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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.
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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.
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| HOT STUFF: Brown Bag Session on 5-Year Affordable Housing Plan for Chicago |
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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.
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| Latinos United to Release Analysis of Housing Overcrowding |
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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).
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Visit the Latinos United website. |
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| A Picture of Chicago Foreclosures in January 2008 |
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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.
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| CRN Community Empowerment Series 2008 |
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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.
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Visit our website for more information on the entire training series, which ends in June. |
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| Job Opportunities |
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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
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| Funding Shortfall Threatens 500,000 Section 8 Apartments |
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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.
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| Saying Thank You |
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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.
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| Daley names leader for panel to recommend property tax changes |
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(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.
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