Foreclosures- about the wave and Hyde Park

Presented by Hyde Park-Kenwood Community Conference, its Development and Condos-Co-ops Plus committees and its website hydepark.org

Visit also Affordable Housing Information home. Organizing for Affordability in Hyde Park. Housing in the Stimulus Act, housing initiative, and before the state. Ending Homelessness. Condos-Co-ops Plus home. Helpline. Housing and the Stimulus.
Affordability Hot Topics

Website of Coalition for Equitable Community Development.

Site with information on trends and wheres in foreclosures: http://www.regionalhopi.org. And Woodstock Institute (see below).

Essential: http://www.makinghomeaffordable.gov, http://www.cityofchicago.org/housing.
Where do you find local trends in foreclosures? go to EveryBlock, run by the Chicago based Woodstock Institute. As part of the source sharing arrangement, you will not get info by address-- you will have to take the PIN numbers given in the foreclosures-by-block to the city's website. Every Block allows you to assess by city, community area, which is the first 2 digits (Hyde Park 51-59 is #41, Kenwood incl. E. HP north of 51st, is #49) and census track (usually 1-2 blocks wide). There are a couple of ways to sort and map the data, although it only comes up a section at a time. Code numbers in which the last 4 digits are 0s are single family homes, those that include numbers are condos. The other category is multi-family buildings-- those digits (If this writer understands right) if 0s are rental, if numbered condo and maybe coop. Note: the Federal Program announced at the end of winter 2009 was expanded in May 2009.

March 27, Saturday, 9 am-2 pm at Morgan Park High School 111th and Vincennes.will see one of four workshops on foreclosure with lenders-- find out about qualifications and be matched with firms qualifying under the federal Making Home Affordable program.

Neighborhood Housing Services and the City of Chicago are sponsoring a series of
Fix Your Mortgage events designed to assist homeowners who are at risk or in
foreclosure. The goal is to have homeowners meet with housing counselors and
other advocates to determine if they are eligible for assistance under the
Treasury's "Making Home Affordable" foreclosure prevention plan. At the event,
homeowners will be able to submit an application to their lender, if they
qualify under the guidelines. We want to spread the word about this event, and
to let Chicago homeowners know that free help is available. I've enclosed a copy
of the flyer (2 sided flyer in English and Spanish). We are also in need of
volunteers to assist in all areas, from registration to processing. I have also
enclosed a description of the volunteer opportunities, if anyone is interested
in participating. The event is from 9:30-2:00 p.m.

If you have any questions, please feel free to contact me directly at
773-329-4111 or at wcollins@nhschicago.org. Have a great day.

Wanda Collins
Neighborhood Housing Services of Chicago
1279 N. Milwaukee Ave.
Chicago, IL 60622
Ph: (773) 329-4111
Fax: (773) 329-4066

Time: Mortgage Defaults: Many Are Intentional, Study Finds – Research by Prof. Luigi Zingales ( of C) suggests many homeowners owe more than their houses are worth (July 7, 2009). And many banks are accused of ignoring contact with owners and forcing foreclosures to get added fees from court proceedings.

April 19, Monday, 7 pm. The Hyde Park-Kenwood Community Conference Condos/Co-ops Plus Committee presents a Public Seminar on issues of importance to Association boards and owners, by Attorney John H. Bickley III. Includes registration with FHA, financial management, management of forclosures. Extensive handouts by Mr. Bickley and the law firm of Kovitz Shifron Nesbit available to attendees (Registration encouraged so we will know how many of the latter to bring. $20, $10 HPKCC members. At Hyde Park Neighborhood Club, 5480 S. Kenwood. 773 288-8343, hpkcc@aol.com.

Foreclosures are climbing in Hyde Park, too by early 2010.

Foreclosure modification program.

Many fairs and forums are being held that will put homeowners in touch with servers or certified counselors:
This page will have information of use to persons facing foreclosure or stress that could lead to loss of home, as well as track what's happening on the ground in our neighborhood.

