Government wants to fight Chicago foreclosures

The government sat all levels have stepped up efforts to tackle foreclosure problem. According to the data of the Woodstock Institute, the number of pre-foreclosed homes in Chicago rose 10.2 percent over 70,000 in 2009. More homeowners in the metro area defaulted on their home loans during the fourth quarter last year than in any other three-month period over the past four years.

More than 24,000 homeowners were given notices of mortgage default, warning them about foreclosure if they do not make their accounts current. The figures also showed that defaults have been increasing in affluent neighbourhoods.

Senior vice president of Woodstock, Geoff Smith said that, foreclosures will continue this year in Chicago and in most other cities across the country because of unemployment. Smith also said that the federal loan mitigation program would not be able to save homes as even reduced monthly payments would not be paid by unemployed borrowers.

He added that there are also other unresolved issues such as underwater mortgages and adjustable-rate mortgages. Any recovery in the market, he said, will be wiped out as soon as the federal tax credit expires.

Woodstock Institute data showed that pre-foreclosed homes increased by the biggest rates in Lincoln Park, Near North Side and Near South Side, communities which had fewer defaults during the first year of the crisis. Previously hardest-hit communities like Hyde Park, Austin, Englewood and Auburn Gresham posted fewer defaults this year compared to 2009.

According to data from the Mortgage Bankers Association, as of October last year, nearly 10.5 percent of mortgage loans in Illinois were in default by at least 30 days but were not yet foreclosed, and another ten percent were delinquent by at least 3 months and already in foreclosure.

Local governments have seriously stepped up efforts to fight and mitigate foreclosures. The Chicago Department of Community Development will increase its mortgage rescue events this year. The city will also continue to carry out its program of buying and fixing vacant homes with help from 43 selected developers.

Since the last year of July, the city has already received over $150 million to turn about 2,000 foreclosures into affordable homes.

In addition, Freddie Mac has also launched its program to cut down the number of pre foreclosed homes in Chicago. It will offer assistance to distressed borrowers through the Neighborhood Housing Services and the Latin United Community Housing Association.