Progress Illinois

After the Cook County Board of Commissioners finally agreed yesterday to fund foreclosure mediation services, housing advocates are celebrating the move as "a huge step" towards stemming the problem.

As regular readers know, it's been a tough slog for those community activists -- led by the group Action Now -- who've been pushing the county to devote more resources to mediation -- a proven method of staving off foreclosure. By a vote of 16 to 1, the board approved a $3 million budget amendment introduced by Comm. Earlene Collins (D) at the behest of Board President Todd Stroger and Cook County's Chief circuit court Judge Tim Evans (Republican Comm. Tony Peraica was the lone dissenter).

Like elsewhere in the state, foreclosures continue to pile up in Cook County.  During a roundtable on WTTW's Chicago Tonight yesterday,  MB Bank Vice President Thomas FitzGibbon noted that one of the biggest challenges in enabling mortgage modifications is getting through the daunting paperwork. "Having a neutral third party helping that consumer, helping that household, fill out the documents is an extremely important part of this whole process," said FitzGibbon, who also sits on the board of the non-profit Neigborhood Housing Services. "Seventy percent of the applications for this service -- for this help that we send out to consumers who we know are in trouble -- never comes back." Watch his remarks (full video here):

Once up and running, Cook County's program will help fill this void.

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Deluged by the thousands of foreclosure cases that have clogged the Cook County court system, Chancery Division Presiding Judge Dorothy Kirie Kinnaird made a bold move back in June when she called for a two-month reprieve on mortgage defaults. Despite her effort to buy homeowners time to seek mediation,  resources remain too scarce -- particularly for people from the low-income communities hit hardest by the foreclosure crisis.

With the county pulling in millions in foreclosure filing fees, some local housing advocates are calling on Cook County Board President Todd Stroger to get creative and start redirecting that money toward mediation services. The local community organization Action Now estimates that the spike in $300 foreclosure filing fees has generated an additional $15 million for the county's coffers. Still, the Stroger administration has yet to allocate any of that money toward foreclosure prevention. "Why not use some of that money for mediation?" Marsha Godard of West Lawndale asked at a rally outside Stroger's office this morning. "At least that would give people a fighting chance."

It's no secret that low-income and African American neighborhoods have seen the highest concentration of foreclosures here in Illinois. "We saw someone getting put out on our way down here," activist Michelle Young of Austin reported at the rally. "This is about people losing their homes -- people who are moving out in the middle of the night because they're ashamed to say 'I'm having trouble with my mortgage.'" Watch:

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Over two years removed from the beginning of the subprime mortgage crisis, foreclosure filings continue to stack up. In Illinois alone, 13,000 homeowners received a foreclosure notice last month. Many of the households forced to leave don't even own the homes; the Woodstock Institute believes that 32 percent of 2008 residential foreclosure filings in Chicago were on properties with between two and six units. In other words, renters unfortunate enough to live in a building whose landlord can't make payments must scramble for a new place to live.

But starting today, those very renters will gain some legal protections thanks to the work of housing advocates in Illinois. That's because Public Act 96-0111, otherwise known as the Renter's Bill of Rights, is now in effect. Sponsored by Chicago Democratic State Rep. Will Burns and State Sen. Jaqueline Collins and signed by Gov. Pat Quinn this summer, the law guarantees that, should a new owner step in to run a foreclosed rental building, existing tenants must be informed within 21 days that management of the property has changed hands.Those notices must also include contact information for the new operator of the premises as well as a foreclosure case number, if necessary. And if the tenant is evicted, he or she will have at least 30 days to find a new residence.

The bill that eventually passed both chambers was not flawless. Stripped from it was a clause requiring new habitability standards for any foreclosed property, meaning landlords are not required to maintain an environment that’s “safe, healthful, and fit for occupancy." But it's a step in the right direction, specifically in a state that's trying to solve mounting budgetary and ethics problems.

The Obama administration's Making Home Affordable loan modification program has stumbled out of the gate. Through July, only 160,000 homes went into trial modifications, according to the Government Accountability Office. (The Obama administration pegged the number a bit higher at 235,250, but the number of successful modifications is undoubtedly lower than that.) Meanwhile, foreclosures keep stacking up. In Illinois alone, 13,000 homeowners received a foreclosure notice last month. And the economic devastation is focused in communities least able to recover. A new paper by the Woodstock Institute found that vacant, lender-owned properties "are concentrated in African American communities, go unsold longer, and incur greater losses to the lender." Clearly, more action is required to protect vulnerable homeowners and the communities in which they live.

Enter Sen. Dick Durbin and three of his Senate colleagues. Yesterday, they introduced a bill titled the "Preserving Homes and Communities Act of 2009" that would expand federal loan-modification programs to more borrowers and crack down on lenders eager to foreclose on delinquent homeowners.

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"Rally Cap" is a new recurring feature at Progress Illinois in which we recap -- with photography or video -- progressive-oriented protests and political rallies held around the state.

Summary:
Since pocketing a $25 billion taxpayer bailout last year, Wells Fargo has refused to extend credit to a series of struggling Illinois companies, unabashedly putting their own bottom line before the public good. Meanwhile, the bank has generated profits through unscrupulous lending practices, such as hiking penalties and interest rates, and targeting minorities with bad mortgages deals. Today, the organization Chicago Jobs With Justice led a protest of Wells Fargo's actions with a bit of political theater outside of the bank's downtown offices. In a mock trial held in the court of public opinion, an actor portraying Wells Fargo Chairman Richard Kovacevich was put on the stand to defend his company's banking practices.

