Profitwise News and Views

May 2004 Issue
Special Edition

• Neighborhood Housing Services of Chicago Home Ownership Preservation Initiative


• Remarks by Michael H. Moskow, President and CEO, Federal Reserve Bank of Chicago


• Remarks by Richard M. Daley, Mayor, City of Chicago


• Alicia Williams, Vice President, Consumer and Community Affairs, Federal Reserve Bank of Chicago


• John G. Markowski, Commissioner, City of Chicago, Department of Housing


• Bruce Gottschall, Executive Director, Neighborhood Housing Services of Chicago


• Bruce Paradis, President and Chief Executive Officer, GMAC-RFC


• Steve Paton, Vice President, Chase Manhattan Mortgage Corporation


• Richard Monocchio, First Deputy Commissioner, City of Chicago, Department of Housing


• Conclusion


• Neighborhood Housing Services Programs


• May 2004 Issue, Special Edition (PDF,137KB)

Bruce Gottschall
Executive Director, Neighborhood Housing Services of Chicago

Mr. Gottschall began by thanking NHS's long term partners- lenders, the city, insurers-who have contributed and invested millions of dollars in NHS's efforts to revitalize Chicago's neighborhoods. He continued by thanking NHS's new partners for their commitment, interest and leadership in partnering to improve Chicago's neighborhoods, and in looking for innovative ways to jointly address the issues of foreclosures and vacant properties.

Mr. Gottschall pointed out that those who have toured NHS targeted neighborhoods have seen first-hand both the strength and the vulnerability of the city's neighborhoods and markets. A vacant building or two on a block can undermine years of home improvement, homeownership, and block club work.

He went on to express that the success to date of the initiative is due to the participants' understanding of the severe impact of the default and foreclosure problem in a relatively small number of neighborhoods. The broad availability of mortgages coupled with the rapid growth in the market or asset-backed securities has created unintended negative consequences for families, neighborhoods and some sectors of the financial industry.

Mr. Gottschall went on to note the range of actors and interests in the securities market-securities issuers, underwriters, investors, rating agencies-that are far removed from neighborhood revitalization and development concerns.⁴ This complex infrastructure underscores the importance of research funded by Neighborhood Reinvestment Corporation to measure the impact of the subprime mortgage finance market on neighborhoods.

Since the beginning of the HOPI initiative on April 1, 2003, lenders and NHS have worked together to keep more than 150 financially distressed families in their homes. Lenders and NHS are working on ways to link their respective services and capacities to assist borrowers in need of help in the most effective way. NHS's refinance loans and deferred payment loans have been resources to resolve default and halt foreclosure.

In its target neighborhoods, NHS has been successful at revitalizing vacant buildings and returning them to good condition for new homeowners. Mr. Gottschall emphasized that further loss mitigation methods need to be explored, so that the negative impact of vacant properties can further be diminished. Creating positive momentum through good quality rehab and owner occupancy is an essential ingredient for neighborhood and housing market stability.