Progress Illinois

Over the past few months, we've tracked Sen. Dick Durbin's emergence as Congress' anti-usury leader.  During this period, he has introduced a series of bills aimed at saving struggling homeowners from foreclosure and reigning in abusive consumer credit products. He has also called on Congress to create a Financial Product Safety Commission (FPSC), a watchdog body modeled on the Consumer Product Safety Commission but focused on the banking industry. 

On Monday, Durbin joined the National Training and Information Center (NTIC) to highlight his proposed reforms at a press conference in Chicago's Albany Park neighborhood, which has been particularly hard-hit by the foreclosure crisis. The blocks of boarded-up multi-unit buildings along the 4400 block of North Albany vividly illustrate why the country can no longer afford to let the financial services sector run wild.

NTIC took the opportunity to highlight its recent "Foreclosures In The Windy City" report, which examined how weak consumer protection laws paved the way for 20,000 Chicago residential buildings to fall into foreclosure in 2008. NTIC researchers explain:

Of Chicago’s nearly 20,000 new foreclosures last year we know that three out of every four loans were Adjustable Rate Mortgages (ARMs) or other high-risk loan products. Furthermore, the majority of foreclosures (86%) occurred on mortgages made within the past three years. This statistic suggests that the spike in foreclosures in 2008 did not occur by accident or due to a mere cyclical downturn in the economy. Chicago reported its highest level of home foreclosures ever due to the reckless lending and unregulated financial practices that have existed for decades and which came to a terrible climax in the years 2005 through 2007. The bulk of these loans were loans made to fail – and in 2008 they did.

Not surprisingly, NTIC found that homeowners locked into less risky fixed-rate mortgages didn't face higher incidents of foreclosure. Still, even secure homeowners are impacted by the crisis as vacancies depress home values across the city and the state. In short, it's in every homeowner's interest for Congress to act. As Kai Wright says in his recent Nation article on ongoing mortgage madness: "All over the country, confused, struggling borrowers and an opaque army of industry contractors are fumbling toward each other in the dark, with guns drawn."  Be sure to read his entire piece.

Below is the full NTIC report (click the button in the upper right-hand corner to enlarge). Page 14 shows how each Chicago ward in particular is reeling in the aftermath:

Image courtesy of NTIC.