WBEZ | foreclosures

City Council panel OKs protections for renters after foreclosure

Wed, 01 May 2013 18:08:00 -0500

A proposal aimed at protecting renters in foreclosed buildings won the backing of a Chicago City Council panel on Wednesday, but not without a few sparks.

The council’s Housing and Real Estate Committee passed the measure in a voice vote after about 90 minutes of debate.

Ald. Matthew O’Shea (19th), who said he supported an earlier version, decried provisions that would require the foreclosing banks to pay tenants a “relocation assistance” fee of $12,000 per unit or offer them rent-controlled leases until selling the building.

“Making foreclosed properties considerably more expensive to hold will further drive down their price at sale or auction,” said O’Shea, the only alderman who voiced opposition to the measure. “We are in essence reducing the value of all surrounding properties.”

Other aldermen, including Walter Burnett Jr. (27th), said what’s dragging down home prices in their wards is the abandonment of properties after foreclosure. “How many people are sitting in their house every night, worried about if there’s going to be a fire next door to them because [banks] made the people who were renting there move out and leave the building vacant?” Burnett asked.

The earlier version, introduced by Ald. Richard Mell (33rd) and dubbed “Keep Chicago Renting,” would have banned post-foreclosure evictions except under limited circumstances such as the tenant’s failure to pay rent.

Mayor Rahm Emanuel’s administration said it agreed with the goal — keeping renters in their homes — but raised legal concerns. Months of negotiations between city officials and tenant advocates led to the version now in the council.

Before the hearing, members of 11 community groups behind the measure donned orange T-shirts and rallied outside the council chambers. The groups included the Lawyers’ Committee for Better Housing, which brandished new research showing crime in abandoned buildings and vacant lots is up nearly 48 percent since 2005.

At the rally, Mell responded to an Illinois Mortgage Bankers Association claim that the ordinance would lead to litigation and congest a court system already struggling with a huge backlog of foreclosure cases. “Why would it clog it up if the banks go along with it?” Mell asked.

The most detailed testimony against the plan came from Brian Bernardoni, senior director of government affairs and public policy for the Chicago Association of Realtors. “This ordinance is bad for the market and bad for transfer-tax revenues,” he said.

Bernardoni claimed that forcing lenders to renew leases would amount to an unconstitutional “taking,” a legal term describing government acquisition of private property without fair compensation. “Landlords have the right to evict a tenant at the expiration of a lease,” he said.

An Emanuel administration representative at the hearing said Chicago officials considered such claims while developing the legislation. “If that’s the lawsuit, we’ll take that one on,” Rose Kelly, senior counsel in the city’s law department, told the aldermen.

No mortgage lenders addressed the committee but some voiced opposition to the measure Wednesday.

“If a lender is compelled by the ordinance to provide relocation assistance of $12,000, it may opt to release its lien and walk away from the property — thereby causing more, not less, building abandonments,” James E. Traush, general counsel of the mortgage bankers association, wrote Wednesday in a message to WBEZ.

“Chicago will become an unfriendly lending environment as more lenders simply pass on lending in the city because it is not worthy of the investment,” Traush wrote.

The Illinois Bankers Association and the Chicagoland Apartment Association also indicated opposition.

Ald. Ray Suárez (31st), the committee chairman, said he would not refer the measure to the full council until June 5. He said the delay would allow more time to hear from the legislation’s opponents.

Chip Mitchell is WBEZ’s West Side bureau reporter. Follow him on Twitter @ChipMitchell1 and @WBEZoutloud, and connect with him through Facebook and LinkedIn.

Mortgage bankers slam proposed tenant protections

Wed, 01 May 2013 00:42:00 -0500

A group of mortgage lenders has a warning about a proposed ordinance that Chicago Mayor Rahm Emanuel’s administration helped craft to protect tenants of foreclosed buildings. The Illinois Mortgage Bankers Association says the plan, set for a City Council hearing on Wednesday, would clog courts already struggling with a huge backlog of foreclosure cases.

“Illinois has the second-largest backlog in the nation,” said Robert Emanuel (no relation to the mayor), a Chicago attorney who serves on the association’s executive committee. “This is going to add either a new form of litigation or it’s going to complicate existing foreclosures.”

The proposal, called the “Protecting Tenants in Foreclosed Rental Property Ordinance,” would require banks to pay a $12,000 “relocation assistance” fee to renters evicted after a repossession or offer them rent-controlled leases until selling the building. The ordinance would apply to tenants in buildings large or small, even single-family houses.

