Many of the neighborhoods hardest hit by the wave of foreclosures now sweeping Chicago are NCP neighborhoods.
That's the bad news. But in another sense, it's also the good news.
The downside is obvious. There's nothing positive about thousands of families losing their homes—be they first-time bungalow buyers tricked by predatory mortgages, or renters who never missed a payment only to discover their landlords failed to make theirs.
NCP and its lead agencies are working to prevent new foreclosures, find housing for those displaced, and find well-qualified well owners for boarded-up properties before they lead to further blight.
Alex Fledderjohn
The upside is that LISC/Chicago and the New Communities Program are front-and-center in a rapidly evolving citywide coalition out to stem the tide of new foreclosures, resettle the dispossessed, and recycle vacant properties into the hands of capable owners before they drag down the rest of the block.
"It's pretty frightening when you look at it," said Joel Bookman, LISC/Chicago’s program director and a veteran of community development battles.
He compares the scale of damage now being inflicted on neighborhoods to that caused by the blockbusting/re-segregation/redlining syndrome of the '60s and '70s, and to the subsequent FHA mortgage foreclosure scandals of the '80s.
A massive problem
The raw numbers of the foreclosure crisis are staggering:
The number of Chicago properties undergoing foreclosure jumped by 85 percent from 2005 through 2007, reaching 13,872 homes by the first of this year. The Woodstock Institute estimates as many as 20,000 additional foreclosures will be filed here during 2008, with the peak not reached until late 2009.
Illinois, which allows some of the most exploitive lending practices, ranked 10th among states with 26,890 foreclosure filings during 2nd quarter '08, or one for every 193 households, according to RealtyTrac.
Chicago's largest neighborhood, Austin, suffered the most foreclosures during 2007 with 810. But when all 77 neighborhoods are compared by foreclosures per number of mortgage-able properties, NCP's Washington Park, Quad Communities, Woodlawn and Englewood rank among the five hardest-hit.
All across the metro region, foreclosures are slamming Hispanic- and African-American neighborhoods the hardest. One regional study for 2006 showed Hispanics were twice as likely as white residents, and blacks three times as likely, to take out "high cost" mortgages. Similar lopsided racial and ethnic disparities now are echoed in foreclosure filings.
Renters have not been spared. A May 2008 report by the Woodstock Institute found that 35 percent of residential foreclosures in Chicago were on buildings of two to six units. Most NCP neighborhoods were hard hit, showing rental buildings at 50 percent to 80 percent of all foreclosures.
Maybe the most galling thing for NCP’s local leaders is that they have been warning—for several years and to anyone who'd listen—about this disaster-in-the-making.
Children play in front of a boarded-up home on the 6300-block of South Rockwell, a common site in a neighborhood suffering from a high number of foreclosures.
Alex Fledderjohn
Their complaints went largely unheeded, however, until the problem burst over Wall Street last autumn as thousands of defaulted loans, having been aggregated and repackaged as collateralized securities, began poisoning the books of financial institutions worldwide.
"Everybody knows it when a Bear Stearns goes down," said Jim Capraro, longtime executive director of Greater Southwest Development Corp (GSDC). "But what about the people at 59th and Artesian? They’ve been up against this for a long time."
Three years ago Capraro’s group led and won a fight for a state law requiring counseling for novice homebuyers in zip codes with high foreclosure rates. Under pressure from loan brokers, Gov. Rod Blagojevich early last year froze the program … only to sign a stronger version into law last fall, after the storm hit Wall Street.
But providing quality loan counseling is no small chore now that providers such as Neighborhood Housing Services of Chicago (NHS) are swamped by homeowners desperate to get out from under tricky adjustable rate mortgages.
From 2005 through 2007, the number of Chicago properties going through foreclosure spiked 85 percent, reaching 13,872 homes by the first of this year. And it could be another 20,000 during 2008, the Woodstock Institute estimates.
Alex Fledderjohn
"We are inundated," said Deborah Moore, who directs the NHS office in Auburn Gresham. Her office is adding two to three cases a day to its load, which is remarkable because it’s estimated 70 percent of foreclosed families never seek assistance.
Often embarrassed, many just move to cheaper rental housing—if they can find it—and struggle on with damaged credit ratings. With the right counseling, however, distressed owners with reliable incomes often can shed their bad loan and refinance with an affordable, fixed-rate mortgage from a responsible lender.
NCP’s response
Here’s where the LISC/NCP network comes into play, with its NCP lead agencies, local Centers for Working Families, its relationships with specialized non-profits such as NHS and the Legal Assistance Foundation, its channels to City Hall decision-makers and, importantly, its contacts with reputable lenders such as Shore Bank.
