PI Original Angela Caputo Wednesday July 8th, 2009, 11:25am

Bad News From The Foreclosure Front Lines

Two of the Prairie State's top housing advocates released some more
grim news yesterday on the handling of the foreclosure crisis in
Illinois. After surveying dozens of agencies backed by the Department
of Housing and Urban Development (HUD), the Woodstock Institute and
...

Two of the Prairie State's top housing advocates released some more grim news yesterday on the handling of the foreclosure crisis in Illinois. After surveying dozens of agencies backed by the Department of Housing and Urban Development (HUD), the Woodstock Institute and Housing Action Illinois (HAI) revealed some alarming gaps in foreclosure aversion services -- particularly in McHenry, Will, and Cook counties.

The report (PDF), "On The Foreclosure Front Lines," found that even in the depths of the housing crisis, only seven counseling sessions were scheduled for every 100 foreclosure filings in the state last year. Foreclosure counseling is an extremely effective service; HUD reports that 45 percent of those who participated in 2008 were able to hang onto their homes. And finding a way to include more people in the process would certainly help bolster the state's housing market, which is suffering from a glut of vacancies.

The Woodstock Institute's Geoff Smith told the Tribune that the underlying problem is "there are a set of borrowers who can be helped and are falling through the cracks." Reporter Mary Ellen Podmolik explains:

Even where the most counseling is occurring, 80 percent of homeowners, on average, face foreclosure without free counseling offered by agencies approved by the Department of Housing and Urban Development. [...]

Illinois has 94 HUD-certified agencies that offer counseling. The shortfall, the report concludes, is the result of a lack of homeowner awareness as well as agencies too strapped to do more.

HUD Secretary Shaun Donovan is trying to address the latter problem by lobbying Congress for funding to beef up counseling services over the next year. As Woodstock and HAI point out, the foreclosure crisis doesn't appear to be letting up and the time for additional reinforcement is now:

In April 2009, Illinois had the eighth highest rate of foreclosures in the nation with a foreclosure action on one in every 384 Illinois households. In total, 13,647 Illinois properties had foreclosure actions against them in April, the country’s fifth highest state total.

Many of those folks may already be out of a home, but Smith points out that they "could have been reached if someone had reached them in time, if they'd been represented in an appropriate manner."

For a full briefing on Woodstock and HAI's recommmendations, read the full report here.

Image by Flickr user Nick Blake.

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