An earlier version of the proposal, known as “Keep Chicago Renting” and introduced by Ald. Richard Mell (33rd) last July, would have banned post-foreclosure evictions except under limited circumstances such as the tenant’s failure to pay rent.

The goal is to keep renters in their homes and keep the buildings from standing vacant and breeding crime. On Tuesday, the Chicago-based Lawyers’ Committee for Better Housing released a study based on city data that showed crime in abandoned buildings and vacant lots is up nearly 48 percent since 2005.

“At a time when overall crime rates have been decreasing in the city of Chicago, crimes occurring within abandoned properties are actually increasing,” said Patricia Fron, the committee’s building programs administrator.

Tenant advocates and city officials negotiated for months before agreeing on the proposal’s main elements in early April. The council’s Housing Committee is holding the hearing Wednesday morning.

The mortgage bankers association says it’s planning to send representatives to the hearing. The group says the proposal should not include single-family homes and says the blame for abandoned buildings belongs less to banks than to investors who are out to buy and sell properties for quick gain — a practice known as flipping. The bankers say the tenant ordinance would make Chicago less attractive for lending and increase costs for borrowers.

Officials of the Illinois Bankers Association, another group likely to oppose the proposal, did not return calls or messages about it Tuesday.

Chip Mitchell is WBEZ’s West Side bureau reporter. Follow him on Twitter @ChipMitchell1 and @WBEZoutloud, and connect with him through Facebook and LinkedIn.

Advocates push Emanuel to protect renters in foreclosed units

Wed, 20 Mar 2013 18:19:00 -0500

Some Chicago tenant advocates are turning up the heat on Mayor Rahm Emanuel as they negotiate with his administration about protecting renters in foreclosed units.

The talks concern “Keep Chicago Renting,” a measure proposed last summer by Ald. Richard Mell (33rd) that would have banned post-foreclosure evictions except under narrow circumstances such as the tenant’s failure to pay rent.

The proposal stalled in the City Council’s Housing Committee, chaired by Ald. Ray Suárez (31st).

A statement from Emanuel’s office says his administration supports the principle of providing tenants “the protections they deserve during a foreclosure process.”

But the mayor’s office says it wants a “strong ordinance that can withstand any challenge from opponents.” Instead of an eviction ban, the city has been pushing to have banks pay evicted renters a “relocation-assistance fee.”

A coalition of tenant advocates behind the original measure says it could live with that substitute.

“The coalition believes that the city’s model, if done right, could meet the goals of the original ordinance — which are to keep renters in their homes and prevent more dangerous vacant buildings in our city,” Manolita Huber of the Albany Park Neighborhood Council said.

The negotiations have focused on the fee amount, among other details, and have dragged on for months.

“To the mayor, we say the people of Chicago cannot wait,” Flora Johnson of SEIU Healthcare Illinois and Indiana said Wednesday at a North Side rally organized by the coalition. “We must address this issue today. Keep Chicago renting!”

Mayor Emanuel’s office says an agreement is near. “We are in the final stages of drafting a substitute ordinance that can help ensure Chicago tenants will have the protections they deserve during a foreclosure process,” the office said in a statement Wednesday afternoon.

Ald. Walter Burnett Jr. (27th), a supporter of the original ordinance who is is participating in the negotiations, on Wednesday called the talks “99 percent” done.

Burnett said the measure was on its way to the council floor this spring. “We’re right there,” he insisted. “It’s getting ready to happen.”

Nearly 17,000 Chicago apartment buildings, amounting to almost 52,000 units, went into foreclosure in 2009, 2010 and 2011, according to the Lawyers’ Committee for Better Housing, a backer of the original ordinance. Those buildings constituted about 9 percent of Chicago’s rental housing stock.

Last year, 2,279 multifamily buildings were auctioned in the city, according to the Woodstock Institute, another supporter of the original ordinance.

Chip Mitchell is WBEZ’s West Side bureau reporter. Follow him @ChipMitchell1 and connect with him through Facebook and LinkedIn.

Illinois foreclosure activity jumps

Thu, 14 Feb 2013 09:06:00 -0600

A jump in the number of January foreclosure auctions moved Illinois up one place to rank as having the third highest foreclosures activity in the country, RealtyTrac said today in its monthly data report on distressed properties.

