City working to stop foreclosures

In an effort to provide relief to thousands of Chicagoans hit  by the mortgage crisis, the city plans to provide "early warning" to homeowners faced with foreclosure and to expand current programs aimed at helping residents hold on to their homes.

Under the new plan, announced by Mayor Richard M. Daley today at a press conference on the city's South Side, the city would send homeowners foreclosure prevention information within days after their lender files a foreclosure action against them. Currently, homeowners receive the information within six months after the foreclosure process is initiated.

Home foreclosures in Chicago numbered 6,339 in the first half of this year, according to the Mayor's office. This represents an increase from the total of 4,695 in the same period in 2006. Nationwide, foreclosures reached an all-time high in the third quarter, according to a Mortgage Bankers Association report issued on Dec. 6.

"The crisis is devastating homes and families all across this country," said Daley. "It's affected every neighborhood in our city, especially those low-income neighborhoods where people work so hard to hold on to their homes."

Daley said the federal effort to stem foreclosures and delinquencies is not enough.

The Bush Administration's plan, announced Dec. 6, would freeze interest rates for five years on some subprime mortgages whose rates are scheduled to rise in the coming months. The administration estimates that its plan will help 1.2 million borrowers.

"My concern is for those who are not covered by his approach, which focuses only on those who have not missed any housing payments," said Daley.

The city also plans to expand its Borrower Outreach Days program to aid the hardest hit communities. The program provides free legal assistance and financial counseling.

James Leyba, community relations specialist with Homecomings Financial, the home loan division of GMAC, urged homeowners to work with lenders to address their financial problems in a timely manner.

"It's crucial for homeowners to reach out for help when they're in the early stages of delinquency," said Leyba. "We've got to reach them early in the process."

Daley said the city will also increase its efforts to educate home buyers about abusive lending practices.

So-called "predatory lenders" have come under criticism for building steep rate and payment increases into loans for people with weak credit records.

"A lot of the companies are really taking advantage of people. That's why we're having this mess," said Daley. "Appraisals are going way up in places like Englewood and the West Side. There's a lot of fraud involved."

Daley pointed to an investigation recently launched by Attorney General Lisa Madigan's office. As reported by the New York Times today, the state subpoenaed documents from Countrywide Financial, the nation's largest mortgage lender and loan servicer, as part of an investigation into predatory lending practices.

The city's latest efforts supplement its Home Ownership Preservation Initiative, established in 2003 to combat home foreclosures through counseling and education. Under the initiative, the city has partnered with non-profits and lenders to prevent almost 1,600 foreclosures, said Daley.

Any Chicago resident who is having trouble paying their mortgage can access a financial counselor by calling 311, the City's non-emergency number.

Borrower outreach days are scheduled for:
  • Jan. 10, 3 p.m. to 8 p.m.,  at the South Shore Cultural Center, 7059 S. Shore
  • Jan. 30, 3 p.m. to 8 p.m., at Tuley Park Field House, 501 E. 90th Place
  • Feb. 9, 9 a.m. to 2 p.m., at Sheldon Heights Church, 11355 S. Halsted
  • Feb. 23, 9 a.m. to 2 p.m., at Austin Town Hall Cultural Center, 5610 W. Lake
  • March 1, 9 a.m. to 2 p.m., at Hamilton Park, 513. W. 72nd
  • March 15, 9 a.m. to 2 p.m., at Warren Park,  6601 N. Western
  • March 20, 3 p.m. to 8 p.m., at Fuller Park,  331 W. 45th.

Discuss

KEVIN, 01-30-2008

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