Foreclosure Research - Blog Posts

February 22, 2011

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.

February 17, 2011

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.

February 10, 2011

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.”

February 4, 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.

February 1, 2011

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.

January 20, 2011

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.

January 10, 2011

When you drive through a distressed neighborhood and see blocks upon blocks of boarded-up houses, you might think that some lender is desperately trying to get those properties off its hands. Some of those homes, however, might not even be on the lender’s radar: they’re sitting in a sort of legal limbo where the lender refuses to complete the foreclosure  and the homeowner is long gone. Woodstock Institute is releasing a report later this week that examines what happens when a loan servicer decides that it’s not worth it to pursue foreclosure and the property sits vacant, a phenomenon known as a “lender walkaway.”

January 3, 2011

Woodstock Institute is back to the business of advancing economic security and community prosperity after celebrating the holidays with our loved ones. Here are some stories on dangerous medical testing, shoring up the US Postal Service, subprime lending and the foreclosure crisis, the (surprisingly) long struggle to cap payday loan rates, and more that sparked the interest of our staff while we were out:

December 9, 2010

Credit-default swaps. Derivatives. Collateralized debt obligations. Mortgage-backed securities. How many people on the street do you think could accurately define these terms? These financial “innovations” play a critical part in the story of the financial crisis, but average Joes—even above-average Joes—struggle to understand the role these instruments played. At our screening and discussion last week of “Plunder: The Crime of our Time,” journalist Danny Schechter proposed a framework for discussing the financial crisis that relies less on financial wonkery and more on a moral narrative.

December 6, 2010

A couple weeks ago, we wrote about some new Treasury data that found that most borrowers whose HAMP modifications were cancelled have not yet lost their homes. We decided to dig a little deeper into the data and look at what individual servicers are doing with borrowers they did not approve for a permanent modification (click for larger chart):

December 1, 2010

Consumer advocates have presented the underwhelming impact of the Home Affordable Modification Program (HAMP) and the foreclosure “robo-signing” scandal, in which employees of loan servicers allegedly fraudulently signed off on foreclosure documents, as two sides of the same coin: both demonstrate a disregard of due process on the part of the servicers. In one situation, servicers drag out trial modifications well beyond their time limit and give homeowners the run-around by repeatedly losing documents, then deny modifications because of “incomplete files;” in the other, servicers entrust the job of affirming the validity of foreclosure papers to poorly-trained and overworked employees, possibly unjustly risking borrowers’ homes.

November 23, 2010

The Home Affordable Modification Program continues to putter along this month, with numbers of active trial and permanent modifications in the Chicago region staying largely level (see our previous analyses). There were 32,997 active modifications in the region in October 2010, up 0.36 percent from last month’s 32,880. However, new data from Treasury shows that the large number of homeowners who have been dropped from HAMP—at least 18,000 in the Chicago region—are not yet losing their homes in large numbers.

November 10, 2010

The longer this foreclosure crisis drags on, the clearer it is that voluntary loan modification programs are inadequate to meet the needs of millions of borrowers with homes worth less than the mortgages.  A recent commentary published by the Federal Reserve Bank of Cleveland shows how an old tool could be used in this new context to help underwater borrowers.

November 9, 2010

As it becomes increasingly clear that voluntary loan modification programs like the Home Affordable Modification Program (HAMP) are woefully insufficient to prevent foreclosures on a meaningful scale, it’s time to consider broader-reaching approaches. The debate on allowing bankruptcy judges to modify the terms of mortgages on primary residences (often referred to as “judicial modification” or “cramdowns”) has quieted down since 2009, when Sen. Dick Durbin (D-IL) introduced a bill that would allow mortgage debt on primary residences to be restructured in Chapter 13 bankruptcy. The bill, called the Helping Families Save Their Homes in Bankruptcy Act (S. 61), didn’t pick up steam. As our president Dory Rand will argue later this week, new analysis has shown that concerns about the negative impacts of judicial modification are likely overblown. Before we take a new look at judicial modification, let’s review what it entails (special thanks to Credit Slips for providing a wealth of information about mortgages in bankruptcy).

November 2, 2010

The number of active trial and permanent Home Affordable Modification Program modifications continues to drop in the Chicago region, according to new data released by Treasury. The past three months have seen active modifications drop to record lows (see our previous analyses). There were 32,880 active modifications in the region in September 2010, down 1.4 percent from last month’s 33,346.

October 21, 2010

Froylan and Amparo Nuñez remember what their block in South Chicago was like back in the day. Good jobs were still available at the steel mills nearby and their son, Froilan Jr., played next door with his friend Hector.
Times have changed. The Nuñezes now have little granddaughters. The steel mills have long closed, and Froylan Sr. ended up working on a garbage truck for nineteen years. And their little bungalow, as Ashley Gross reports for Chicago Public Radio, is an island of stability on an increasingly troubled street. Hector’s old house is now boarded up and tagged by the Latin Dragons, who use it as a drug house. While some of the homes are neatly tended, clusters of boarded-up homes attract garbage and foster gang activity and drug sales.

