March 2008

In this issue

Foreclosure Solution Proposal

HOT STUFF: Brown Bag Session on 5-Year Affordable Housing Plan for Chicago

Latinos United to Release Analysis of Housing Overcrowding

A Picture of Chicago Foreclosures in January 2008

CRN Community Empowerment Series 2008

Job Opportunities

Funding Shortfall Threatens 500,000 Section 8 Apartments

Saying Thank You

Daley names leader for panel to recommend property tax changes


Foreclosure Solution Proposal

By Kevin Jackson

The City's actions to date in gathering resources for homeowners in crisis should be applauded.

The impact of this situation on our work in community development cannot be overstated. We are concerned that the assets we've built together are now threatened and we should do all that we can to mitigate this growing instability. The community development field is well-positioned to contribute capacity, commitment, and broad stakeholder relationships to a unified effort.

As a key point of discussion and strategy at a very recent board retreat, we established a set of principles to guide our philosophy of stabilizing neighborhoods:

  • Nonprofits have the framework and experience to put families back into these homes given sufficient resources, with a careful eye towards both family and community sustainability.
  • Foreclosed properties should become affordable dwellings and not be allowed into the speculative market.
  • A plethora of housing strategies including full ownership, land trust, lease-to-purchase models, and rental must be utilized.
  • Units must be packaged to nonprofits in such a way to make management and rehab cost- efficient.
  • Subsidy at several levels will be required at amounts that are less than required for creating new units.

Community development corporations can be partners with the City to prevent the spread of abandoned buildings while providing badly needed affordable, quality housing. While we completely understand that it is the servicers that need to be negotiated with, we do believe that together we can devise some solutions.

Foreclosure Solution Scenarios for Three Segments of Households:

  • EARLY FORECLOSURE: Homeowner can pay if the mortgage interest level does NOT reset and is made fixed rate or other remediation is negotiated with lender.
  • LATE FORECLOSURE: Homeowner is in imminent foreclosure = cannot pay mortgage payment but still in home. Notices of default sent.
  • FORECLOSED HOME: Homeowner leaving/gone. Home is through foreclosure process. Unit will be vacant.

Strategies per segment: EARLY FORECLOSURE: City meets with banks holding the majority of loans to keep loans from resetting (or renegotiate terms) so family can stay in home. City, financial institutions, counseling agencies, and IHDA offering "expos" to provide homeowners in crisis with information and linkage to resources. Current federal policies and funds flowing to increase massive demand for foreclosure counseling. These homeowners are actively seeking solutions. City might consider an escrow model where household can continue to pay mortgage at pre- reset level but forego paying increase while predatory practices are investigated.

LATE FORECLOSURE: With goal being to keep family housed and prevent negative impact on community from unit being boarded up, process is needed to identify these homes and offer redevelopment options. Households can be identified through Notice of Default postings and with targeted marketing. Considerations:

  • Pricing must be negotiated as appraisal processes have resulted in overinflated values. A three-appraisal process could be required to re-set home values to the market.
  • Lenders and servicers need incentives to take losses and transfer properties which may require city, state and/or federal legislation.
  • Families may need relocation services as gap may be too large in some markets.

This segment can be targeted to transferring ownership of home via deed in lieu or other such mechanism to CDC which would be responsible for determining appropriate ownership, management, and lease agreements. Subsidy would be provided to the CDC and buyer with restrictions on the property.

FORECLOSED HOME: Homes already vacant require a broad comprehensive purchase/rehab strategy that would put the unit back into the community as an affordable unit. Considerations:

  • A systemic process is needed to intervene in the foreclosure auction process that would allow for either a) government bodies to take ownership and transfer properties or b) to give nonprofits the ability to purchase homes whether through an acquisition pool or legal priority.
  • Scattered site management and probable rehab of some properties will require sufficient number of units, capital, and operating funds to be successful.
  • Lenders/investors should be incentivized to transfer pools of homes by geography.

Kevin Jackson is the executive director of the Chicago Rehab Network.

For 25 years, the Chicago Rehab Network (CRN) has worked to further the development and preservation of safe affordable housing in Chicago, and throughout the state of Illinois.

  • HOT STUFF: Brown Bag Session on 5-Year Affordable Housing Plan for Chicago
  • Brown bag

    At our February 20th Membership Meeting, CRN and its members began the first step towards a strategy for the Next Five-Year Housing Plan with a productive exchange of ideas on the current state of housing, accomplishments, and opportunities for innovation in the City of Chicago.

    A dialogue on this important topic was convened March 11th by the Chicago Rehab Network.

  • Latinos United to Release Analysis of Housing Overcrowding
  • Latinos United will soon release a housing overcrowding study "Bajo el Mismo Techo" (Under the Same Roof), The Latino Community in Suburban Chicago: An Analysis of Overcrowded Housing, to be released at a Housing Roundtable event. The Bajo el Mismo Techo Roundtable is the culmination of Latinos United's efforts towards forwarding an empowering and thoughtful housing policy agenda for Latinos throughout the Greater Chicago area. This report provides a summary of available knowledge on housing overcrowding and some of the issues involved in policy develop­ment.

    The Housing Roundtable will be held Tuesday, March 25th, 9-11:30 a.m., at Sonnenschein Nath & Rosenthal LLP, located at 7800 Sears Tower, 233 South Wacker Drive in Chicago.

