016.
BlueHub says none of the complaints are valid. "In the 13 years SUN has been helping homeowners, we have never once been cited by the AG's office for any of these types of unsubstantiated allegations," said McLoughlin.
BlueHub sent a news release about the grant. "The award accelerates BlueHub Loan Fund's efforts to address the lack of access to affordable housing for very and extremely low-income residents."
This report has been updated to clarify the number of plaintiffs in the pending lawsuit.