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Quick Hit
by Adam Doster
Thu Nov 18, 2010

Madigan: Bring Transparency To Foreclosure Procress

Prompted in part by the recent crisis that swept through the housing market, in which mortgage services using "robo-signers" produced shoddy foreclosure filing documents, Illinois is clamping down on companies that are taking advantage of vulnerable homeowners.

Yesterday, the Illinois Department of Financial and Professional Regulation fined 11 unlicensed mortgage modification firms who have been charging families thousands of dollars to reduce the principal on their home even though free loan modification programs exist. Attorney General Lisa Madigan, meanwhile, has filed new legislation in Springfield (HB 6951) to bring transparency to the foreclosure process. Specifically, the bill would amend the Illinois Mortgage Foreclosure Act to require that banks provide a detailed summary of a borrower's payments over a 36-month period, giving homeowners clear data to contest a foreclosure filing if they feel they are making a good-faith effort to keep up with their payments. Madigan's bill would also force the lender to document in writing every effort they have taken to keep the homeowner in the home, including loan modification efforts. Just this week, Housing Action Illinois released a report stating that mortgage servicers in greater Chicagoland are dragging their feet on those modifications. From a release:

"Too often, Illinois families are struggling to pay their mortgages because banks put them into risky loans that they did not understand and could never afford. Now, we must make sure that banks are not violating the law as they try to take these families’ homes away," Attorney General Madigan said. "This legislation is designed to ensure that banks and loan servicers cannot cut corners or ignore homeowners’ rights in the foreclosure process."

The bill is currently in the House Rules Committee waiting to be assigned for a proper hearing. With one-in-three Chicagoland homeowners currently underwater, it's something to keep an eye on during this next few months.

Quick Hit
by Micah Maidenberg
Tue Nov 16, 2010

Report Whacks Mortgage Lenders In Chicago Region

Mortgage servicers active in greater Chicagoland are dragging their feet when it comes to approving the kind of loan modifications that would give distressed homeowners relief, a study (PDF) released this morning by Housing Action Illinois (HAI) reveals. Working with 10 different housing counseling agencies across the region, HAI analyzed the results of 516 loan modification applications homeowners submitted to their lenders between December 2009 and this past September. Sixteen percent of the applications were denied outright; 40 percent were still pending as of September. And though 44 percent were approved, the latter finding must be taken with a grain of salt, if not a teaspoon: the report finds that the overwhelming number of the approved loan modifications were only temporary, made through the struggling federal Home Affordable Modification Program (HAMP).

Years after the housing and foreclosure crisis began, it is deeply frustrating to read another report that reveals mortgage loan servicers remain unresponsive to mortgagors, sending those seeking help through endless loops. "[W]hile HAMP program directives require that servicers must acknowledge receipt of the application within 10 business days and respond within 30 calendar days with an approval of a trial modification, a denial of a modification, or a request for more information -- this is simply not occurring," HAI's report states.

The organization makes a series of recommendations to address the low number of permanent loan modifications in the Chicago region, including requiring servicers to improve their communication systems and forcing them to respond in a timely manner to loan mod applications. The federal government, the report says, must deal more effectively with complaints related to servicer compliance with HAMP and hold servicers accountable when they fail to meet their obligations. HAI also calls for Congress to expand (PDF) the Community Reinvestment Reform Act. A better modification process and broader reforms certainly are needed -- an estimated one in three mortgage-holders in Chicagoland are presently underwater on their loans, and minority borrowers are particularly at risk of losing their homes to foreclosure.

Quick Hit
by Adam Doster
Fri Nov 12, 2010

Refinancing Ain't What it Used To Be

Earlier this week, we wrote about the frightening statistics compiled by Zillow that detailed how many homeowners in Chicagoland owe more on their mortgage than their home is presently worth. One reason that so many local homeowners are under water is that refinancing a mortgage has been tricky for those with a shaky balance sheet. "Many homeowners can't refinance," NPR reported yesterday, "because they don't have enough equity, their incomes are too low, their debt is too high, or their credit scores aren't good enough."

