By Angela Caputo
March 16, 2010
Clearly feeling the heat from their constituents, the Chicago City Council Housing Committee called bank officials down to City Hall yesterday to testify about the foreclosure mess. "Our problem is that we could lose our jobs because of you," Ald. Dick Mell (33rd Ward) told execs from Bank of America, Wells Fargo, Chase Bank, and a handful of other financial institutions, "and you could get bonuses at the end of the year."
But for all their outrage, the lawmakers seemed a little late to the party. After all, it's been nearly five years since the subprime mortgage meltdown touched off Chicago's foreclosure crisis. Meanwhile, major lenders' ongoing resistance to mortgage modifications has continually grown the stock of vacant properties, further driving down property values in hard-hit communities.
In calling the meeting, Ald. Ray Suarez (31st Ward) -- along with State Sen. Iris Martinez (D-Chicago) -- sought to pressure the banks to do a better job maintaining repossessed properties and to speed up the unduly slow modification process to keep more people in their homes.
In the meantime, the foreclosure problem isn't going away. Just yesterday, National People's Action (NPA) reported (PDF) that not only did Chicago's foreclosure rate grow by another 16 percent in 2009, but that banks now own nearly 60 properties per square mile in minority communities (a rate that's three times higher than in predominantly white neighborhoods). By NPA's analysis, the glut of foreclosures has affected the entire housing market, costing the average Chicago homeowner $27,000 in home value between 2004 and 2009, resulting in a $15 billion collective loss in equity.
As the lawmakers pointed out yesterday, everyone appears to be struggling -- except the banks.
Suarez remarked that lenders have done a heck of a job insulating themselves from the foreclosure mess, noting that even city officials have been unable to reach them to talk about the problem. "I could get a hold of the Pope easier than finding out who handles foreclosures and troubled properties for your financial institutions," he said.
As we noted earlier this month, State Reps. Mary Flowers (D-Chicago) and Deborah Graham (D-Oak Park) have introduced legislation that could ultimately boost modification numbers by holding lenders more accountable. The need is clear: A mere 11 percent of Chicago-area homeowners got a modification in January, the Woodstock Institute reports.
Few have been following those efforts closer than The Chicago Reporter. Editor Kimbriell Kelly testified yesterday regarding the federal Home Affordable Modification Program's (HAMP) shortcomings:
We found that in Illinois, most people had less than a 50-50 chance of having a successful home loan modification. In particular, 45 percent of applications from Latinos resulted in a modification, compared with 31 percent for Asians, 18 percent for African Americans and 13 percent for white clients.
"We're doing our best, we're trying our hardest," IndyMac Vice President Bill Glasgow told the lawmakers. He blamed incomplete applications and lack of income for the dearth of modifications his firm has carried out.
"You didn't have to have a job to get these phony loans," Mell muttered in response.
In the end, Martinez and the city housing committee decided to give the banks another four months to respond. Now they too can go back to their constituents and repeat the bankers' line: "We're doing our best, we're trying our hardest."
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