Location:
Wells Fargo Chicago Headquarters, 230 W. Monroe

Participants:
Chicago Jobs With Justice
United Electrical Workers Local 1174

Quote of the day:
"Wells Fargo, you have been found guilty on all criminal charges against you. You are ordered to cease the foreclosure of homes, evictions of tenants, and liquidation of factories."
- Rev. Jonny Drummond of New Grace Emmanuel Church

Multimedia:

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Last year, Cook County Sheriff Tom Dart worked hard to defend thousands of unwitting renters who were tossed from their homes because of the foreclosure crisis. Then, Rep. Will Burns (D-Chicago) tried to right the wrong in Springfield by sponsoring a Renter's Bill of Rights. But at the eleventh-hour, lenders managed to strip out even the most basic protections, including habitability standards that would ensure units are “safe, healthful, and fit for occupancy." No organization better understands the stress that renters are facing as a result of too few protections than the Metropolitan Tenants Organization (MTO). And after fielding thousands of calls from Chicagoans living in substandard conditions, the non-profit has drafted a State of Chicago Renters report (PDF) that concludes it's time for the federal government to intervene on behalf of low-income households and help stabilize an increasingly difficult market. More from the report:

For too long, national housing policy has relied on moving Americans toward homeownership. The current housing and financial crisis suggests that during the last decade, growth in homeownership rates and increases in the numbers of owner-occupied units were unsustainable.

Prior to the foreclosure crisis and the economic downturn, thousands of renters were forced to move as rental units were converted to condominiums. Renters have been in an affordable housing crisis for sometime ... They continue to suffer from an acute shortage of affordable rental units.

After listening to 150,000 calls fielded by their own hotline and comparing the data with foreclosure estimates provided by the U.S. Housing and Urban Development and Census data, MTO found that foreclosure-related rental problems are creeping into some unlikely Chicago neighborhoods: those on the city's outskirts that were traditionally occupied by homeowners.

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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.

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It's becoming quite clear that policy makers can't just will the region's foreclosure problem away. Two articles by the Sun-Times' Francine Knowles paint a pretty grim picture of the local housing market's health. According to a report from First American CoreLogic, 29.4 percent of properties in Illinois had negative equity, meaning a mortgage was greater than the value of the home, giving homeowners a huge incentive to abandon the property. In Chicagoland, the number is over 30 percent. Moreover, 14 percent of home mortgage loans in Illinois were in foreclosure or behind on payments at the end of the second quarter, a five percentage-point jump since last year.

As we've pointed out, it's not that new government regulations have "led to a spike" in foreclosures. It's that elected officials have done too little -- both the state and federal levels -- to step in and protect homeowners. And the most stinging failure has come from Washington where cowardly lawmakers have refused to stand up to financial institutions and pass Sen. Dick Durbin's judicial modification proposal, which is designed specifically to address underwater mortgages.

Most legislative attention nationally is being taken up by health care. In Illinois, the budget deficit has imposed severe limitations on what lawmakers can do. But getting people out from under these onerous debts should be a key priority for officials at both levels moving forward.

This lede from the AP -- in their article on July foreclosure filings in Illinois -- is just terrible:

A new law in Illinois that aimed to help give homeowners facing foreclosure more time apparently led to a spike in problems during July, according to data released today by RealtyTrac.

"Led to a spike in problems" leaves the impression that the Homeowner Protection Act had unintended consequences which ultimately exacerbated the foreclosure crisis.  The takeaway is that state legislators and Gov. Quinn did something wrong by approving this legislation. But that's just not the case.

As we noted yesterday, the law did exactly what it was supposed to do: bought struggling homeowners some time while federal policymakers debated how best to help stem the spread of foreclosures.  The problem is that the programs in place at the national level are underperforming and Congress is yet to push for more aggressive measures.

Here again is the Woodstock Institute's Geoff Smith, as quoted in yesterday's Tribune article:

"The 90-day window is good but only good if you can help the borrower get into a better loan and theoretically that would be through the [federal loan modification] program," said Geoff Smith, Woodstock's vice president. The grace period "seems to have achieved its goal of delaying the foreclosure process. What happens next is where the big question mark is. Are those people whose foreclosure was delayed, are they now getting the help they need?"

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Since foreclosure rates exploded last year, the Woodstock Institute has steadily released data illustrating the homeownership struggle many are facing in Illinois. Unfortunately, the situation has only grown more difficult in the first half of this year. By the end of June, 28,520 foreclosure filings were recorded in the six-county Chicago region alone, marking a 9 percent jump over the same period in 2008. But if we dig a little deeper into the numbers, Woodstock researchers suggest there are some bright spots.

During the second quarter of 2009 -- and from April to May in particular -- the number of foreclosure filings actually declined sharply (PDF). And that's no coincidence. Over that time, Illinois' Homeowner Protection Act was strengthened, forcing lenders to extend a 30-day grace period to folks who were a month late on their payments. Moreover, should the homeowner seek out HUD‐certified foreclosure counseling, an additional 30-day reprieve is tacked on. And as Woodstock's Geoff Smith told the Tribune, this short-term progress is significant, although only the first step:

"The 90-day window is good but only good if you can help the borrower get into a better loan and theoretically that would be through the [federal loan modification] program," said Geoff Smith, Woodstock's vice president.

The grace period "seems to have achieved its goal of delaying the foreclosure process. What happens next is where the big question mark is. Are those people whose foreclosure was delayed, are they now getting the help they need?"

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