Meetings, seminars, workshops

If you encounter deceptive or fraudulent business practices in the credit industry, you may visit http://www.ftc.gov/bcp/conline/edcams/credit/index.html to file a complaint.

From Woodstock Institute: Of the 10 Chicago neighborhoods with the most foreclosures in 2008, half were on the South Side--West Englewood, Englewood, Roseland, West Pullman, and Auburn-Gresham were on the South Side. A nearly different set were in the 10 with highest rate among 1000 mortageable properties: Washington Park, Grand Boulevard, Woodlawn, Englewood, Burnside, West Englewood, and South Shore- 7 of ten were South Side neighborhoods. Overall in Chicago, the number of foreclosures doubled between 2006 and 2008. 32% were on 2-6 unit properties (up 36.3 % in a year.) 60-80% of filings were in in African-American and Latino communities, 48* of all in Chicago were single-family homes, 20% condo units.

We start with an article in the Herald inspired by and reporting on a panel forum sponsored by our two aldermen on the subject on April 15, 2009:

Foreclosure waves touch Hyde Park

Hyde Park Herald, April 22, 2009. By Sam Cholke

Foreclosure filing rates continue to rise on the South Side, affecting more condominiums than in previous years. While Hyde Park is less impacted than other neighborhoods, it has not gone untouched by the national foreclosure crisis. "We're seeing a big jump in condo foreclosures," said Jeff Smith, vice president of the Woodstock Institute, a Chicago-based community economic development research institute that tracks foreclosure filings and auctions.

There have been 162 foreclosure filings already this year in the 4th and 5th Wards, 77 of which were condos. Hyde Park had seen 831 foreclosures in 2008, according to Woodstock. "Where you're gong to see it is going to be condos," said Ald. Leslie Hairston (5th), whose ward has seen 453 foreclosure filings since the beginning of 2008. The area, particularly the 4th Ward, has fared better than other parts of the city. "A lot of the redevelopment we did goes back a decade or more," said Ald. Toni Preckwinkle (4th). A neighborhood stabilization plan has helped reduce foreclosures in the ward, she said. The 4th Ward has experienced fewer foreclosure filing since the beginning of 2008.

The comparatively affluent Hyde Park may contribute to the lower foreclosure rates. "Hyde Park is pretty stable, as far as the area I represent," Hairston said.

A panel of experts convened April 15 at the Hyde Park Neighborhood Club to offer advice to those who may be facing foreclosure. "Even if you're not delinquent yet and you feel a hardship coming on you and think it's going to be hard to pay your mortgage next month, come to us: do not wait until you're delinquent," said Dolores Allen, director of mortgage lending at South Side Community Federal Credit Union. Homeowners who are having trouble -- or think they will soon have trouble -- paying their mortgages should talk to their lender, servicer or a U.S. Department of Housing and Urban Development-certified counselor, she said. "These are the only three parties you will want to talk to in this situation," Allen said.

The panel continually warned of a spate of scams targeting propel in foreclosure. "It is illegal for anyone to charge you an upfront fee to modify your mortgage," said Michael Van Zalingen, director of homeownership services at Neighborhood Housing Services. "Unless it's Oprah coming to your house, they're lying."

After the meeting, Van Zalingen said the current housing crisis has hit Chicago particularly hard. "Chicago is probably the worst non-bubble city for foreclosures," Van Zalingen said. Studies from the National Training and Information Center say that Chicago has a disproportionate number of exotic loans, many of which were aggressively marketed in minority communities. Many of these loans were misrepresented to people in ways that often constitutes fraud, said Hyde Parker and attorney Al Hofeld.

"If you have a fraud claim, you've maid it very expensive for the defendants to litigate the case, plus you can claim damages," Hofeld said. Filing a case can also help delay a foreclosure filing, he said. "Delay really is still worth something - it's worth quite a bit now because the president's plan is really just getting off the ground."

