Housing

Dart On Spread Of Foreclosures: "Utter Chaos"

Josh Kalven — Thu, 20 Nov 2008 07:30:38 -0800

Yesterday, the Senate Judiciary Committee held a hearing on Sen. Dick Durbin's proposal to help struggling homeowners by allowing bankruptcy courts to renegotiate the terms of certain mortgages. As we noted on Tuesday, Cook County Sheriff Tom Dart flew to Washington to testify before the committee about the foreclosure crisis in Chicagoland. Dart told NBC 5 that the situation represents "utter chaos." Durbin said he doesn't expect his plan to move forward during the lame duck session thanks to a White House that "is not open to the changes that we think will be necessary." Watch:

(H/T HuffPo Chicago)

IL Foreclosure Notices Keep Rolling In

Angela Caputo — Thu, 13 Nov 2008 14:04:10 -0800

More bad news emerged on the Illinois foreclosure front today. The number of homeowners slapped with bank repossessions, foreclosure, default or auction sale notices came to 12,681 in October -- a 24 percent increase from September and a 31 percent increase over the same month last year.

Homeowners in Cook County fared the worst. They made up more than half of the total foreclosure filings in the Prairie State. From the Sun-Times:

Some 6,885 homes received foreclosure notices in Cook County, representing one in every 313 homes. In Will County, the number was 990 homes, or 1 in every 226 homes. In DuPage County, the number was 807 homes, or one in every 441, and in Lake County it was 815 homes, or one in every 307 homes.

For more on what certain banks are doing to stem the tide of foreclosures -- here in Illinois and nationwide -- check out this post from yesterday.

Countrywide Accord Paves Way For More Loan Remodifications

Angela Caputo — Wed, 12 Nov 2008 14:25:55 -0800

Last month, Illinois Attorney General Lisa Madigan won a lawsuit that forced Countrywide Financial to establish an aggressive loan modification program to help an estimated 21,000 people in Illinois facing foreclosures. At the time, she described it as a "model that other lenders and services as well as the U.S. Treasury should look at."

In that vein, Fannie Mae and Freddie Mac announced yesterday that they plan to adopt a similar program in the hopes of stemming the foreclosure tide. Like the Countrywide loans, which are now owned by Bank of America, the two government-backed agencies will begin adjusting the terms of at-risk mortgages based on income. The New York Times explains:

The program would be open to people who are at least three months delinquent on mortgages that are either owned or guaranteed by Fannie Mae or Freddie Mac. The goal would be to reduce the monthly payments on all of those loans — by stretching the term to 40 years, or lowering the interest rate, or even lowering the amount of the loan — so that payments would not be higher than 38 percent of a family’s monthly income.

The measures are exactly the sort of concessions that the Woodstock Institute, an Illinois-based housing policy group, has been calling for since early on in the meltdown. JP Morgan Chase recently announced that it too will begin using income as a key factor in resetting home loans. Obviously the foreclosure crisis extends well beyond the loans issued by these four mortgage providers and housing activists are stressing the need for more widespread action.

It's not hard to see why. A new housing survey in the Chicago-area -- which not long ago was considered a relatively strong market -- found that a growing number of people are being forced to sell their homes at a loss.

That's going to add up to more trouble, warns Sheila Bair, chairman of the Federal Deposit Insurance Corp. Based on a decision to channel the remainder of the economic relief package to banks and financial institutions, it doesn't appear that the Bush administration is listening. Bair, however, is still eyeing the most prominent potential source for additional homeowner relief: what's left of the $700 billion bailout.

Affirming Fair Housing's Future

Rob Breymaier — Mon, 10 Nov 2008 10:59:44 -0800

Fair housing has suffered for too long as a largely ignored priority in America. The Department of Housing and Urban Development (HUD) continuously neglects its duty to affirmatively advance the cause. Many others dismiss the issue as historical. And the movement itself has suffered from poor funding and organization throughout its history.

