Progress Illinois

Yesterday, we noted that the Democratic House leadership looks poised to consider two bills dealing with workers' rights in the first week of the upcoming session: the Paycheck Fairness Act and the Lilly Ledbetter Fair Pay Act. Senate Majority Leader Harry Reid has his own priorities as well. The American Prospect’s Tim Fernholz got his hands on a list of 10 bills the Senate hopes to unveil when Congress reconvenes, as sent by leadership to various staffers. While the memo doesn’t contain specific legislative language, there are some encouraging details.

Indeed, third on the list is the “Homeowner Protection and Wall Street Accountability Act of 2009, which -- along with a moratorium on foreclosures and new regulations for the financial industry -- includes Sen. Dick Durbin’s plan to aid struggling homeowners by allowing the terms of their mortgages to be revised in bankruptcy court.

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President-elect Barack Obama and his team of economic advisers have been busy at work devising a blueprint for the stimulus package they hope to pass next month. If all goes according to plan, Democratic Congressional staff members will have an outline to draft legislation from by the the end of the year. On Saturday, the New York Times reported on those items likely to be included in the Obama administration’s initial proposal:

About a fifth of the Obama package could go toward health care, Democrats say. The biggest piece would be up to $100 billion to subsidize the states’ growing Medicaid caseloads of the poor. [...]

Besides the health care financing, it would propose billions of dollars for energy-saving programs, public works projects, school construction and renovation, and expanded jobless aid and food stamps for “the most vulnerable,” as well as tax cuts.

Financing Medicare and expanding unemployment insurance and food stamp benefits is a pretty straightforward endeavor. But officials will have to decide exactly what public works projects are worth pursuing if, and when, a stimulus is passed. One sound choice would be an expansion of HUD’s recently-created Neighborhood Stabilization Program.

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Less than two weeks ago, the hyperlocal news and information provider EveryBlock launched a new feature on their Chicago site: a section that tracks and maps foreclosure filings throughout the city.  Using data compiled by the Woodstock Institute (which researches foreclosures throughout the metro area), EveryBlock will be updating the foreclosure section twice monthly.  Check it out.

The manner with which mortgage companies peddled subprime loans to low-income people of color has been called reverse redlining, an inversion of the racially discriminatory real estate practices prevalent in urban America through the better part of the 1960s. And just like 40 years ago, an organization of community groups is charging that financial institutions violated civil rights in their quest to generate wealth. This time, the target is two bond rating agencies that assuaged investor concerns about the tenuous mortgages bundled and sold around the world as mortgage-backed securities. Via the Los Angeles Times:

In what is apparently the first legal action of its kind, an association of community-based organizations has filed a federal civil rights complaint against two of the three largest Wall Street rating firms, charging that their inflated ratings on subprime mortgage bonds disproportionately caused financial harm to African American and Latino home buyers across the country.

The complaint, filed by the National Community Reinvestment Coalition, alleges that Moody’s Investors Service and Fitch Ratings enriched themselves by assigning high ratings to bonds backed by mortgages “that were designed to fail” because of “unfair payment terms and insufficient borrower income levels.”

The complaint seems to have merit.

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Painting themselves as David taking on Goliath, a group of citizen activists from Chicago’s North Side have filed a legal challenge against the city for what they see as another abusive use of Tax Increment Financing (TIF).

According to the suit, which was filed in Cook County Circuit Court Wednesday, the plaintiffs from Fix Wilson Yard coalition alleged that the city signed off on multi-million dollar project overruns at the Wilson Yard site without following through on the oversight required under state law.

The plaintiffs also argue that city officials, including Ald. Helen Shiller (46th), have been nothing short of sneaky in rolling out the $151 million redevelopment plan. They point to a rushed October decision that handed a golden parachute to developer Peter Holsten as evidence.

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Just three days after Dick Durbin relaunched his effort to let judges alter the terms of distressed mortgages in bankruptcy cases, a coalition of activists rallied outside the senior Illinois senator’s Chicago office to commend his efforts and push him to offer more expansive assistance.

Organized by Chicago Jobs With Justice (JWJ), a group of around 50 gathered to hear testimony from Antoinette Chambers, a West Side resident facing eviction from her apartment because her landlord is being foreclosed upon. The coalition also delivered a letter to a Durbin staffer (right) calling on Congress to support his bankruptcy bill, impose a freeze on all mortgage foreclosures, and pass a job-creating stimulus package as outlined by the Institute for Policy Studies.

“This is a letter,” said James Thindwa, JWJ’s executive director, “that we’re sending to Senator Durbin to thank him, to acknowledge his good efforts, and to ask him to do more and push other members of the U.S. Senate and the Congress at large to really understand what an emergency this is.”

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Yesterday, the Senate Judiciary Committee held a hearing on Sen. Dick Durbin's proposal to help struggling homeowners by allowing bankruptcy courts to renegotiate the terms of certain mortgages.  As we noted on Tuesday, Cook County Sheriff Tom Dart flew to Washington to testify before the committee about the foreclosure crisis in Chicagoland.  Dart told NBC 5 that the situation represents "utter chaos."  Durbin said he doesn't expect his plan to move forward during the lame duck session thanks to a White House that "is not open to the changes that we think will be necessary."  Watch:

(H/T HuffPo Chicago)

More bad news emerged on the Illinois foreclosure front today. The number of homeowners slapped with bank repossessions, foreclosure, default or auction sale notices came to 12,681 in October -- a 24 percent increase from September and a 31 percent increase over the same month last year.

Homeowners in Cook County fared the worst. They made up more than half of the total foreclosure filings in the Prairie State. From the Sun-Times:

Some 6,885 homes received foreclosure notices in Cook County, representing one in every 313 homes. In Will County, the number was 990 homes, or 1 in every 226 homes. In DuPage County, the number was 807 homes, or one in every 441, and in Lake County it was 815 homes, or one in every 307 homes.

For more on what certain banks are doing to stem the tide of foreclosures -- here in Illinois and nationwide -- check out this post from yesterday.

Last month, Illinois Attorney General Lisa Madigan won a lawsuit that forced Countrywide Financial to establish an aggressive loan modification program to help an estimated 21,000 people in Illinois facing foreclosures.  At the time, she described it as a "model that other lenders and services as well as the U.S. Treasury should look at."

In that vein, Fannie Mae and Freddie Mac announced yesterday that they plan to adopt a similar program in the hopes of stemming the foreclosure tide. Like the Countrywide loans, which are now owned by Bank of America, the two government-backed agencies will begin adjusting the terms of at-risk mortgages based on income. The New York Times explains:

The program would be open to people who are at least three months delinquent on mortgages that are either owned or guaranteed by Fannie Mae or Freddie Mac. The goal would be to reduce the monthly payments on all of those loans — by stretching the term to 40 years, or lowering the interest rate, or even lowering the amount of the loan — so that payments would not be higher than 38 percent of a family’s monthly income.

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