President Obama's Making Home Affordable program is designed to help homeowners reduce mortgage payments to no more than 31 percent of their income. More information is available at makinghomeaffordable.gov. The city of Chicago also offers free assistance for homeowners who may be facing foreclosure. For more information visit cityofchicago.org/housing or call 311.

Foreclosure modification program

Am I eligible for modification? You may be if you: Are behind or at risk, are an owner-occupant of a 1 to 4 unit property, originated before Jan. 1, 2009, HAVE INCOME THAT WILL SUPORT MONTHLY MORTGAGE PAYMENTS.
To preregister for a fix-your-mortgage with real HUD-certified counselors: call 773 329-4185 or www.nhschicago.org.

This is a subsidy to lender program in exchange for lowering monthly payment on 1st mortgages to nom ore than 31% of gross monthly income. A three month trial: If make the payments, it will be extended 5 years- then can rise 1% a year to then market rate. Taxes and insurances are escrowed; accrued interest and fees- but not late fees are added to principal; there is no fee for this modification; pending foreclosures are postponed. If your payment adn other debt exceed 55% of your gross monthly income, you must enroll with a HUD-certified Housing Counseling Agency.

How it's done: lower interest to as low as 2%, extend loan length to up to 40 years, reduce or defer principal to extent there is substantial negative equity. If these won't do it, you may not qualify.

How can you qualify? Loan is on a owner-occupied 1-4 unit property in first mortgage under $c1.4 m for 4-unit, 1.2 for 3, 934.2 for 2, 729,570 for 1 unit); entered before January 1, 2009, you have income that wil support the payments at 31% of gm income; it's not FHA or VA, you have a hardship such as job loss or illness, and the current PITIA payment is over 21% of your gm income. So, calculate gmi, subtract monthly property tax payments and monthly homeowners insurance payment-- this is "available funds for principal and interest. Then divide principal by 1,000 and multiply by 3.7 to get potential P&I payment at 2%. If the latter is at or less than the funds available, you should qualify.

There are major documents you need to assemble and or sign from the counselor, of all your income or debts and properties owned, IRS 4506-T, HUD How To Kit. You will have to fill out as Hardship Affidavit that explains why you need help, most recent pay stubs and tax return. Get the application form for President Obama's Home Affordable Loan Modification Program and fax or mail the competed Application with your documentation to the lender with the Cover Letter. You can modify only once and deadline is Dec. 31 2012.

Making home affordable guidelines, based on Treasury Dept. guidelines

Home Affordable Refinance is for those under Fannie Mae or Freddie Mac, having a track record, and unable to use normal channels because their homes have lost value. Flexibility is built in. Expires June 2010.

Home Affordable Modification reduces monthly payments in tandem with Hope for Homeowners. See How Can I Qualify in preceding section. Servicers are required to cooperate and use a net present value test (if risk is imminent or is 60+ days delinquent whose result shows cash flow greater under the modification. Must result in payment of under 31% of gross monthly income. First interest reduced to as little as 2%, if not sufficient then extend loan term and or forbear principal or forgive principal.

Looking up your loan, if FM or FM. 1-800-7FANNIE, www.fanniemae.com/loanlookup. 1-800-FREDDIE, www.freddiemac.com/mymortgage.

Finding HUD Certified Mortgage Counseling Agencies in Illinois:
http://www.hud/offices/hsg/sfh/hcc/hcs_print.cfm?webListAction=search&searchstate (c 30 pages).

