New York City Mayor Bill de Blasio has unveiled a $1 billion bail fund for bail bondholders, calling it a way to help struggling homeowners and those struggling to afford the mortgage payments that come with owning a home.
“It’s time to get on with the job of rebuilding our cities,” de Blasio said Tuesday at a news conference announcing the fund.
It is expected to have a maximum of $1.4 billion in assets under management, including $500 million for homeowners who were arrested or convicted for serious felonies.
But the fund, a partnership between the city and the New York State Association of Counties, is expected only to cover the cost of homeowners who are found to be delinquent on their mortgage.
The fund, the first such initiative in the country, is being led by Brooklyn-based First Community Bank, a subsidiary of the largest private bank in the United States.
First Community Bank is expected as a partner in the fund for the first time.
De Blasio is also set to announce that the fund will pay for a $5 million grant to the city to help low-income families buy homes.
That grant will go toward affordable housing.
Bail bonds are used by municipalities to finance loans to individuals or corporations that have been accused of crimes.
Some of those arrested or charged with serious felictions can be jailed for months without being able to repay the loans.
However, the Brooklyn fund will only be used to pay the legal fees of defendants.
According to the FDIC website, bail is considered a “non-recourse” debt, meaning that the person can’t be released on their own.
A person can be ordered to pay a fine, however, if they are caught with a gun and a person they are with is killed or seriously injured.
At least one person has been arrested for killing another and killing himself after committing the crimes.
“Bail is a form of debt that can’t easily be discharged,” deBolt said.
After de Blasio’s announcement, First Community, the nation’s largest municipal bond fund, tweeted that the city would be investing $1 million in the program.
If the Mayor makes good on this promise, the city will add an additional $1,000 to our $1B bail fund, FirstCommunity Bank (@FirstBankNY) December 6, 2018 Bond holders can get a free $250 home loan with the purchase of a $200,000 home, and $100,000 for an $80,000 mortgage.
The fund will also offer an additional free $100 home loan for any borrower who was arrested on a warrant and who has been in the U.S. for three months or more, according to a press release.
As part of the plan, the mayor said the fund would cover $1-billion in mortgage payments, and an additional money of $500-million will go to affordable housing and job training programs.
This is a huge deal.
The money will go directly to homeowners who have lost their homes, and it will help pay down their mortgage and help them get their lives back on track.
The city already has a $2 billion fund to help homeowners who default on their mortgages.
Last month, Mayor Bill De Blasio announced $1 Billion to Build Brooklyn, which will be a joint effort between the FDICA and First Community Banks.
In a statement, FDICA said the new fund will “help provide homeowners with the financial tools they need to get back on their feet.”
“The mayor is right to invest millions in the housing crisis, and we need to invest even more to help make the neighborhoods we call home a safer place to live,” FDICA President and CEO David Cone said in the statement.
(Read more about the Brooklyn bond fund at The Hill.)
The announcement comes as the city is facing a growing number of home foreclosures, particularly in low- and moderate-income neighborhoods, as foreclosing rates rise and prices plummet.
Since January, when the city began releasing data on forecloses, the number of foreclosed homes has risen to nearly 30,000, and many homes are foreclosed on for as little as $400,000.
New York City Councilman and Brooklyn mayoral candidate Brad Lander said Tuesday that his district will soon be seeing “a significant increase” in the number foreclosed homes, noting that the number is expected “to be greater than the citywide rate.”
(Related: The Rise of the New Home Foreclosure) “If the city does not invest in housing, there will be more foreclosings and more people will be displaced,” Lander told CNN.
Lander also said that his plan would give the city more tools to combat foreclothesline-related violence, which he said has become more frequent since the beginning of the crisis.
Mayor de Blasio, who took office in January, has been