Woodstock Institute identifies trends and impacts of the foreclosure crisis and works to limit foreclosures’ negative effects on communities.
Representatives from leading policy and community development organizations met with Senator Dick Durbin on Thursday, February 24 in the Roseland neighborhood to examine ways to stop the scourge of vacant homes on Chicago area communities.
Debate is brewing across the country about what shape our housing finance system should take in the years to come. As consumer advocates, we need to ensure that the system that emerges from these discussions meets the needs of low-wealth people seeking affordable and sustainable housing.
The new housing finance system must support broad access to the products that made home ownership, the primary means of building wealth for many Americans, a reality for communities that otherwise would have been overlooked. It’s worth noting that, from the aftermath of the Great Depression to the beginning of the new millennium, government-sponsored entities (GSEs) like Fannie Mae and Freddie Mac ensured the flow of responsible credit to underserved communities and considerably expanded homeownership opportunities.
The foreclosure crisis continues to evolve and pose new challenges for communities working towards recovery. Chicago area municipalities, community and policy groups, and financial institutions have been working together for years to develop tools and strategies to handle the problems associated with foreclosures on single-family homes, many of which have been highlighted by Regional HOPI. A new threat is commanding these groups’ attention: foreclosures on condominiums.
The Chicago six-county region saw nearly 80,000 new foreclosure filings in 2010, says data released today by Woodstock Institute. This 14 percent increase in new foreclosures from 2009 to 2010 happened in spite of a dip in the fourth quarter of 2010, likely due to the moratoria many mortgage servicers instated after it was discovered that a number of servicers were improperly preparing foreclosure documents.
“Clearly, the foreclosure problem in the Chicago area is not going away anytime soon,” said Senior Vice President Geoff Smith. “Even though many foreclosures were halted for several months in 2010, the region still saw double-digit increases from 2009 to 2010. It is likely that we will see an even larger jump in foreclosures in early 2011.”
Loan servicers, who typically steward homes through the foreclosure process, came under scrutiny several months ago for problems ensuring the validity of foreclosure documents. Many of the country’s largest servicers allegedly employed “robo-signers,” often underpaid and under-trained employees who signed thousands of statements testifying to the accuracy of the foreclosure paperwork without actually ensuring that the statements were true. When some files were scrutinized, it was found that the servicer may not have had the right to pursue foreclosure because the mortgage debt had not been properly transferred. After a ruling by the Massachusetts Supreme Court that declared two such foreclosures invalid, the legality of thousands of foreclosures has been called into question.
The Home Affordable Modification Program has modestly improved the level of modification activity in Chicago this month, though its pace continues to be far slower than what’s necessary to address the foreclosure crisis (see our previous analyses). There were 35,012 active modifications in the region in December 2010, up 3.57 percent from last month’s 33,806.
Our latest report, “Left Behind: Troubled Foreclosed Properties and Servicer Accountability in Chicago,” has created a wave of buzz from the Chicago region and beyond, generating dozens of stories, thousands of comments, and scores of tweets and Facebook posts. In case you missed it, the report found thousands of troubled foreclosed homes in Chicago that are likely poorly maintained, lack clear ownership, and threaten to destabilize neighborhoods. These homes include what we call “red flag” properties, where a servicer has decided not to complete the foreclosure process, and likely-vacant lender-owned properties that are not registered with the City of Chicago potentially in violation of its vacant properties ordinance.