The latest news about the local housing market is bittersweet. According to a report unveiled Thursday by RealtyTrac, home foreclosure filings in Illinois actually dropped 10 percent from July. But the month's activity was still 22 percent higher compared to August of last year. In all, over 13,000 homeowners received a foreclosure notice last month. And that number could grow unless unemployment dips significantly. "The August report demonstrates that there is still an ample supply of properties filling the foreclosure pipeline," the report stated.
Of course, what's lost in these broad statistics is the financial and emotional toll foreclosures take on families and communities. Yesterday, in the first installment of a series titled "Facing The Mortgage Crisis," WTTW's Chicago Tonight told the story of Chicago resident Richard Mitchell who recently received a foreclosure notice after losing his job and falling behind on his ballooning adjustable-rate mortgage payments. Watch it:
The story has a happy ending in this case, as Mitchell was able to get foreclosure counseling services, find work, and secure a 30-year fixed loan on his home. But that's not a common enough outcome. Only about 50,000 mortgages have been successfully modified by lenders under the Obama administration's Making Homes Affordable program, a fact WTTW reporter Eddie Arruza notes in the piece. That lag has led several powerful Democrats to reconsider Sen. Dick Durbin's judicial mortgage modification proposal, which was defeated in the Senate earlier this year.
The Huffington Post's Ryan Grim has the details:
House Financial Services Committee Chairman Barney Frank (D-Mass.) tells the Huffington Post he plans to revive the effort to give bankruptcy judges the authority to renegotiate home mortgages -- by making it part of this fall's much-anticipated financial regulatory reform bill. [...]
Frank said that he met in Boston recently with Senate Majority Leader Harry Reid (D-Nev.), Charles Schumer (D-N.Y.), Jack Reed (D-R.I.) and Tim Johnson (D-S.D.); the latter three are all on the Senate Banking Committee. They told him, he said, that they were ready to make a serious push at major financial regulatory reform before the year was out. Frank guessed the House would act by October.
The Washington Independent has a similar report, which quotes Durbin declaring that "waiting for banks to ‘volunteer’ to end this foreclosure crisis is a waste of time.”
But lawmakers supportive of the bankruptcy reform face two massive hurdles: the White House and the banking lobbying. On Wednesday, Assistant Treasury Secretary Michael Barr told the Wall Street Journal that while bankruptcy reform is one possible tool, "it's not the focus of our efforts to keep people in their homes." Meanwhile, the Mortgage Bankers Association -- fresh off it's legislative victory in the spring -- sent out a statement suggesting the reform would "destabilize a mortgage market that desperately needs stability right now." Clearly, they are ready to use all resources available to keep this off the Congressional agenda.
Comments
Brian White (not verified) on Fri, 09/11/2009 - 20:06
Recently, the National Foreclosure Mitigation Counseling Program, which represents a major initiative to fund housing counseling services, asked counselors for feedback about how servicers were handling requests for modification. The response was almost universally negative, with frustrations expressed over servicers' lack of staff, inadequate training of front-line staff, inconsistent responses about federal guidelines and eligibility, and mind-numbing problems like not have enough fax numbers to handle paperwork, yet telling counselors and clients to keep trying to fax documents. Part of what seems apparent in this is the lenders simply were not prepared to implement anything close to what the government proposed. Moreover, the Obama plan did not adequately account for the problems some borrowers had getting approval for modifications from servicers who said they were bound by agreements with investors, who are rarely named or mentioned.
Something we are discovering now is that condominium associations with foreclosures are getting hammered on multiple fronts, the latest being changes in FHA rules which make it more difficult for borrowers to get mortgages if an association has too many foreclosures, renters, or owners late on assessments. Rather than throw homeowners in these buildings a lifeline by making it easier to sell a home or refinance, the FHA is throwing a cinder block in the water.
Thanks for covering this story.
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