SUN Initiative Note Offering II
United States of America
Last updated 13 May 2020, by Impactyield.
Developed countries (203) / More developed regions (202) / More developed regions (North America, Asia & Oceania) (153) / United States of America (112)
This is the second debt offering from BCC based on the Stabilizing Urban Neighborhoods (SUN) Initiative strategy launched in 2009. For information on the first offering, select SUN Initiative Note Offering I from the list of additional fund/product profiles on ImpactBase at right below.
Concerned about the disproportionate impact of foreclosures on low-income communities BCC launched the SUN Initiative, a foreclosure relief program that stops the displacement of families and the neighborhood-destabilizing effects of vacancy and abandonment by acquiring foreclosed properties before evictions occur. SUN then resells those properties at current market values to their current occupants with fixed rate mortgages they can afford.
Federal Reserve Chairman Ben Bernanke has highlighted the SUN Initiative as an “innovative strategy” and a model for how “local communities are meeting the challenges of tough times in troubled communities.” Since late 2009, BCC has provided over $48 million in financing to help over 300 Massachusetts residents remain in their homes, reducing average mortgage principal and monthly housing payments by more than 40%.
Now SUN is seeking to sell the revenue stream from the performing mortgage notes to recapitalize the initiative, to support additional lending, and to pave the way for expansion of the model nationwide.
Boston Community Capital is proposing a $25 million loan with a ten-year term and a 5% interest-only coupon backed by the revenue stream from a $25 million pool of mortgages to SUN Initiative borrowers. The SUN Initiative purchases foreclosed properties at current market values before evictions have occurred and resells those properties to the current homeowners with 30-year, fixed rate mortgages. Through July 2012, SUN has helped over 250 Massachusetts households remain in their homes, reducing average principal balance and monthly mortgage payments by over 40%.
While BCC would need the right to partially pay down the outstanding principal as mortgages are refinanced, BCC would also be prepared to use best efforts to replace those refinanced mortgages with new mortgages so that the payment stream remains as constant as possible. BCC has modeled losses in the pool at a rate of 5%, but it is also prepared to stand behind that assumption by assuming the first 20% of losses in the pool.
BCC has prepared a package for potential investors including detailed loan-level information on the mortgage loans contained in the $25 million pool, BCC's financial model together with its related assumptions, and a proposed structure for the transaction.
of track record
the year funded
Headquarters location: United States of America
Other funds managed by this asset manager: SUN Initiative Note Offering I
Key performance indicators
Asset manager: BlueHub Capital
Product track record: Fund has 11 years of track record
Target IRR: 5%
Committed Capital: 0 USD (US Dollar)
Target return category: Risk-adjusted market-rate of return
Fund domicile: United States of America
Product status: Open - no committed capital
Inception year: 2012
Vintage year: n.a.
Target region: Developed countries, More developed regions, More developed regions (North America, Asia & Oceania), United States of America
Target close date: 01/12/2012
Product term: 10 year maturity + coupon
Assets under management: 75,000,000 USD (US Dollar)
Investment size: Min: 50,000; Max: 500,000; Avg: 230,000
Currency of investments: USD (US Dollar)
Currency for fund / product figures: USD (US Dollar)
Fund investments to date: 60
Fund investments to date exited or repaid: 0
Management fee: n.a.
Carried interest: n.a.
Hurdle rate: n.a.
GIIN Investors' Council Investment: Yes
Limited Partners / Investors: n.a.
Limited Partner / Investor Type: Development Finance Institution (DFI), Endowments/Foundations, Family Office, Pension Funds, Other Institutional Investors
Phone number: 0.00
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Senior Vice President, Development and Communications
Since launching the SUN Initiative in late 2009, BCC has financed over $48 million in mortgages to keep over 300 families in their homes, and it is on track to lend a total of $30 million in 2012. Currently, SUN is focused on homeowners in Massachusetts, but it is in discussions with groups interested in bringing the model to cities around the country.
SUN works with clients to understand their finances and what they can afford to pay for a mortgage. After working with their banks to negotiate a purchase of the foreclosed property for its current distressed market value, on average, the clients' monthly housing payments reduce by more than 40%.
By helping homeowners remain in their homes, SUN not only prevents the displacement of families and helps children remain in a stable school environment, but reduces vacancies that destabilize neighborhoods.
To date borrowers are 60% African American, 29% Caucasian, 23% Hispanic/ Latino, and <2% Asian/ American Indian and the typical professions of our borrowers are teachers, nurses aides, bus drivers, child care providers, and assembly workers.