Regional HOPI Plenary investigates different ways of combating foreclosure crisis, looks to the future

A housing counseling agency that’s so swamped with demand for foreclosure prevention counseling that its executive director personally handles clients. Stalled real estate markets where buyers are waiting for prices to drop even further, and buyers who do want to buy now are struggling to obtain financing. Scam artists who take off with troubled homeowners’ last dollars while promising to save their homes. These are some of the challenges that face those who are trying to combat the effects of foreclosure in the Chicago region’s neighborhoods.

At the Regional Home Ownership Preservation Initiative (RHOPI) 2010 Annual Plenary on July 15, more than 80 representatives from the public, private, and nonprofit sectors came together to hear leading practitioners explain how they are meeting those challenges—and worked together to come up with proposals to address persistent problems.

Click here to see the agenda.

See real-time updates from Twitter.

2010 Landscape and Implications for RHOPI

Leading researchers William Testa of the Federal Reserve Bank of Chicago and Geoff Smith of Woodstock Institute described the challenging landscape upon which foreclosure prevention efforts take place. Testa took an historic view of regional economic trends and cited Illinois’ high levels of debt and high levels of unemployment as barriers to recovery. The Chicago region’s labor market tends to take longer than the U.S. average to recover from recessions because of the types of industry in the city, Testa noted. Smith presented Chicago region foreclosure data, noting that new foreclosures continue to grow in affluent areas while they are declining in lower-income neighborhoods that were hit hard early in the foreclosure crisis.

Continuing foreclosures: what are the best ways to inform families affected by foreclosure about their options and available resources?

The first panel asked how best to reach families affected by foreclosure in order to inform them of their options and brought together leaders of private and nonprofit efforts to reach homeowners, condo owners, and renters. Jennifer Streder of Bank of America described their efforts, which include increasing call center staff from 50 to more than 15,000 employees over the course of the crisis and partnering with nonprofits to go door-to-door contacting delinquent borrowers.

Ruben Feliciano of the Spanish Coalition for Housing noted the skyrocketing demand for foreclosure prevention counseling among their constituents in the Latino community—cases have grown by 600% since 2005—and said they now stay open seven days a week to serve those who have nonstandard work schedules.

Patrick Nolan of the Lakeside Community Development Corporation noted the particular challenges facing those trying to reach condo owners, including large numbers of renters in condo units and security barriers. Lakeside CDC is encouraging condominium associations to work with borrowers who are trying to secure loan modifications with their banks.

Finishing the panel was Kathy Clark of the Lawyers’ Committee for Better Housing, who emphasized that, just like homeowners, renters are severely impacted by the foreclosure crisis. A 2007 Woodstock Institute report found that 35 percent of foreclosure filings were on multi-family rental buildings.  An average of 125 rental buildings went into foreclosure per week in 2009, and landlords, law enforcement, and tenants are often misinformed about tenants’ rights and responsibilities, leading to illegal lockouts or utility shut-offs.

Continued oversupply of vacant and foreclosed homes: How do we tackle neighborhood disinvestment and generate neighborhood confidence?

While the Neighborhood Stabilization Program (NSP) and other initiatives are focused on rehabilitating vacant and foreclosed homes, there is the continuing challenge of generating demand for these homes. Panel two considered how to tackle neighborhood disinvestment and generate neighborhood confidence. Katie Ludwig from the City of Chicago said that the City’s Neighborhood Stabilization Program created interest in their target neighborhoods by showcasing neighborhood assets and hosting tours of NSP homes.

Neighborhood Housing Services of Chicago’s Robin Coffey reported that while interest in their homebuyer education classes is still high, few of the students are turning into homeowners. Possible explanations include the realization that they are not ready to buy a home, a low sense of urgency based on the expectation that home values will drop, and high levels of debt—particularly student debt.

Grace Bazylewski of the Village of Lansing presented plans in the South Suburbs of Chicago to create a land bank as an alternative to speculative real estate investors.

Catherine Godschalk of the Self Help Ventures Fund presented a lease-to-purchase financing model they developed, which is a 30-year fixed rate assumable mortgage made to a nonprofit, which then brings in a tenant-purchaser and works with them to build credit and reduce debt so they can eventually purchase the home.

Emerging issues and initiatives

The final panel addressed emerging issues in the foreclosure crisis. Lisa Thompson-Bennett of the Office of the Illinois Attorney General discussed challenges to their efforts to combat foreclosure rescue scam artists, which includes a mentality of “you get what you pay for” that deters homeowners from free nonprofit alternatives.

Erica Page Muhammed of Housing Action Illinois introduced their new Servicer Accountability Initiative, which will track servicer response times and other communication metrics on individual loan modification cases.

Carina Segalini of the Circuit Court of Cook County Mortgage Foreclosure Mediation Program walked attendees through the process of seeking mediation and outlined the counseling and legal aid resources available to homeowners.

Plenary attendees broke into sessions at the end of the day to develop action steps on the panel topics. Regional HOPI is currently reviewing and summarizing these steps for distribution. If you’d like to be notified when these are released, please sign up for the Regional HOPI mailing list.

The Regional HOPI Annual Plenary helped circulate ideas for strategies to combat the foreclosure crisis, identified ongoing challenges, and generated new ideas to address these challenges.

{flickr-album}Type=Photoset, User=48923005@N07, Photoset=72157624414552379{/flickr-album}