Did you know.... from a seminar sponsored in spring 2009 by our aldermen, the city and counselors

50% of borrowers never talk to the ir lender when they get in trouble? And the city is considered a more reliable advisor. The banks and servicers are way behind in getting "back to" borrowers-- or are out of town etc. -- and it's sometimes in their interest to not get back. Better you go to a HUD certified counselor, perhaps calling 311 or going to a seminar. Shorebank is one of several that run careful Rescue programs, and will tell you ways to get reprieves or work the system in your favor-- also South Side Consumer Credit Union.
f you are not yet in foreclosure and can find grounds to sue for fraud or technical faults in the loan or to get the language, it will help, several advisors say. Beware of some so-called modifications that make you pay more, or deed-over and get evicted. Questions? call Illinois Department of Financial and Professional Regulation- 1 800- 532-8785.

What if the math doesn't allow a sustainable modification? If you have a temporary hardship, make small payments? If a permanent hardship consider pre foreclosure sale. Don't rule out a hardship case because you are "only struggling." And note that lenders getting federal money have to join the federal Home Affordable program. The city has a program for seniors involving a reverse mortgage--you stay in your home, pay o interests.

Note that bankruptcy is a poor last resort and "walking away" is the very worst.

Live in a multi-family, rental building that goes into foreclosure? Illinois has passed a law requiring notice and other safeguards for evictions.

 

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Information from HOPI- Home Ownership Preservation Initiative

This is a partnership started in 2003 between NHS (Neighborhood Housing Services of Chicago), City of Chicago Department of Housing, Federal Reserve Bank of Chicago, and major lenders and servicers.

It promotes or provides:
-Quality homeowner education to prevent delinquencies
-Direct interventions to assist homeowners at risk
-Reclaims foreclosed homes for owner-occupants
-Studies mortgage and servicing impacts on neighborhoods to develop best practices

Causes of high foreclosures

-No or reduced documentation loans, esp. income documentation
-ARM resets
-Loose wording including high allowable debt to income ratio and teaser rates
-Inappropriate loan products
-Origination and appraisal fraud
-Severe economic downturn
-Declining market value

The servicer problem

-Investors distanced from borrowers
-Most of the funds invested in a pool of loans are immune from credit risk
-Multiple layers of investors and approvals for workouts creates a culture that denies justified workouts and modifications
-Over-reliance on repayment plans that can't be sustained
-Loan abuses and investor risks that are "priced into the transaction" rather than eliminated through corrective action

Loan modifications

-A high proportion of these are not on sustainable terms: Only 1/3 lower monthly payment, just freeze them or even increase them
-Workable Mods require considering Homeowner's Total Budget (and income)
-Still takes at best 3-6 months to get a mod started and government plans hasn't made it to the servicer staff level

Why aren't loan modifications sustainable?

-Investor restrictions on whether and how much loans can be modified (and inability to identify, contact/talk to, or leverage true holder)
-Lack of accurate data on what the homeowner can afford
-Volume of requests high, servicers don't have information or don't want to hire staff to handle
-Investors and services waiting on bailouts or incentives too low/not as high as servicer wants
-Disincentives to modify vs foreclose, unwillingness to be a "renter/manager" rather than a loan servicer or holding property vacant

Current purchase, rehab, resale issues

-Very soft market
-Tight credit
-Overall holding costs
-Decreasing sales prices
-Increased subsidy needs and lower acquisition costs
-Rental single-family option

Value of Nonprofits

-Gain greater contact with borrowers
-Third party trusted advisor role creates solutions
-Cost effective borrower outreach
-Outsource of staffing needs, filing a gap
-Assistance in accurate analysis of borrower
-Proactive loss mitigation efforts
-Access to other resources: public funds, other private

NEW REALITY

-97% of properties that go to foreclosure auction end up in REO inventories (investor interest has declined)
-Large inventories of bank-owned REO property are putting downward pressure on real estate markets
-Servicers are actively pursuing opportunities to move REO including "make us an offer."

Beware of foreclosure rescue scams. Real help is always free, says Shorebank.

For a HUD-approved counselor visit http://www.hud.gov/offices/hsg/sfh/hcc/fc/.

Beware of anyone who says they can "save" your home if you sign or transfer the deed. And never make payments to anyone other than your mortgage company without their approval.