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)

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

Mr. Markowski noted the city government's awareness of the impact of foreclosures and resulting neighborhood decay, and that it is a national as well as a local issue. The city's Department of Housing tracks closely the related trends regionally and nationally in an effort to gauge the effectiveness of the new HOPI initiative. He provided recent data that underscore the problem.

National data kept by the Mortgage Bankers Association show that the rate of foreclosures nationwide hit a record high of 1.2 percent of all loans originated in the first quarter of 2003, the highest level in at least 20 years. In Chicago, foreclosures have more than doubled over the past six years, and the estimated city rate of home foreclosures was 4.7 percent in 2001, three times the Illinois statewide rate.

In the City of Chicago, 3,100 people lost their home to foreclosure in 2001; between 1998 and 2001, 10,000 foreclosures were documented.

In 2001, 41 percent of foreclosure starts² in the City of Chicago occurred in NHS targeted communities, Auburn Gresham/Englewood, Back of the Yards, Chicago Lawn/Gage Park, Garfield Boulevard, North Lawndale, Roseland, South Chicago, West Englewood, and West Humboldt. These nine NHS communities have a highly disproportionate share of the city's foreclosures in that year. In the most recent data for July 2003, there were 654 foreclosure starts for the entire city. Thirty-four percent of these starts were in the NHS target areas, a slight drop from 2001, but far above the city-wide average. Foreclosure starts in the nine NHS targeted areas reach completion faster and more frequently than in other areas of the city. More than half occurred within three years after origination, compared with 12 percent in 1993.

"These statistics underline the importance of a targeted approach, bringing together all the key actors in the lending and investing community. Everybody here has already made a commitment to help homeowners at risk of foreclosure stay in their homes," said Markowski.

The Department of Housing has established programs to help families catch up on their mortgages and enable neighborhood based agencies to provide foreclosure counseling. The Department of Housing is also working directly with HUD and organizations such as NHS to take over foreclosed HUD-owned properties (those that had FHA-insured mortgages), rehab them, and return them to productive use. Even though these efforts have had impact, they cannot address the full scope of the problem in the hardest hit communities. Accordingly, DOH is looking to all of the HOPI partners to ensure responsible underwriting practices, and participate in active, coordinated, and creative efforts to help families avoid foreclosure.

"What is most encouraging is to see how many of you have stepped up to the plate in coming up with new ideas and initiatives for preventing foreclosures and handling REO³ properties."