Nonetheless, promoting integration and reducing discrimination in housing is a crucial component to improving our metropolitan regions going forward.

Despite important victories that helped guarantee civil rights (including systemic changes in the lending and insurance fields), the first 40 years of fair housing advocacy has almost completely failed at improving the integration of metropolitan communities. Multiple metrics show that most communities throughout the United States continue to suffer from high segregation. While demographic changes occur across many regions, what we often see is short-term integration swiftly replaced by re-segregation. Common examples include the entry of white residents into gentrifying urban neighborhoods and increases in minority populations in suburban municipalities. In the vast majority of these cases, the initial increase in diversity is followed by re-segregation due to displacement or flight.

This continual, shifting dynamic is due in part to the fact that in 1968, when the Fair Housing Act passed, American cities were already segregated in a way that privileged white residents over people of color in nearly every quality of life measurement. Moreover, the most significant changes did not begin to manifest until the 1980s.

The federal government and the fair housing community have been most successful in responding to acts of discrimination. But this reactive strategy has failed to provide either models of inclusion or leadership on affirmative measures. Part of this approach results from the language of the Fair Housing Act. However, the failure to engage in significant pro-integrative programs is also due to a lack of imagination and innovation in fair housing advocacy both from HUD and the movement itself.

So what does "pro-integrative" mean? Essentially, these programs inform housing seekers of their rights and opportunities from the beginning of their search process rather than after housing providers have denied them or discouraged them from quality housing options. This structural approach aims to create and sustain diverse, integrated communities characterized by inclusion and harmony. It also seeks to create environments that minimize discrimination and expand housing choices.

The best known of these initiatives are located in the Chicago region – specifically, the voucher-oriented Gautreaux program and the market-oriented Oak Park Regional Housing Center. Other Chicago-area organizations continue to foster innovation on this issue. For instance, a new start-up organization called MoveSmart.org aims to expand housing choices in the region by reducing the knowledge gaps that perpetuate segregation. Similar programs exist in other areas of the country, such as the Inclusive Communities Project in the Dallas/Fort Worth region, the Heights Community Congress in Cleveland's southeast suburbs, the Maplewood/South Orange Community Coalition in New Jersey.

By prioritizing affirmative, pro-integrative measures, the incoming Obama administration could add a sorely missing component to fulfilling the spirit of the Fair Housing Act. Affirmative policies will better guarantee the rights afforded all Americans in the Fair Housing Act. Moreover, these policies will foster a structure of equal opportunity in our metropolitan regions that will help ameliorate a wide array of urban problems.

The time is now to promote a pro-integrative fair housing model that change the structure of our cities and suburbs to the benefit of people of all races and protected classes.

Rob Breymaier is the executive director of the Oak Park Regional Housing Center.

Affordable Housing Measures Pass - So What's Next? (CORRECTED)

Angela Caputo — Fri, 07 Nov 2008 09:12:08 -0800

Referendums aimed at bringing more affordable housing to two lakefront Chicago communities passed by wide margins this week. In Uptown, 66 percent of voters in certain precincts* approved their measure, while 68 percent voted in favor of the Bronzeville version. So what's the next step?

If organizers in both neighborhoods have their way, city officials will use readily-available resources to create additional housing opportunities for low- and middle-income Chicagoans.

In Bronzeville, community groups want the Daley administration to begin cutting deals so that a glut of vacant, city-owned properties can be turned into new housing. Meanwhile, in Uptown, housing activists think the city's Tax Increment Financing (TIF) funds should be tapped to fund affordable housing initiatives.*

According to Robin Snyderman, housing director with the Metropolitan Planning Council, these proposals reflect exactly the type of creative thinking that is required. "There is no magic bullet," she said.

The affordable housing crunch isn't exactly new to Chicago. Long before the mortgage meltdown, years worth of gentrification sent countless families scrambling to secure a spot in their communities. A record number of foreclosures has only intensified the problem, emptying as many as 28,932 apartments in 2007 alone, the Woodstock Institute reports.

