In the current climate, the mission of HOPI takes on a much higher level of urgency. The graph in exhibit 1 depicts the sharp increase in foreclosure starts city-wide in the past two years in particular. Foreclosure starts in Chicago rose approximately 40 percent from 2006 to 2007; and lower-income, underinvested communities, which describes all NHS target areas of Chicago, are impacted most severely, as they have higher concentrations of high-cost mortgages, homes tend to remain vacant longer, and lower-income households have a more difficult time recovering from the effects of a foreclosure.
For more than a decade the consumer and community affairs (CCA) division of the Federal Reserve Bank of Chicago has worked with community development and governmental organizations to understand and address geographically concentrated foreclosures in lower-income communities. Foreclosure is a continual problem in low-income communities; foreclosures have a more pronounced effect in low- and moderate-income (LMI) communities because foreclosed homes tend to stay vacant longer, and lowerincome families have less savings to fall back on, and accordingly a much more difficult time recovering from the financial impact of foreclosure than middle- and upper-income households (Schloemer et al., 2006). The current crisis has reached into much higher levels of income and wealth, and is the focus of much attention from lawmakers, regulators, consumer advocates, economists and others. It has also had an even more pronounced impact in communities that already suffered high rates of foreclosure. These communities have few traditional financial institutions, such as banks and thrifts, and must largely rely on fringe and/or less regulated financial service providers, such as payday lenders and mortgage brokers, for credit.
Thirty-five years ago, ShoreBank tackled redlining on Chicago’s South Side. A few years later, the bank led the fight to pass the ground-breaking Community Reinvestment Act of 1977. Today, as thousands of South Side home owners are dealing with the repercussions of a subprime adjustable rate mortgage, ShoreBank has taken up a new challenge: providing refinancing to homeowners caught up in the mortgage lending meltdown.
The Chicago Metropolitan Agency for Planning (CMAP) was formed in 2005 to approach planning in northeastern Illinois comprehensively and collaboratively. The new agency and its partners are removing barriers to cooperation across geographic boundaries, and across subject areas like land use, transportation, natural resources and economic development. By understanding how these issues – and our communities’ futures – are interrelated, CMAP wants to change the way planning is conducted in northeastern Illinois.