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Local nonprofits win MacArthur awards

Two local nonprofits are among organizations in fifteen countries announced Wednesday as recipients of the MacArthur Award for Creative and Effective Institutions.

The Children and Family Justice Center at Northwestern University and the Southwest Organizing Project will each receive a $750,000 award from the MacArthur Foundation.

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Championing neighborhood schools

It’s now ten years since the launch of Renaissance 2010, the CPS campaign that closed scores of neighborhood schools and poured resources into scores of new charters.

The result?  Virtually no improvement in academic performance, according to the Chicago Consortium on School Research.  Better-resourced charters performing at the same level as neighborhood schools.  Worse, CPS’s racial achievement gap has only gotten larger.

The response from new city and school leadership?  They say they want much, much more of the same:  many more closings, many more charters.

What’s the alternative?  Nine community organizations are proposing a Neighborhood Agenda for Schools at an event on Tuesday.  They argue that since the vast majority of CPS students attend neighborhood schools, that’s where available resources should be focused.

The endorsers include groups that have long histories of involvement with schools, including nationally-recognized parent involvement, teacher training, community schools, anti-violence and student mentoring work.  Their recommendations flow from their extensive experience.

The groups include Action Now, Albany Park Neighborhood Council, Brighton Park Neighborhood Council, Enlace Chicago, Kenwood Oakland Community Organization, Logan Square Neighborhood Association, Organization of the Northeast, Southwest Organizing Project, and Target Area Development Corporation.  The College of Education of NEIU has also signed on.

The agenda will be released at a public event with 60 community activists from across the city, Tuesday, November 22, 10:30 a.m., at LSNA, 2840 N. Milwaukee.

Communities mark 9/11 with calls for solidarity

On the tenth anniversary of 9/11, community interfaith gatherings will remember victims and the spirit of unity with which the nation responded to the attacks.

And one ongoing Jewish-Muslim collaboration founded in the days following the 2001 attacks is rededicating itself to work together “toward a more inclusive, diverse, and just society.”

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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.

Youth to lobby for summer jobs

With violence surging on Chicago streets, a hundred young people from the South Side are travelling to Springfield this week to press for funding for summer jobs for youth.

Youth unemployment has also surged — 90 percent of Chicago black males aged 16 to 19 are unemployed, according to Jack Wuest of the Alternative Schools Network — reaching “historically unprecedented” levels since federal funding for youth employment was eliminated in 2000, according to a study just released by ASN.

On Wednesday, participants in youth leadership development programs at the Kenwood Oakland Community Organization and area high schools will lobby for funding for the Community Youth Employment Act. HR 4553 was approved last week but still requires an appropriation for funding. It aims at creating 2500 jobs for youth in low-income communities this summer, and more in the future.

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Report: Mortgage Counseling Needed

With the subprime mortgage industry reeling from rising foreclosures – and mortgage rescue fraud a growing problem – a new study is expected to show the continuing relevance of a controversial state law requiring outside review of high-cost and high-risk mortgage loans.

HB 4050, requiring reviews by nonprofit counseling agencies of high-risk loans, was suspended by Governor Blagojevich in January, four months after it was implemented as a pilot program in ten Southwest Side zip codes. Last week the state proposed new rules for the program, expanding the pilot area to all of Cook County; a 45-day comment period is now in effect.

While mortgage brokers criticized the program for inhibiting home sales, a large majority of the transactions reviewed under HB 4050 were for refinancing mortgages, not home purchases, according to Livia Villarreal of Southwest Reach Center, a nonprofit housing counseling agency.

About half of the loans reviewed were found to be unaffordable based on the borrower’s debt-to-income ratio, she said, and many borrowers did not fully understand the terms of their loans.

Bob Palmer of Housing Action Illinois said a report on data collected by counseling agencies under HB 4050 would be released next week. Among the concerns raised will be ensuring that counseling agencies have the capacity in place to handle the increased volume of mortgage reviews expected with the expanded pilot program, he said.

According to recent reports, refinancing rates are increasing as subprime borrowers face rising rates and scramble to avoid default and foreclosure.

Foreclosures often come after troubled homeowners have refinanced their mortgages one or more times, said David McDowell of the South West Organizing Project.

A Woodstock Institute report this week found that foreclosures increased last year by 36 percent in the Chicago area, driven in part by “complicated and risky products combined with loose mortgage underwriting standards that often include no documentation of borrower income,” according to Geoff Smith.

Rising foreclosure rates have also meant rising mortgage rescue fraud. Homeowners should be wary of mortgage rescuers who promise to save homeowners from foreclosure and instead strip homes of equity, observers say. “We advise people not to sign a deed to their home without checking with a lawyer,” said Bruce Gottschall, executive director of Neighborhood Housing Service. “And if it sounds too good to be true, it probably is.”

NHS and other nonprofit housing counseling agencies offer workshops on avoiding foreclosure, provide individual counseling, and will negotiate workouts with lenders. NHS also offers fixed-rate refinance loans to help homeowners who are at risk of foreclosure. (Information is at 1-800-882-0882.)