Meanwhile, housing costs continue to climb, outpacing Illinois incomes. The minimum wage necessary to afford a two-bedroom apartment these days is $16.23, according to Housing Action Illinois. That's out of reach for more than a quarter of the state's full-time workforce.

"The demand so far outweighs the supply. And the public subsidies that are available are a drop in the bucket," said Snyderman. But with a new president in the White House, the tide may shift. "I tell you a change in leadership in Washington could go a long way," she said.

*CORRECTION: While this post initially reported that "66 percent of voters" in Uptown favored the referendum, only certain Uptown residents had the opportunity to vote on the measure -- specifically those living in "precincts 8, 12, 20, 22, 23, 26, 32, 38, 41, 42 and 47 in the 46th Ward, virtually all of which fall within the Wilson Yard TIF District."

Housing Activists Make Grassroots Push

Angela Caputo — Mon, 03 Nov 2008 08:23:52 -0800

Long before the mortgage meltdown, renters were struggling to secure affordable housing in a Chicago market turned upside down by years of gentrification. A faltering economy has only intensified this challenge. And three independent campaigns are now being waged across the city to bolster an ever-dwindling supply of housing for low- and middle-income residents.

In Uptown and Bronzeville -- two gentrifying lakefront communities on opposite sides of the city -- voters will cast ballots tomorrow on non-binding referendums calling for the city to set-aside Tax Increment Financing (TIF) funds or city-owned land for affordable housing. Grassroots community groups are backing both measures.

Northside Action for Justice, a coalition of Uptown and Rogers Park residents, is asking voters to support earmarking 40 percent of the city's TIF funds for preserving or creating affordable housing.*

Eleven miles south, Housing Bronzeville wants roughly a quarter of the community's 1,800 vacant, city-owned lots developed and made available to those working people increasingly priced out of the neighborhood.

Meanwhile, despite a cool reception from the Chicago Housing Authority (CHA), residents of the Lathrop Homes are asking why officials haven't filled the public housing development's 600 vacant apartments as the agency's plan for transformation fledges.

That a high foreclosure rate, softening housing market, and glut of empty homes would turn out to be bad for renters seems counterintuitive. But this is the case, according to a recent study (PDF) by the Woodstock Institute (WI).

As many as 28,932 apartments in 2007 alone were emptied when building owners went belly up, the Institute reports. This year, the foreclosure rate has only accelerated, creating even more problems for renters.

Perhaps the most solid evidence that people are desperate came when the CHA fielded applications for subsidized housing last spring. More than 250,000 people applied. A mere 40,000 actually made the wait list, including an estimated 6,000 families.

In the meantime, housing costs continue to climb, outpacing Illinois incomes. The minimum wage necessary to afford a two-bedroom apartment these days is $16.23, according to Housing Action Illinois. That's out of reach for more than a quarter of the state's full-time workforce. As a result, a growing number of families are spending their nights in shelters or on couches until they can scrape together money for a place of their own.

With tens of thousands more looking for places to stay, Ed Shurna, executive director of the Chicago Coalition for the Homeless says the absence of a viable citywide plan is discouraging. He adds that the lack of action at Lathrop is unconscionable.

"It's wrong to keep those [apartments] boarded up considering the demand there is for housing," Shurna said. "It wouldn't solve the entire problem ... but it's one of the things you should do if you care about families."

*CLARIFICATION (11/9/08): Only certain Uptown residents ultimately voted on the referendum, specifically those living in "precincts 8, 12, 20, 22, 23, 26, 32, 38, 41, 42 and 47 in the 46th Ward, virtually all of which fall within the Wilson Yard TIF District."

Cook Co. Foreclosure Evictions To Resume On Monday

Angela Caputo — Fri, 17 Oct 2008 07:23:57 -0700

The moratorium on foreclosure evictions that propelled Cook County Sheriff Tom Dart into the national spotlight last week and secured his "good-guy" reputation back here at home has officially concluded.

