It’s hard to feel lonely in Roxie King’s house. The walls are packed with row upon row of pictures of Roxie’s parents, two children, twenty grandchildren, and other loved ones celebrating various stages in life. On a recent visit, Roxie proudly showed Woodstock friend Bobbi Ball of Partners In Community Building, Inc. and me around her clean and cozy ranch-style home of 37 years near Midway Airport. Given her good cheer, it was hard to believe that, just last year, she was at risk of losing this home.

Bankruptcy filers in African-American neighborhoods choose potentially risky Chapter 13 more often than filers in white communities

Women in Cook County’s African-American neighborhoods file for bankruptcy at a disproportionately high rate, a new report from Woodstock Institute found. The report also found that bankruptcy filers in African-American communities are far more likely to choose Chapter 13 bankruptcy over Chapter 7, a trend that may indicate limited economic benefits of the bankruptcy process to filers in these 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.

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.

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.

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).