Mortgage Counseling Law Defended

Lenders who refuse to operate in the pilot area for a new state program which tracks mortgage fraud and provides consumer counseling could be illegally redlining, said State Senator Jacqueline Collins (D-16), defending the controversial program at a recent community meeting.

“If any lenders are pulling out, they are the ones who are redlining, and we need to prosecute them,” said Collins, chair of the Senate Financial Institutions Committee and a sponsor of the Predatory Lending Database Pilot Program Act, also known as HB4050.

The bill establishes a data base for all mortgage loans in a ten-zip-code pilot area on the Southwest Side and requires mortgage counseling for borrowers whose credit rating or loan terms indicate vulnerability to predatory lending.

Lenders Pull Out

A list of about two dozen lenders said to have suspended or limited lending in the area was circulated to members by the Illinois Association of Mortgage Brokers in September. It was based on written confirmations from each company, said IAMB executive director Marve Stockert. Lenders are concerned the new requirements have the potential to complicate title and lien issues, he said.

“Nobody is saying they aren’t going to lend in the area ever again,” he said. “They’re taking a wait-and-see attitude.”

Stockert echoes the observation of many HB4050 supporters that “there’s a lot of misinformation” circulating about the law. One example: “They’re saying people can’t get loans, and that’s not true.”

Indeed, the second of two lawsuits currently challenging HB4050 (filed November 15 by attorney David Richardson) has three plaintiffs who claim they were unable to obtain mortgage loans as a direct result of the law.

‘Loans Being Made’

Southwest Reach Center, one of a dozen counseling services taking referrals in the pilot area, has had 100 transaction reviews under the program in its first two months, said director Livia Villarreal. “That’s 100 people who have secured financing,” she adds.

“We are getting calls every day,” said Mike Reardon of Neighborhood Housing Service of Chicago Lawn and Gage Park. “Loans are being made and homes are being sold.”

Some 145 banks and mortgage companies have financed loans in the pilot area in the first two months of the program, said Geoff Smith of the Woodstock Institute.

‘Legislative Redlining’

At several heated community forums, the major objection to the new program is the predominantly minority composition of the population of the pilot area. Felicia Stovall, an Englewood community activist with the Coalition to Rescind HB4050, calls it “legislative redlining.” And both lawsuits charge the program discriminates against African Americans and Hispanics in its choice of pilot area.

Collins said she initially pressed for a county or statewide program but was blocked by the real estate lobby. “The people who keep saying it’s discriminatory are the same ones that fought us when we wanted to make it statewide,” she said.

The final legislation left the choice of a pilot area up to the Illinois Department of Financial and Professional Regulation, which is charged with implementing the law, and directed it to include areas with higher rates of predatory loans and home foreclosures.

That requirement skewed it toward Black and Latino communities, where historical redlining has allowed predatory lenders to move in, Smith said. Minorities are steered into high-cost, high-risk mortgages – even when they have credit ratings that would qualify them for prime loans – at much higher rates than whites, he said. The pilot area has a home foreclosure rate nearly twice the Cook County average, he said.

“This bill doesn’t target minorities,” said McDowell of SWOP, which was a major proponent of HB4050. “The predatory lenders have been the ones targetting the minority community for years.”

SWOP pushed to have its neighborhood included in the pilot area, as did several of the bill’s legislative sponsors, according to McDowell. The Southwest Side has been hard hit by predatory lending and is on pace to see over 1800 foreclosures initiated by the end of the year, he said.

Other community concerns include electronic information transferral and government data collection, but these are no different than existing mortgage brokerage communications with lenders or the information given on tax returns, McDowell said.

Counseling and Enforcement

The counseling sessions required by the program focus on ensuring that purchasers understand the mortgage product they are getting and know their options, Villarreal said.

“Sometimes the mortgage broker has done a good job and [consumers] know exactly what they’re getting,” she said. “In other cases it’s totally different than what they thought they were getting.”

In particular, consumers too often think they are getting fixed-rate mortgages when they aren’t, and their interest payments will be subject to annual increases, she said

“A lion’s share of the foreclosure cases we’ve seen involved people who didn’t understand what mortgage product they bought,” said Jim Capraro of Greater Southwest Development Corp., which cosponsors the Reach Center with the Instituto Progreso Latino.

Another purpose of the program is to establish a data base to track all mortgage loans in the pilot area, in order to enable regulators and law enforcement to crack down on violators. Fraudulent loans are often hidden in the secondary mortgage market, McDowell said, and predatory lenders often change affiliations and tactics.

Counselors can flag loans for possible fraud, said program administrator Philip Dalmage of IDFPR, who said the department is exploring a joint task force with the Attorney General’s office to investigate cases of suspected fraud. “Enforcement is a big priority for the department,” Dalmage said.

In response to the controversy, IDFPR is holding a public hearing on HB4050 and proposals to amend it next Monday, November 27, at 1 p.m. on the concourse of the Thompson Center, Randolph and Clark. People wishing to testify are asked to submit witness cards and written testimony, said Susan Hofer.

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