Sep 29, 2009 Comments Off on Fed Officials to Tour SW Side Foreclosures
Federal Reserve officials will tour a Southwest Side neighborhood plagued by foreclosures and later meet with residents and community organizations to discuss the issue.
It’s part of an effort by a Chicago-based national network of community organizations to push for stepped up regulation to stem foreclosures, while giving local affiiliates a chance to raise the concerns of their communities.
Brighton Park Neighborhood Council became a HUD-certified counseling agency last year, and executive director Patrick Brosnan says that case-by-case consideration of loan modifications by mortgage services “just isn’t working.” “It isn’t even putting a dent in the problem,” he said.
Current loan modification efforts are purely voluntary, and it’s often difficult to get a response from mortgage servicers to requests for help, he said. It can take months to get an answer, and applicants who seem fully qualified can be rejected with no reason given — and no recourse or appeal.
The National Training and Information Center and local groups– including BPNC, Southwest Organizing Project, South Austin Coalition, and the Interfaith Leadership Project of Cicero — want the Federal Reserve to call together the banks with the largest number of foreclosures in the region to consider a plan to streamline their loan modification process and to offer assistance proactively to borrowers whose loans are unaffordable.
They also want the Federal Reserve of Chicago to work with them to examine whether banks are engaging in unsound business practices by basing their loan modification offers on statewide calculations for home values. Values have dropped much more dramatically in lower-income communities than elsewhere, said Jordan Esteveo of NTIC. “They could be shooting themselves in the foot by working under the assumption a property is worth a lot more than it actually is,” he said.
NTIC is pressing the Fed to expand the reporting requirements of the Home Mortgage Disclosure Act, a 1975 law which the group helped write. Originally aimed at redlining, the law requires disclosure of the race and gender of lending institutions’ customers. Other data including credit scores and loan-to-value and debt-to-income rations are needed to keep tabs on newer, more exotic loan products, Esteveo said.
They’re also calling for Congress to modernize the Community Reinvestment Act of 1977 to include mortgage companies and other mortgage originators. “Across the country we’ve seen constantly that loans by institutions regulated by CRA are much less likely to go into foreclosure,” Esteveo said.
Thursday’s meeting is the seventh of nine hearings being held in communities across the nation (including an August 15 hearing in Decatur) following a meeting with Fed chair Ben Bernanke in March. A final hearing, with Barney Frank, chair of the House housing committee, takes place in Massachusetts on November 1. A followup meeeting with Bernanke is also slated.
“People who’ve been victims of foreclosure and people who are fighting it in different ways” will testify at the hearing, along with housing counselors and public officials, Brosnan said. It takes place at 5:30 p.m. at Shields Elementary School, 4250 S. Rockwell.
Local groups are also pressing for an expansion of the definition of property owner in by the city’s ordinance requiring registration of vacant properties — they want institutions that have foreclosed to be covered even if they don’t hold title. And they want a portion of registration fees to go to foreclosure prevention outreach strategies, Brosnan said.
They particularly want support for homeowners to fight foreclosure in chancery court, he said.