    To RSVP or for further information contact Benjamin Osborne at 312.376.1766 x226 or e-mail bosborne@latinosunited.org. All attendees must RSVP and bring an ID. After going through security at the Sears Tower, take an elevator to the 66th floor Sky Lobby, walk around the corner, and then take elevators to the 78th floor (there will be signs).

    Visit the Latinos United website.
  • A Picture of Chicago Foreclosures in January 2008
  • In January 2008, Chicago experienced 1,001 foreclosures. The Chicago Rehab Network has compiled a report about these numbers, complete with a map that break downs locations of foreclosed homes based on zip codes.

    Review foreclosure numbers for January 2008.


  • CRN Community Empowerment Series 2008
  • CRN's Community Empowerment Training Series will kick off March 13 and March 14, hosted by Northern Trust Bank. "Community Building" will be the first in the series. It offers a community assets perspective as a model for community planning. Richard Townsell, of Bethel New Life, will lead the training session.

    "HP12-C & Spreadsheets" will be the focus on trainings March 27 and March 28. Participants will have the opportunity to learn housing finance concepts, how to compute financial calculations on the HP12-C, and how to use computer spreadsheets to create porformas.

    For more information, call 312-663-3936.

    Visit our website for more information on the entire training series, which ends in June.
  • Job Opportunities
  • The Community Investment Corporation is seeking a manager of post-approval operations and a manager of acquisitions and dispositions. For more information, e-mail Monica Kirby at mkirby@cichicago.com. You can also visit www.cicchicago.com.

    The Interfaith Housing Center of the Northern Suburbs is seeking a director of development and a director of fair housing. For more information, e-mail executive director Gail Schechter at gail@interfaithhousingcenter.org.

    Latin United Community Housing Associates is seeking a foreclosure intervention specialist. Mail or fax resume's to: Eliseo Barbosa, LUCHA, 3541 W. North Ave., Chicago, IL 60647. Fax: 773-276-5358. DEADLINE: March 20, 2008

  • Funding Shortfall Threatens 500,000 Section 8 Apartments
  • Us Capitol

    A critical situation is threatening federal government contracts on thousands of affordable housing properties subsidized through the US Department of Housing and Urban Development (HUD). The current FY '08 budget for project-based Section 8 is approximately $1.9 billion short of what is required to fully fund the program's contractual commitments for the current fiscal year. Without this funding, rents could triple overnight, potentially resulting in the displacement of the low income families, elderly and disabled people living in over 60,000 project based section 8 apartments throughout Illinois.

    With Illinois among the states hardest hit by foreclosures, the state needs this housing stock more than ever. On March 19th various housing organizations nationwide will participate in demonstrations as part of a day devoted to focusing public attention on this affordable housing funding crisis.

    Contact your congressmen, urging them to call for the necessary funding. Below is a link to a letter, drafted by the National Housing Trust, requesting that the Budget Committee include an advance appropriation to make up for the shortfall in funding. To date, this letter has received the bipartisan support of 24 senators. Please contact Senators Obama at (202) 224-2854 and Durbin at (202) 224-2152, asking them to sign on as well.

    For more information contact CRN Director of Policy and Advocacy Gené Moreno by email at gene@chicagorehab.org or call her at (312) 663-3936.

    Click here to read more.

  • Saying Thank You
  • Thanks to Housing Commissioner Ellen Sahli who spoke at CRN's February membership meeting and discussed the upcoming 5-year housing plan. We appreciated the time and information Ms. Sahli shared with us.

  • Daley names leader for panel to recommend property tax changes
  • (The following article was published Feb. 28 by Crain's Chicago.)

    By Greg Hinz (Crain's)--Mayor Richard M. Daley on Thursday named a low-income housing advocate and former Chicago Housing Authority chief to head a panel that will recommend changes in Cook County's controversial property-tax assessment system.

    In a press release, Mr. Daley said Andrew Mooney, executive director of the Local Initiative Support Corp., has agreed to chair the 22-member committee and submit a list of recommendations for long-range changes in two months.

    "Our property tax system is broken and must be fixed before Chicago is next reassessed in 2009," Mr. Daley said, specifically complaining that the property-tax burden has gradually shifted from business to homeowners in recent years. "Fundamental reform in the assessment system should bring greater fairness to everyone."

    At the Local Initiative Support Corp., Mr. Mooney has helped package and funnel federal tax credits into low- income housing development. Earlier in his career, he headed the CHA during the tenure of former Mayor Jane Byrne. Mr. Mooney was not available for comment.

    Others on the wide-ranging panel include property-tax lawyers Ted Swain and Mark Davis; Taxpayers Federation of Illinois President Thomas Johnson, Civic Federation President Laurence Msall, County Clerk David Orr, and even County Assessor Jim Houlihan, with whom Mr. Daley repeatedly has clashed in recent years.

    Some of the possible reforms Mr. Daley discussed in his press release are considered potentially doable, if expensive, such as reassessing property each year rather than every three years. But cutting taxes on homeowners would just shift them to businesses unless other taxes were raised or governments like Mr. Daley's cut their spending.

    Research by the Civic Federation has confirmed a shift in the property-tax burden over the past decade or so from office and factory property to homes because the value of most homes has risen faster than the value of commercial property. But the recent national slowdown in the housing market suggests that trend may be in the process of at least partially reversing.

    richard@chicagorehab.org richard@chicagorehab.org
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