April 15, 2010

Mayor Daley Outlines Local, State And Federal Legislative Steps To Help Homeowners Facing Foreclosure

More than 22,000 Foreclosures in Chicago in 2009
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Mayor Richard M. Daley today outlined a series of local, state and federal legislative steps the City supports to deal with the home mortgage foreclosure epidemic facing Chicago and the nation.

“It’s our responsibility to help keep families in their homes and work with lenders to create solutions that will protect our neighborhoods,” Daley said in a news conference held at the Chinese American Service League, 2141 S. Tan Ct., where numerous foreclosure prevention services are offered to Chicagoans.

“If we don’t continue to address this challenge, we face the prospect that whole blocks in many parts of our city may be at risk, threatening the economic future of many homeowners as well as the tax base of our city,” he said.

The Mayor said that in Illinois, nearly one of every eight mortgages is delinquent or in foreclosure. In 2009, banks filed more than 22,000 foreclosures against Chicago homeowners and the City’s Department of Buildings spent nearly $7 million securing and boarding up vacant and abandoned properties to help keep our neighborhoods safe.

“Our entire city benefits when we work to prevent foreclosures,” Daley said.

The Mayor described the legislative proposals at the state and federal levels that he believes are critical to enact to help people avoid foreclosure and keep Chicago’s neighborhoods strong.

At the state level:

o Daley called on the General Assembly to enact legislation that will require banks (or other responsible parties) in Chicago to maintain their foreclosed properties so that the costs do not fall on the taxpayers. The legislation would apply only to Chicago.

o He said the City is also seeking legislation to clarify when a property is defined as “abandoned.” Chicago’s proposal would allow a bank to take legal ownership of a vacant property sooner so it can be secured sooner. Some banks have specifically asked for this change.

o He said the City has been working closely with Speaker Madigan’s office to identify potential opportunities to expand programs to help homeowners avoid foreclosure. These include such things as requiring mediation prior to foreclosure and expanding homeowner access to legal services and education programs for homeowners facing foreclosure.

“The City of Chicago has some of the toughest local laws in the nation when it comes to requiring banks to maintain vacant properties they own as a result of foreclosure. But current laws do not adequately address who is responsible for the property during the foreclosure process if the homeowner has already abandoned it,” he said.

At the federal level, Daley said he is encouraged by and supports the Obama Administration’s recent proposal to use $50 million in Troubled Asset Relief Program funds – the federal bailout money for the banks – to give short-term relief on mortgage payments to homeowners who have lost their jobs.

“As the Administration recognizes, stabilizing the housing market is essential to our nation’s economic recovery,” he said.

At the local level, Daley said he has introduced an ordinance to the City Council that would require banks to refund security deposits to renters when their buildings are lost to foreclosure.

The Mayor said these steps would build on the many programs already in place here that have made Chicago the model among cities for foreclosure prevention and assistance.

“We anticipated this problem early on and as far as I’m aware, no other city or state has done a better job of addressing this challenge of helping people remain in their homes,” he said.

For example:

o The City’s Homeownership Preservation Initiative (HOPI), launched in 2003, offers free financial counseling through 311 to any Chicago resident having trouble paying their mortgage. This program has prevented more than 2,800 foreclosures, reclaimed 717 vacant, troubled buildings and counseled more than 13,500 residents.

o Since 2007, Chicago became the first city to hold “Borrower Outreach Days”, which offer troubled homeowners the opportunity to sit down face-to-face, right in their communities, with lending institutions and HUD-certified counseling agencies to try to renegotiate their mortgages. So far, 20 Borrower Outreach Days have helped more than 4,800 homeowners.

o Chicago is using $1.8 million in federal stimulus funds to pay for additional housing counselors and legal services to help even more homeowners in the neighborhoods hardest hit by foreclosure.

o In 2009, became the first city in the nation to hold “Fix Your Mortgage” events to help make it easier for homeowners to modify their loans under the federal “Making Home Affordable Program.” More than 1500 families have been helped thus far and the City will use an additional $1 million in federal economic stimulus funds to support five more events this year.

o And Chicago strengthened its local ordinance and successfully pursued changes in state law to help protect renters, who are the innocent victims of foreclosure.

“Foreclosures have a devastating impact on families who are uprooted and on neighborhoods, where vacant and abandoned properties damage property values and become magnets for crime,” Daley said.

“The legislative proposals we’re supporting would be a big step in the direction of solving this problem. Especially during these tough times when our city's resources are strained, the City alone should not be responsible for this issue,” he said.

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