Between December and January, the number of foreclosure filings in Illinois increased 22.6 percent - that basically equates to one out of every 375 homes in Illinois. Compared to the same time last year, the number of filings decreased 1.8 percent.

Nationally, foreclosures are down 28 percent from the year before.

Illinois is preceded only by Florida and California for foreclosure activity. A change in California law commonly called the Homeowner's Bill of Rights drastically impacted foreclosure filings there, RealtyTrac said.

“For the first time since January 2007 California did not have the most properties with foreclosure filings of any state," RealtyTrac's Darem Blomquist said in the report. "Instead that dubious distinction went to Florida, where January foreclosure activity increased on an annual basis for the 11th time in the last 13 months.”

You can check out more results here.

Kenwood is becoming more troubled

Wed, 30 Jan 2013 11:16:00 -0600

Let me tie a few of this week’s stories together — all them anchored in my neighborhood, at least one literally right across the street from me.

First, the utterly horrific and senseless murder of Hadiya Pendleton, the King College Prep sophomore who was shot dead at a little park on a very quiet street two blocks from my house. I’ve driven by that park literally hundreds, if not thousands of times, since I moved here more than a dozen years ago. I strolled by there with my son last fall, looking forward to when he was old enough to go down that slide.

I woke up to this Facebook status yesterday from a friend whose child attends King: “Damn. I hope this is the first and only time I have to give one of my kids grief counseling — a friend of my 14yo was shot and killed while she was walking home today. This world is rough.”

Yes, pretty damn rough, though you might not get just how rough from reading the Tribune story, for example, which goes out of its way to quote an Oakenwald neighbor of 19 years time: "It's a great neighborhood. Nothing like this has happened since I've been here.”

True enough, there have been few crimes on that stretch of Oakenwald, tucked just east of Lake Park. According to WBEZ's gang map, we're in a little gang-free oasis. But here’s what the news isn’t telling you: There’s plenty of crime going on around Oakenwald: drugs, burglaries, armed robberies.

The Lakefront Outlook, a sister paper to the Hyde Park Journal, publishes a weekly police blotter that’s a parade of pain: the petty and increasingly not so petty crimes that slowly chip away at any feeling of security or hope. And here’s something else: That sweet little park where Hadiya Pendleton was killed is in an area where foreclosures have jumped considerably in the last few years, where, in fact, empty and boarded up houses are no longer unusual. The fall-out of the housing bust has left its debris all over Kenwood, which was overdeveloped and abandoned. (Out of 22 sales in the last year or so in my neighborhood, according to my bank, at least 14 have been foreclosures.)

Empty and boarded up houses like the Muddy Waters place, which my colleague Lee Bey wrote about here last week. I’ve known that house since long before I could look out on it from my living room. As a high school kid, I was one of a handful of non-African-Americans who’d occasionally come by, especially on weekend summer afternoons when it was sweltering in Muddy’s basement studio, with the hope of catching a glimpse and song from the blues great right in his own front yard.

Since I’ve been living here, I’ve seen all sorts of tourists come by, sometimes ferried by bus, and snap their pictures on the stoop. A few times I’ve witnessed clean-up efforts, and maybe a year or so ago, new signs for the doors (installed so they read “Waters” “Muddy,” one each panel, so you have have to read right to left ... ). I’ve peeked in through the windows, walked the perimeter and, in the early years, when it didn’t need a gut job, when demolishing it would have been unheard of, wondered why the city hadn’t jumped to save it. And always, it seemed, when I called or wrote to the city or any entity I was turned on to, there was something already underway.

Here’s what I know now: The Muddy Waters home and the empty lot next to it, and the terrified neighbor immediately north of both, are the site of increasingly brash drug dealers. Cars come to a slow stop in front of the Muddy Waters place and greet the young men waiting there. They sit on the sidewalk, stroll up the side of the house and disappear in the back to conduct their business. Sometimes they don’t bother to more than lean in the car window. And there’s plenty of pedestrian business, enough that sometimes the young men take up residence on the stoop, or on the terrified neighbor’s stoop. The neighbors call the cops, and they come. And the young men vanish for maybe a day. And then they’re back, like clockwork.

