By Sally Duros
U.S. Treasury Secretary Henry Paulson flew into Chicago last Friday morning to announce $27.3 million in federal grants to community-based lenders to provide homeownership counseling and
Following not too far behind him was Alphonso Jackson, secretary of the federal Department of Housing and Urban Development, who popped in Monday — appearing with prominent tour guide Mayor Daley — to discuss federal plans to help distressed homeowners.
Federal officials are piggy-backing on Chicago’s considerable halo effect and historic role as a crucible of community-based activism in the homeownership arena. They also recognize that we are ahead
of the curve in recognizing and attempting to fix problems that are leading to a record foreclosure rate nationwide.
It’s a backhanded compliment that Chicago is ahead of the curve on this stuff.
“Unfortunately, Chicago has been in the forefront of housing reform back in the ’60s, ’70s, ’80s because we have had more than our share of problems,” said Jim Wheaton, deputy director of Program
Services and Strategy at Neighborhood Housing Services of Chicago. “For instance, Chicago led the country in FHA foreclosures back in the days when FHA lending wasn’t that great,” he said.
Reinforcing Wheaton’s position is reporting by the Chicago Reporter released this week that found the Chicago metro area ranked highest in the country for high-cost loans in 2006 — loans at least three
percentage points above the Treasury standard.
Chicagoans have either been stampeding toward homeownership at whatever the cost or been subject to more than our share of foxes guarding the mortgage chicken coop. Also in the mix are those
Chicagoans who took out adjustable-rate mortgages on investment properties and lied about their residential status on their applications. These “yuppies” will not be spared, or so the federal
Despite appearances, Wheaton said: “The current situation is not solely a poor person’s problem.”
Paulson made the grant announcement at the Milwaukee Avenue offices of NHS. Chicago-based nonprofits receiving federal cash include NHS Chicago, $950,704; the CEDA Community Development Fund, $26,230, and the Chicago Community Loan Fund, $585,060.
The CDFI grant will help make homeownership sustainable and affordable, Wheaton said. He said that 40 percent of subprime borrowers might not be able to afford their monthly payments, regardless of interest rate. “The CDFI grant will enable NHS to become the first CDFI organization in the country to be able to pay down outstanding principle for homeowners who qualify. Between 400,000 and 800,000 people nationwide may need a solution like this,” he said.
NHS of Chicago is recognized for its Home Ownership Preservation Initiative. A unique public-private partnership with the City of Chicago, the Federal Reserve Bank of Chicago and financial institutions, HOPI serves as a national laboratory for innovative programs, partnerships and lending products that are replicated across America to assist homeowners at risk of foreclosure.
“With 2.2 million of adjustable-rate mortgages resetting, and foreclosure rates already skyrocketing beyond even the most pessimistic predictions, this CDFI award will add momentum to
assist homeowners by providing vital new tools and funding so homeowners can preserve their dream of homeownership,” said Bruce A. Gottschall, executive director of NHS.
NHS client Regina Garrett shared her story at the press conference. Garrett bought her first home in 2003 with an adjustable-rate loan that carried an initial 10.5 percent interest rate. A year later,
she lost her job and was struggling to pay all her bills. While she found another job, she was in financial trouble. “My rate had adjusted up to 12.875 percent. NHS of Chicago refinanced my loan
into a sustainable 6.31 percent fixed-rate mortgage, and helped me get necessary repairs done on my home using public funds,” she said.
NHS and city officials reiterated that individuals within city limits who are falling behind on their mortgages should call 311, the city’s nonemergency number. Individuals outside the city should
call NeighborWorks, America’s national foreclosure prevention hotline, (888) 995-4673.
Credit: The Chicago Sun-Times