On Monday, a non-profit organization that has been researching foreclosure trends in Chicago released a report that painted a dismal picture for Chicago homeowners--and claims the foreclosure crisis is "still raging on" in Chicago.
The National People's Action's 2009 Chicago Foreclosure Report showed that foreclosures in Chicago were up 16 percent in 2009 from 2008--and that Chicago saw an average of "one new foreclosure filing every 22 minutes." The group wants to stress the need for a "strong, independent consumer protection agency" that would prevent abuses such as the predatory lending that led to the housing crisis.
As lawmakers in Washington debate over federal regulation of these industries, Sen. Dick Durbin said the crisis has evolved from a problem with predatory lending into an unemployment crisis--and said more needs to be done to keep people in their homes.
"Foreclosures are no longer being driven primarily by predatory lending," Durbin said in a statement Monday in response to the report. "Most of those homes, sadly, are already gone. The crisis has now evolved into an 'underwater' problem and an unemployment problem--and those problems have seeped into neighborhoods across Chicago."
More than 23,000 homes in Chicago were in foreclosure last year, according to the report. Also, those lucky enough to keep their homes have seen a vast decrease in property values.
"An average Chicago homeowner has lost an estimated $27,000 in the value of their home compared to prices 5 years ago," the report states. "Citywide, an estimated $15 Billion in total Chicago homeowner equity has been lost over the last 5 years."
Aside from suggesting independent regulation, the NPA report recommends policies that would keep more families now facing unemployment in their homes.
The NPA suggest the Home Affordable Modification Program be improved. The widely criticized HAMP program, which came about last year, is a loan modification program designed to reduce at-risk borrowers' monthly mortgage payments. The report also suggests allowing people with home mortgages to "receive the same relief currently allowed only for investment properties and vacation homes," along with a loan or grant program that would assist "unemployed and underemployed homeowners," letting them stay in their homes while they get back on their feet.
"With the unemployment rate now above 11 percent in Illinois, many families are facing difficulty making their mortgage payments," Durbin said Monday. "Even if they want to move, these families are stuck, because they often can't pay off the mortgage even by selling the house. Far too often, foreclosure is the only option left."
Read the full report here.