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Chicago's Foreclosure Boom

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A new report shows home foreclosures in Chicago increased 36-percent last year. That represents the largest increase in at least 13 years. More than half of the foreclosures occurred within the first 2 years of the loans.

David Rose is with the non-profit National Training and Information Center. He wrote the report.

Rose says almost all of the early foreclosures were on Adjustable Rate Mortgages. He says potential homeowners are enticed by the loans’ affordable starting interest rates.

“Borrowers borrowers don’t really understand the risk behind these mortgages, Rose sayd. “They are focused by their broker on the initial payment and don’t think about what that payment is going to look like a year or six months or two years down the road.”

Rose pins the blame on mortgage brokers he says don’t fully explain the risks to customers. He plans to lobby the industry to add more safeguards.

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