Satisfied by the Cook County's decision to incorporate new renter-friendly provisions into the foreclosure eviction process, Dart has announced that he'll resume all law-abiding evictions on Monday.

If new safeguards adopted by Dart's office are any indication, the appeals from helpless renters seem to have really gotten to the sheriff. (Or maybe it was the shout out by MSNBC's Rachel Maddow.) He plans to add a social worker to his evictions unit staff for the express purpose of helping folks find new homes or social services. An attorney and financial crimes unit will also team up within the department to investigate mortgage fraud, which has exacerbated the county's foreclosure crisis.

Had Dart not suspended evictions, tenants in 24 households would have put out of their homes during the past week alone. Under the old rules, lenders wouldn't have been required to note the existence of renters when they filed eviction petitions in court. Now they'll have to provide that along with proof that the tenatns have been given either 120 days notice -- unless their lease expires sooner.

If lenders take their time getting up to speed on the new guidelines, the sheriff's office is reserving the right to hold off on evictions. If they aren't prepared, "We're not doing it," sheriff's spokesman Steve Patterson said.

But for those that have their act together, the evictions will resume early next week. "We're ready to go ahead," Patterson said.

MacArthur Drops $68 Million For Foreclosure Aid

Adam Doster — Wed, 15 Oct 2008 11:29:53 -0700

While foreclosure aid is hard to come by these days, Illinois borrowers have some strong advocates on their side. Attorney General Lisa Madigan has fought to crack down on predatory lending and help homeowners wrecked by subprime mortgages. Cook County Sherriff Tom Dart has done his part to protect the tenants that often become collateral damage during the foreclosure process. Today, the Chicago-based MacArthur Foundation became the latest local ally:

Saying it is well aware of the problem in its own backyard of Chicago, the John D. and Catherine T. MacArthur Foundation today announced a $68 million investment in local grants and low-interest loans to help stop the rising number of home foreclosures.

The foundation said its initiative, which it believes is the largest effort by a private foundation to address the foreclosure crisis, should help 10,000 households, including counseling to 6,000 borrowers and preventing 2,700 foreclosures by 2010. It also will offer legal counseling to renters affected by foreclosure.

The money will be routed in all the right directions, too. Ron Grzywinski's ShoreBank will receive $15 million to broaden their innovative Rescue Loan and Prevention Program, which provides borrowers who took out adjustable rate mortgages -- the majoirty of whom would have qualified for concentional loans -- an opportunity to refinance into fixed mortgages at reasonable rates. Another $9 million will be funneled to the Neighborhood Housing Services of Chicago so they can expand thei $150-million mortgage program. The Woodstock Institute will receive grants equalling $1.5 million to continue its in-depth research on Chicago foreclosures. Even the Center for Responsible Lending will get some scratch to lobby on behalf of consumer protections.

Overall, this looks like a great investment. Kudos to the folks at MacArthur.

Federal Housing Bill Finally Hits Home

Angela Caputo — Tue, 14 Oct 2008 15:45:53 -0700

Some indirect federal help is on the way for those Illinois homeowners and municipalities who've become collateral damage in the foreclosure crisis. An additional $170 million worth of federal aid is headed for 13 Chicago-area cities and counties to help local authorities and moderate-income folks to buy up or repair a glut of foreclosed properties that have become a drag on local property values.