I wish I could say the Muddy Waters house is the only one. But there are more than 12 empty units on my block alone, probably more like 20. Go one block south (just one block west of where Hadiya Pendleton was killed) and the story repeats itself. Just north of us, a developer is raising two 450 unit towers, a mixed income project that had too much government aid to be denied, no matter how unnecessary to the neighborhood, which is already a wasteland of empty units. Think how tempting all those barren properties will be to the neighborhood’s more restless souls, and how dangerous to the rest of us.

The problem isn’t merely gun violence, isn’t merely not enough cops, isn’t merely bad schools or lack of school choice, and isn’t merely having few supermarket and shopping options. It’s endemic, fundamental, literally from the ground up.

How many more Hadiya Pendletons will it take for the city to take a good hard look at our neighborhood and others like it on the South Side? Many, I fear, way too many.

Report: Home foreclosures push down local housing prices

Tue, 02 Oct 2012 13:48:00 -0500

Distressed homes have pushed down housing prices in the Chicago area, according to a report released Tuesday by the real estate data and analytics firm CoreLogic.

Local home prices for August 2012, including homes facing foreclosure, fell 2.5 percent when compared to numbers from the previous year. The report also shows Illinois prices, including distressed home sales, declined 2.3 percent--the second-largest decrease in the United States.

"The foreclosures and the short-sales have a major impact on our market," said Matt Silver, a director at the Chicago Association of Realtors. In a phone interview Monday, he said buyers are "a little more cautious on the properties they do buy."

But Chicago realtors remained optimistic about the condition of the local housing market, saying that prices are expected to pick back up in the coming months.

"Foreclosures need to be dealt with. But I think generally speaking, people are optimistic that they can buy a house today and in two years it will be worth similar to what it’s worth today," said Chicago-based realty expert Jeff Lowe in a phone interview.

According to the CoreLogic report, excluding distressed homes, Chicago-area home prices in August have increased 1.5 percent since last year. Using the same measure, Illinois prices also rose 1.2 percent.

Meanwhile, home prices have risen nationwide. Including distressed properties, values increased 4.6 percent compared to August 2011.

"Again this month prices rose on a year-over-year basis and our expectation is for that to continue in September based on our pending [...] forecast," said Mark Fleming, chief economist for CoreLogic, in a statement.

"The housing markets gains are increasingly geographically diverse with only six states continuing to show declining prices."

Chicago considers eminent domain to curb foreclosures

Mon, 20 Aug 2012 07:00:00 -0500

Earlier this summer, San Bernadino County, an area east of Los Angeles hit hard by the mortgage crisis, considered a plan that could potentially help homeowners whose mortgage payments exceed the actual value of their property. The ostensibly simple idea, proposed by the California firm Mortgage Resolution Partners, would have the county purchase so-called underwater loans at market value using eminent domain, thus allowing homeowners to refinance and stay put, rather than face foreclosure.

MRP, which says the plan could be tailored according to the needs of local communities, would help local governments broker the deal for a fixed fee. San Bernadino has not moved forward with the plan, but their interest caught the attention of a number of cities and counties around the country, among them Chicago.

Alderman Ed Burke held a hearing at City Hall last week (which, as noted by local media, attracted the likes of John Cusack) to consider the idea.

“Renegotiation of underwater mortgages by the private sector has failed to keep pace with this epidemic,” Burke said in a statement. “Even with record low interest rates, many homeowners have found it difficult to refinance due to newly tightened lending standards and depressed home values.”

To be sure, Cook County could use a fresh injection of ideas, when it comes to the foreclosure crisis. According to the Woodstock Institute, one in four homes in Cook County is underwater. The crisis has hit black and Latino areas especially hard.

Without Mayor Rahm Emanuel’s approval, the idea is likely to be dead on arrival. "I don't think it's the right way to address the problem," Emanuel told reporters at an unrelated news conference. "I don't think it's (in) the power of the city to do, to deal with the housing issue.”

Chicago Alderman Roberto Maldonado, whose ward covers the Humboldt Park area, thinks using eminent domain could be an effective way of stabilizing home prices and avoiding foreclosured properties, which can remain vacant for years and blight a neighborhood. He joins Eight Forty-Eight on Monday to discuss eminent domain, along with Chicago magazine Deal Estate columnist Dennis Rodkin.

Northwestern University law professor David Dana will also join the discussion. He supports the idea of doing something to reduce principals for homeowners with underwater mortgages, but thinks the Mortgage Resolution Parners approach raises constitutional questions.

