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)

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

Good morning. I'm Michael Moskow, president and CEO of the Federal Reserve Bank of Chicago. We are pleased to host this morning's meeting to discuss strategies to preserve homeownership in Chicago neighborhoods. Let me begin by welcoming our honored guests: Mayor Richard Daley, Chicago Department of Housing commissioner Jack Markowski, first deputy commissioner Richard Monocchio, Bruce Paradis, CEO of GMAC-RFC, Steve Paton, vice president of Chase Mortgage, and Bruce Gottschall, executive director of NHS. And I'd also like to welcome all the members of the capital markets community that have joined us today.

The Federal Reserve Bank of Chicago has worked closely with Neighborhood Housing Services for many years. On a personal note, I worked closely with the national leader of NHS back in the early 1970s when I was in Washington, D.C. and worked at HUD. For almost three decades, NHS has served troubled Chicago neighborhoods with innovative and effective programs. They always work with an eye to the underlying causes of disinvestment and their resolution. Put simply, they have never been afraid to think big. For many years, NHS has been recognized as one of the most effective nonprofit housing organizations in the nation. Several attributes of the organization have been key to their success.

NHS is adept at enlisting support at the neighborhood level, and also from corporate, financial and political leaders. They understand all sides of the complex issues facing communities. NHS creates coherent, goal-oriented programs whose outcomes are readily measurable, and then leverages public and private investment to undertake them. But the overriding goal of NHS is to foster a level of stability in neighborhoods so that their services are no longer needed. True to this ideal, NHS has closed seven neighborhood offices over the years after successful efforts to stabilize local housing markets.

Since a growing economy is central to the Federal Reserve's overall mission, the Chicago Fed is keenly interested in promoting sound local economies within our District. Our relationship with NHS in recent years stems from our mutual involvement in the Mortgage Credit Access Partnership, MCAP, which was initiated in 1996 by our Consumer and Community Affairs division. Our role in MCAP was to bring together about 100 organizations to address obstacles to fair housing and fair access to mortgage credit. In the course of MCAP, NHS created the Foreclosure Intervention Program, and later the Neighborhood Oriented Recovery Mortgage Assistance Loan, or NORMAL program, both of which were introduced here at the Fed at meetings similar to today's.

In October of 2000, NHS introduced the Home Ownership Preservation Initiative-HOPI-again here at the Fed, and returned to provide a detailed progress report on HOPI earlier this year. Partnerships with lenders and loan servicers that developed from these meetings have greatly increased the effectiveness of Chicago's loss mitigation and lending strategies. We at the Chicago Fed are pleased to have had some small part in getting this series of successful initiatives off the ground.

However, despite these considerable efforts, foreclosures in Chicago neighborhoods are occurring today at very high rates, and vacant buildings threaten the stability of neighborhoods and future reinvestment opportunities. We need to better understand the dynamics of foreclosures, their origin and results, and to work together to develop solutions to keep families in their homes. To this end, Federal Reserve Board Governor Edward Gramlich is supporting an effort to study how the securitization of subprime loans impacts efforts to preserve homeownership. The goal is also to foster dialogue within the capital markets about practices that impact loss rates, and their impact on communities, and we hope to learn a great deal from this effort.

Before I introduce Mayor Daley, let me leave you with a few final thoughts. We have learned that difficult issues facing the lending industry take creative thinking and cooperation from all quarters. We are delighted that you are all here to learn more about the important work of NHS to preserve homeownership, and I hope that you consider carefully becoming an active partner. We have worked with NHS before to roll out innovative programs, and we have seen great results. NHS is once again breaking new ground by looking beyond the lenders to the sources of capital to promote their important goals. And, there is an opportunity to hold up the City of Chicago, NHS and its partners as national leaders in identifying best practices and addressing this critical challenge.

I am now honored to introduce Mayor Richard M. Daley. Under his leadership, Chicago is at the forefront of understanding and addressing foreclosures. Mayor Daley recently presented this issue to the U.S. Conference of Mayors and through the Department of Housing, is committing staff and resources to combat this vital neighborhood issue.