To be sure, interest rates are very low and refinancing activity is picking up steam, even for those whose credit score has taken a dive. But the NPR piece illustrates the vicious cycle in which many folks in foreclosure, particularly those in communities of color, find themselves. To get an affordable mortgage, one needs steady income and a solid credit score. But individuals living in communities of color are far more likely to have "non-prime" credit scores and far less likely to have job opportunities available. With so few options, walking away from the home often makes the most economic sense. 

PI Original
by Micah Maidenberg
Wed Nov 10, 2010

One In Three Chicagoland Homes Are Underwater

Homeowners in the Chicago region are struggling with mortgage debt. Data released today shows that about one-third of mortgages on area single-family homes are worth more than the property itself. What can be done to improve the situation?

Quick Hit
by Micah Maidenberg
Fri Nov 5, 2010

Sweet Home's Next Steps

There was no vote on the Sweet Home Chicago Ordinance at City Council on Wednesday, but proponents of the legislation say they've got multiple options at their disposal to get the bill -- or an alternative version of it -- finally passed. Sweet Home, as originally written, would mandate that the city designate a minimum of 20 percent of the tax increment financing dollars collected in Chicago on an annual basis for affordable housing projects, including revitalizing foreclosed homes. We've tracked the fight for the bill and its status in council extensively over the last few months.

Faced with a delay that had stretched to well more than a year, Ald. Walter Burnett (27th Ward), the legislation's chief sponsor, threatened to use a rare parliamentary maneuver called motion to discharge to force the full City Council to take an up or down vote on the bill at the November 3 council meeting. But Burnett said at the "ninth hour" Alds. Ray Suarez (31st Ward) and Ed Burke (14th Ward) approached him with a deal: drop the motion to discharge and prior to November 17 we'll allow a committee hearing and, crucially, vote on the original ordinance or a compromise bill that's still being drafted. Burnett said after conferring with Sweet Home supporters, he agreed to the plan. Suarez and Burke chair the housing and finance committees, respectively. There's been one hearing about Sweet Home, but no vote on it.

Julie Dworkin, policy director for the Chicago Coalition for the Homeless, said the Sweet Home coalition agreed to put off the motion to discharge vote for practical reasons. It's preferable to go through the regular legislative process, she said, "because certain aldermen who support the ordinance do not support using the motion to discharge because they don't like to be so in your face to the committee chairs." Dworkin is also confident that Sweet Home would make it out of a joint housing-finance committee hearing. She pointed out that Sweet Home backers still can use the motion to discharge, as there are two council meetings remaining this month, for the original ordinance if they do not support the alternative. The exact contours of that bill -- whether it preserves the basic idea of Sweet Home or overly waters it down -- could determine whether Ald. Burnett forces a showdown in the full council on an important, yet long-stalled bill.

Burnett, who's long been close with outgoing Mayor Richard Daley's administration, acknowledged he was frustrated with the delays that have kept Sweet Home stalled. "Personally, I think it's the mayor holding it up," he said. The end game for this legislation, however, finally appears to be at hand.

Quick Hit
by Adam Doster
Thu Nov 4, 2010

Berrios: "You'll Have More Information Than In The Past"

For those hoping Cook County Assessor-elect Joe Berrios will uphold his campaign promises to make the property assessment process more transparent and fair, the election night quote he delivered to the Chicago News Cooperative is a bit discouraging:

"To me it was all a bunch of bunk," Berrios told the Chicago News Cooperative, when asked about the persistent criticism of cronyism that has dogged his campaign. He vowed greater transparency, but set a vague standard for it, saying that from day one "you will see more information than you have in the past" out of the office.

On his campaign website, Berrios said this his office would ensure "assessment notices can be read with clarity." He even posted a sample notice (PDF) that he thinks is an improvement over the current paperwork sent out to homeowners each year. But saying only that "more information" will be made available is a pretty low bar to set, especially when accusations of corruption dominated the campaign. It'd be nice to see our new Assessor make some concrete proposals in the coming months.