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:
Richard M. Daley
Mayor, City of Chicago

Good Morning. I want to thank Michael Moskow and the Federal Reserve for hosting this meeting. We appreciate their continuing support of our efforts to combat foreclosures and preserve affordable neighborhoods. I'd also like to recognize the Department of Housing, as well as Neighborhood Housing Services, for spearheading the Home Ownership Preservation Initiative.

This past January, I addressed the U.S. Conference of Mayors about the damage that foreclosures are doing to our cities today, in a time of high unemployment and economic uncertainty. I urged mayors everywhere to work together to focus national attention on this issue that affects us all. These foreclosures have a devastating effect, not only on the families involved, but also on the surrounding communities. They threaten to erode some of the neighborhood improvements and positive investments that we have all worked so hard to achieve.

Here in Chicago, we have made a strong commitment to assisting homeowners and working with lenders to turn around foreclosed homes. We are here today to thank and acknowledge each to the 20 financial institutions in this room for joining our work in this initiative. We first met in February here at the Federal Reserve to explore how partnerships could be formed. You will recall that our efforts are centered on two areas.

Our first priority is to preserve homeownership whenever possible, to keep families in their homes through counseling, loss mitigation, and loan workouts. And when foreclosure is unavoidable, we want to make sure the vacant properties left behind are preserved for affordable homeownership. That means getting these buildings into the hands of responsible parties who can rehabilitate them and sell them to owner occupants. Working together, we have already made good progress. Since April 1, 2003, we have helped nearly 150 homeowners stay in their homes and we have reclaimed 30 foreclosed properties so they can become assets to their communities.

More important, we have laid the foundation to work together in addressing the foreclosure problem by sharing information and strategies. We understand that we are all in this together. Foreclosures weaken neighborhood markets and affect all of our bottom lines. The idea behind the Home Ownership Preservation Initiative is finding innovative solutions and then sharing them with other institutions.

For example, many of you have told us that if people sought help earlier, we would have a much greater likelihood of success. We believe people are often afraid to call their lender when they are in trouble, but they might be willing to call the city for help. So we hope, that by January 2004, families facing foreclosure will be able to call the city's non-emergency number-311-for assistance.¹ We would refer them to counselors or to the appropriate lender to work out a payment plan.

We all know that foreclosure is expensive to everyone. It's much cheaper in the long run to make a small financial concession that allows a family to stay in its home. We are also making progress on turning vacant properties into homeownership opportunities, and I challenge each of you to continue to find ways to work with Neighborhood Housing Services on this important neighborhood revitalization strategy.

Let me give you one example of how this can work. Sandra Traback has been principal of Chavez Elementary School in the Back of the Yards community since it opened in 1993. Sandra believes that in order to have positive change in the schools, you need positive change in the community. This month, Sandra is buying a rehabbed home from Neighborhood Housing Services on the 5000 block of South Marshfield, three blocks from her school. NHS acquired this foreclosed property from HUD, along with 30 other properties in Back of the Yards that are being rehabbed and sold to homeowners. I am honored that Sandy is with us today and commend her for her dedication to the Back of the Yards.

But NHS can't do it alone, and that is where the partnership with financial institutions comes in. In May, NHS and the Department of Housing took some people from Chase to Back of the Yards and showed them the rehab underway on Sandra Traback's house. It turns out that Chase was foreclosing on a vacant, fire-damaged house on the very same block. Understanding the importance of that house to the revitalization the block, Chase representatives immediately agreed to donate the property to NHS. This is an important story, because it shows the inter-connection of all of our work. The impact extends far beyond the two vacant houses that are being rehabbed. For the other homeowners on the block, it means they don't have to worry about the crime and illegal activity that vacant buildings attract. For the lenders, it means that property values don't decline as a result of deteriorating conditions on the block. Imagine if we could sell all of these foreclosed properties to people like Sandra Traback.

Today I challenge you to think about creating healthy, vital markets over the long term. For this to happen we need the help of industry leaders like you, making a commitment to explore partnerships with groups like NHS to rehabilitate buildings to a high standard of quality and sell to owner occupants. When neighbors see construction activity on homes that have been vacant for months or even years, they are more inclined to invest in the upkeep of their own properties. This activity also helps preserve the values of other homes in the neighborhood. With every vacant building rehabilitated, and every new family that buys one of these buildings through a legitimate loan, we are creating value and confidence in the future of our neighborhoods.

While we have made encouraging progress, there is much to be done to spur more neighborhood investment. I challenge each of you, as industry leaders, to continue the dialogue we have begun over the past few months. I would like to hear from you on a quarterly basis about our progress toward our three-year goal of helping 1,500 families stay in their homes and reclaiming 300 buildings. Many of you have already devised new business approaches-challenging old standard operating procedures and constraints. I am sure I can count on you to continue this innovative thinking.

Thank you again for your commitment to our city and our neighborhoods. Working together, we can make our communities even stronger and healthier than they are today.