October 15, 2010

As you likely know, a number of large mortgage servicers are under scrutiny for possibly preparing fraudulent foreclosure papers. You can read our thoughts on the issue here. Since the situation keeps rapidly changing, we rounded up the latest news to help you stay informed:

October 13, 2010

In recent weeks, the foreclosure processing practices of some of the nation’s largest mortgage servicers have come under scrutiny. If the allegations of widespread fraud are true, this episode serves as yet another reminder that we can’t simply rely on the prudence of servicers to adequately address the foreclosure crisis.

September 29, 2010

New data show that the number of active trial and permanent Home Affordable Modification Program (HAMP) modifications in the Chicago region continues to drop, surpassing last month’s record low (see our previous analyses). There were 33,346 active modifications in the Chicago region in August 2010, down from last month’s 34,576 and November 2009’s 36,208, the first month Treasury released data by metro area.

September 13, 2010

Even though the comment period on CRA modernization is now closed, there are other opportunities to provide input on policies that hold lenders accountable to their communities. Federal bank regulators are holding public hearings on updating the Home Mortgage Disclosure Act (HMDA), which requires mortgage lenders to provide detailed public reports of their mortgage lending activities to regulators and the public (register here by September 15 for the Chicago hearing).

September 13, 2010

Even though the comment period on CRA modernization is now closed, there are other opportunities to provide input on policies that hold lenders accountable to their communities. Federal bank regulators are holding public hearings on updating the Home Mortgage Disclosure Act (HMDA), which requires mortgage lenders to provide detailed public reports of their mortgage lending activities to regulators and the public (register here by September 15 for the Chicago hearing).

September 10, 2010

Pages and pages of ratios and figures don’t usually fire up a crowd, but they do affect the rash of foreclosures our country is experiencing and Americans are fired up about that.  One of the driving factors behind the foreclosure crisis was lenders putting unsuspecting borrowers into loans they could not reasonably afford.  Borrowers of color, women, the elderly, and low-income families were favorite targets for these practices. Thankfully, legislators recently passed a bill that includes the modernization of a tool critical to fighting discrimination in the housing market.

September 10, 2010

Pages and pages of ratios and figures don’t usually fire up a crowd, but they do affect the rash of foreclosures our country is experiencing and Americans are fired up about that.  One of the driving factors behind the foreclosure crisis was lenders putting unsuspecting borrowers into loans they could not reasonably afford.  Borrowers of color, women, the elderly, and low-income families were favorite targets for these practices. Thankfully, legislators recently passed a bill that includes the modernization of a tool critical to fighting discrimination in the housing market.

September 10, 2010

Pages and pages of ratios and figures don’t usually fire up a crowd, but they do affect the rash of foreclosures our country is experiencing and Americans are fired up about that.  One of the driving factors behind the foreclosure crisis was lenders putting unsuspecting borrowers into loans they could not reasonably afford.  Borrowers of color, women, the elderly, and low-income families were favorite targets for these practices. Thankfully, legislators recently passed a bill that includes the modernization of a tool critical to fighting discrimination in the housing market.

August 25, 2010

The predatory subprime lending crisis devastated families and communities across Chicago and the nation, particularly low-wealth communities and communities of color.
A crucial tool to fight discriminatory and predatory lending is the Home Mortgage Disclosure Act (HMDA). HMDA requires mortgage lenders to provide detailed reports of their lending to regulators and the public. Woodstock Institute uses HMDA data to track discriminatory lending practices, study patterns of community investment, and hold individual banks accountable for their lending practices.

July 21, 2010

New foreclosure filings on condominiums are a rising share of foreclosure activity in the Chicago region, new data from Woodstock Institute show. New filings on condominiums in the six-county region grew by two percentage points from 17 percent to 19 percent of all foreclosure filings between the first half of 2009 and first half of 2010.

July 20, 2010

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.

July 16, 2010

The Community Reinvestment Act (CRA) should be updated give financial institutions credit for activities that support, enable, or facilitate projects carried out under the Neighborhood Stabilization Program (NSP), says a recent public comment letter submitted by Woodstock Institute.

July 15, 2010

There’s been a constant flow of anecdotes from housing counselors, homeowners, and the media saying that the federal Home Affordable Modification Program (HAMP), designed to prevent foreclosures by lowering monthly mortgage payments, has major flaws in its implementation. Homeowners and counselors report difficulties in communicating with their servicers and problems with repeated loss of documents or errors in determining eligibility that can bog down the process—or even result in mistaken foreclosure. A recent report from Congress’ investigative arm states that these anecdotes indicate systemic problems in HAMP’s implementation.

July 9, 2010

The Community Reinvestment Act (CRA) has been an effective tool that has been used over the past 30 years to ensure that banks are meeting all the credit needs of the communities they serve, particularly low- and moderate-income (LMI) communities.  It has been used to improve access to low-cost mortgage credit in underserved markets, promote the provision of sustainable financial services tailored to low- and moderate-income consumers, and encourage sound investment in underserved communities who badly need it.  However, many questions have been raised about how CRA can be used to meet one of the most pressing needs facing communities today—helping families avoid foreclosure when possible.

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