“In eminent domain law, you have to meet both state and federal constitutional requirements, and this is uncharted territory,” Dana said.

Weighing the pros and cons of real estate short sales

Tue, 22 May 2012 07:00:00 -0500

In January, short sales outpaced foreclosures for the first time. To explain why, let’s pretend you’re one of the 11 million homeowners with underwater mortgages. If you can't afford to make your monthly payments or if you are no longer able to cross your fingers and hope your property value increases, you have two main options: Go into foreclosure or ask your lender to agree to a short sale.

The first option hits your credit score hard, making it difficult to obtain loans in the future. The second allows homeowners to sell their property at a price below what they owe the lender and recoup some of their losses.

Banks like short sales because they don’t have to spend money to maintain the property, which will usually sell for more than a foreclosure.

In many markets, including Chicago, short sales are becoming the norm. Local @properties agent Mabel Guzman says short sales account for 20 percent of her business. “It's what's in the market," she said, "although some [agents] would rather not deal with them."

For all parties, the main downside is that short sales are a pain in the butt. WBEZ’s Susie An and Ashley Gross chronicled An's own mixed experiences with short sales last year. An and husband got their house, but many other potential buyers end their search with the deal falling through, after months of headaches.

Real estate agents often use attorneys to expedite the process. Guzman, a former head of the Chicago Association of Realtors, uses a third-party negotiator to assist clients interested in a short sale.

Dennis Rodkin, who writes the Chicago magazine Deal Estate column and blog, says many are turned off by the cumbersome process. “For potential buyers on a lease, short sales can be too risky,” he said. “People can end up temporarily homeless.”

Starting in June, federal regulators will begin to remove some of the hurdles by requiring lenders to respond to seller requests in 30 days and have an answer within 60 days.

Rodkin and Guzman join Eight Forty-Eight on Tuesday to discuss the changes and whether short sales are worth the pain. If you have an experience with a short sale, call in live at 312.923.9239, to share your story.

Federal mortgage giants lay ground for restitution

Tue, 01 May 2012 09:13:00 -0500

Lending giants Fannie Mae and Freddie Mac on Tuesday begin requiring the banks and servicers they work with to note that fees they pay to register vacant homes in Chicago are done “under protest.”

The government-sponsored entities believe that the revised city ordinance that introduced the $500 fees should not apply to them. Their government regulator, the Federal Housing Finance Agency, has filed a lawsuit against the city of Chicago on their behalf.

Chicago began charging lenders the one-time registration fee in November, when it introduced some changes to the city’s vacant housing ordinance. Previously, abandoned homes were the legal responsibility of only the homeowner. But the Chicago City Council expanded the ordinance to to require lenders to register, secure and maintain properties when homeowners fail to do so.

According to Chicago’s Department of Buildings, more than half of the 5,787 homes on the city’s official vacant property registry were added after the new rules went into effect in November.

City attorney Judith Frydland said the revised ordinance has made it much easier to respond to problems at abandoned properties.

“When a building is registered and we get a complaint through 311 that the building’s vacant and open, we go right to the registry, we find out which bank it is, we have their contact, we email them, and by that night the building is boarded,” said Frydland. “Otherwise the city would have had to do that.”

While Fannie Mae and Freddie Mac have told their on-the-ground partners to comply with Chicago’s new ordinance, their instruction to file the fees “under protest” lays the ground for restitution.

“This preserves the legal right to challenge the payment,” explained attorney Richard Gottlieb, Director of Dykema Gossett’s financial industry group. “If a party makes a payment without challenging it, it’s often difficult to recoup it,” he said.

Foreclosures jump in Chicago as banks work through backlog

Thu, 15 Mar 2012 19:53:00 -0500

Foreclosure filings in the Chicago metro area jumped 43 percent in February from a year ago.

The good news is that a jump in foreclosures means banks are working through their backlog and the end becomes closer in sight. But for homeowners, the bad news is that will probably drag down prices even more.

Geoff Smith heads the Institute for Housing Studies at DePaul University.

"There’s probably not going to be a lot of great news on the housing market for the next six months to a year in terms of property values, but this is something that has to happen," Smith said.

The housing data firm RealtyTrac says the number of foreclosure auctions scheduled in Illinois more than doubled in February.

Smith says banks are moving ahead now that they’ve reached a settlement with state attorneys general over shoddy paperwork and robo-signing.