"Our lead agencies are well positioned to be an outreach army," said Susana Vasquez, LISC/Chicago’s NCP director. So she and Bookman convened local NCP directors in March to mobilize around the issue and the group drafted an action plan tailored to each neighborhood.
Hugely important has been the early and emphatic commitment of the MacArthur Foundation. A MacArthur grant will help three organizations on the Southwest Side – Capraro’s GSDC, NHS and the Southwest Organizing Project – to identify and provide counseling for hundreds of additional families facing foreclosure.
Another grant, to LISC/Chicago, will create an NCP Foreclosure Response Fund to support agencies working on the battle’s front lines.
Meanwhile, LISC and others in the private and public sectors are discussing how to find buyers for a swelling inventory of vacant properties. The NCP Foreclosure Response Fund will underwrite tactics and coalitions every bit as diverse as the neighborhoods receiving first-round grants.
In just the first four months of 2008, nearly 600 foreclosures were initiated in the 60629 ZIP code area on Chicago's Southwest Side. The white dots represent institutions affiliated with the Southwest Organizing Project.
Courtesy Southwest Organizing Project
For example, Greater Auburn-Gresham Development Corp. will stage a series of "revival tent" rallies and informational sessions at weekend block club parties throughout the summer.
"We’re going to rev up our residents with a revival-style approach," said Carlos Nelson, executive director of GADC, which is working with NHS, St. Sabina parish and the local Center for Working Families.
He expects thousands will hear the gospel of good credit at a big windup planned for Sept. 6 at the 3rd annual 79th Street Renaissance Festival.
In East Garfield Park, the Metropolitan Tenants Organization will work with the Garfield Park Conservatory Alliance to develop a foreclosure assistance program. In Quad Communities, Genesis Housing Development Corp. will expand its counseling capacity.
Teamwork Englewood will develop materials for distribution at church meetings, where NHS will provide technical expertise. Washington Park will work with the South Side Community Federal Credit Union. Claretian Associates, an NCP affiliate with considerable housing experience, will beef up its preservation efforts in South Chicago.
As usual, NCP isn’t out to reinvent any wheels ... just improve traction. Where existing providers already are in a neighborhood and on the case, the idea is to widen coalitions and amplify resources.
Still, the massive scale of the foreclosure crisis and the complexity of each case (just identifying who holds a mortgage can be a chore) will require many more partners, innovations and resources.
"We have a platform," said LISC’s Bookman of NCP’s involvement. "We have people who are mobilized. We’ve met with Senator (Richard) Durbin, with the mayor’s office, with our partners. We’re finding that we need a lot of different procedures for a lot of different circumstances. It’s not easy. A lot of work has to be done."
But get done it must … and get done it will. "Maybe we can’t stop what’s going on," said Bookman, "But we’re definitely in a position to lessen the hardship."
NHS counseling saves the day
Two years ago a friend sold Virginia “Virgy” Chavez on a great way to take some spending money from the equity in the family’s tidy cottage at 59th and Pulaski on the Southwest Side. Some friend.
Counseling from Neighborhood Housing Services enabled Virginia and Hugo Chaves to remain in their Southwest Side home.
John McCarron
Before long the Chavez’ monthly mortgage payment more than doubled to $1,900. And because the new adjustable rate loan also had a “payment option” feature, allowing her to make lower payments at first, the principal kept getting larger with each payment, not smaller.
“With three kids and a mother to take care of, that was too much,” said Virgy, a no-nonsense lady with a good job managing a McDonald’s restaurant.
After a couple of missed payments collection agents began calling. One even threatened to garnish her pay. A notice of impending foreclosure came in the mail.
Fortunately Virgy had another friend, one who gave her some good advice: Get help from the local offices of Neighborhood Housing Services of Chicago.
At the little NHS storefront at 2609 W. 63rd St. she met with Kathleen “Katie” Van Tiem. And over a period of weeks counselor Katie helped extricate the Chavez family from their lousy mortgage with a California-based banker broker, and to refinance at a lower, fixed rate for 30 years via NHS.
Her payments will drop to $888 a month, low enough so she and her husband, Hugo, can pay for some long-deferred car repairs and back-to-school clothes for the kids.
“This was a perfect example of hard-working people doing the right thing, falling into a trap, but getting help in time,” said Van Tiem, “But just this one case has taken close to 20 hours of our time. We’d all like a larger scale solution.”
— John McCarron
GETTING HELP WITH FORECLOSURES:
City's Home Ownership Prevention Initiative, Dial 3-1-1
Neighborhood Housing Services of Chicago, 1-773-329-4010
Illinois Attorney General's Homeowner Helpline, 1-866-544-7151
Legal Assistance Foundation, 1-312-341-1070
National Home Ownership Preservation Assn., 1-888-995-HOPE