The money, which was approved in July through the Housing and Economic Recovery Act, will be divvied up in the form of grants for rehabbing or buying abandoned and foreclosed properties in the following areas. Here's the list:

Aurora, $3 million
Chicago, $55.2 million
Cicero, $2.1 million
Cook County, $28.2 million
DuPage County, $5.2 million
Elgin, $2.2 million
Joliet, $3.5 million
Kane County, $2.6 million
Lake County, $4.6 million
McHenry County, $3.1 million
Rockford, $2.3 million
St. Clair County, $2.3 million
Will County, $5.2 million

Some may remember that it was this program that led GOP Rep. Peter Roskam to ask: Do you want Rod Blagojevich to be your landlord?" In response to Roskam's fear-mongering about the bill, Adam explained that the governor would have little control over the funds doled out to each of these municipalities:

Essentially, once a state decides it wants to participate in the program, it solicits applications from local government authorities. State officials then decide how to distribute funds among communities in non-entitlement areas and ensure that recipient communities comply with applicable state and federal laws and requirements, but they have no hand in running the programs. That responsibility rests on local officials, who must "consider local needs ... and carry out the funded community development activities." While the state can accept some administrative and technical assistance expenses, they may not exceed three percent of the total allocation.

As we noted yesterday, property values have become a growing concern among homeowners across the region, who in many cases, are watching the worth of their largest asset plummet. Based on some alarming figures released by the Chicago-based Woodstock Institute (WI), it's no wonder why they have the jitters.

During the first half of 2008 alone, the number of lender-owned properties, 10,000, in the Chicago area nearly matched a year-end total for 2007, which amounted to $2.5 billion dollars in actionable assets, WI reports. The numbers illustrate how the heighten fears of a foreclosure-initiated ripple effect of blight and crime, which are brewing in the region, aren't exactly alarmist.

Madigan: Foreclosure Prevention Lacking

Adam Doster — Mon, 13 Oct 2008 11:43:33 -0700

It's no secret that home foreclosures are soaring. In a front-page article today, the Tribune noted that 30 percent of all U.S. mortgage holders will owe more on their homes than they are worth in just one year. Unfortunately, little is being done to help those struggling to stay under their roof.

According to a recent study (PDF) released by the State Foreclosure Prevention Working Group -- the task force consisting of 11 attorneys general -- nearly eight out of 10 "seriously delinquent homeowners are not on track for any loss mitigation outcome," a number that rose between January and May of this year. In fact, loan modification efforts for at-risk homeowners dropped by 28 percent during that stretch, the lowest number enacted since 2007. Illinois Attorney General Lisa Madigan, a leader of the commission, isn't too happy with the data.

"Unfortunately, this report shows that while the foreclosure crisis continues to intensify, lenders have not effectively sustained their efforts to help borrowers avoid foreclosure," Madigan said. "Now, nearly eighty percent of borrowers who are seriously delinquent are still not getting the help they need to try and save their homes."

What can be done? The commission and some affordable housing advocates think Madigan and California AG Jerry Brown's approach to the Countrywide settlement provides a helpful template. That loan modification plan offers $8.4 billion to Countrywide customers who were sold (or peddled, depending on one's point of view) adjustable-rate and fixed-rate subprime mortgages in order to reduce principal and interest payments. Bank of America, which now owns Countrywide, agreed to waive $56 million in prepayment penalties and $79 million in late fees, as well. Today, the commission issued a letter to 16 mortgage lending companies urging them to follow Bank of America's model. ACORN's Financial Justice Center national director Austin King agrees that such a proposal is needed:

More than any other action taken to date, this settlement provides a new model and a road map for actually fixing the problem underlying our deep economic woes, which is that too many Americans cannot afford the mortgage. Through interest rate reductions to as low as 2.5 % and principal write-downs, Countrywide will restructure mortgages so that borrowers are not paying more than 34% of their income toward all housing costs. Critically, this agreement also takes the first step toward addressing the coming crisis with resetting Payment Option ARMs, negatively amortizing loans where borrowers can choose monthly payments that increase their overall debt.

In other foreclosure news, Madigan stood by Cook County Sherriff Tom Dart's controversial plan to implement a moratorium on foreclosure evictions, mentioning that Dart is helping to enforce an Illinois law that requires a renter to be notified 120 days before being kicked to the curb. And Barack Obama announced today he supports a 90-day moratorium on foreclosures that would apply to banks receiving capital through the $700 billion rescue plan.