March 11, 2010

By MARK LAWTON mlawton@pioneerlocal.com

Foreclosures in Franklin Park have continued a five-year increase, going up 49 percent from 2008 to 2009, according to the nonprofit Woodstock Institute. That’s the largest increase of 13 west Cook County suburbs.

Foreclosures are when a homeowner can’t make payments on a home loan and the bank or other lender takes legal action to repossess the house.

In Franklin Park, the number of foreclosures has grown 410 percent from 2005 to 2009.

Rob Breymeier, executive director of the Oak Park Regional Housing Center, speculates that Franklin Park has seen an increase due to a large number of first-time homebuyers and a high Latino population.

“Folks who are most likely to be taken advantage of are on the edge of what they can afford,” Braymeier said.

The increase in foreclosures has its roots in the subprime (above market rate) loan industry.

Initially, said Braymeier, a number of homebuyers borrowed from subprime lending institutions and had to pay more for the loan than the market rate.

“In many cases, these were people who were qualified for better loans but got subprime loans mostly because of race and ethnicity,” Breymeier said.

“It was much more prevalent in the African American and Latino communities.”

According to the U.S. Census Web site, more than one third of the residents in Franklin Park are of Latino ancestry.

“Then the market went beyond those two groups and started to provide exotic types of loans to people that weren’t intended for those types of loans,” Breymeier said. “Such as adjustable rate mortgage loans. It was fine for people who were getting a large increase in income in the short term, like doctors and lawyers who were just out of school.”

Such loans still worked for many people while housing values were increasing. Then, in 2006, housing values stopped increasing.

“People were in real trouble,” Breymeier said. “They were betting on their homes increasing in value. No refinancing was allowed. Also, the banks started tightening up their lending criteria based on the fact that the market was crumbling.”

The poor economy of the last couple years has only exacerbated the problem, causing homeowners to lose their jobs and income.

The priority of the Franklin Park government is to make sure foreclosed homes are maintained so properties don’t get vandalized, said Jeff Eder, director of community development.

“So they don’t stand out like sore thumbs,” Eder said. Last year, village trustees passed an ordinance requiring owners of foreclosed properties — banks, lenders — to notify the village.

Kurt Kugelberg, a Franklin Park resident who serves on the village Plan Commission and is a former urban planner, suggests the village government apply for federal stimulus funds so it can buy foreclosed properties.

“Either tear it down and sell it to the lot next door or restore them and sell them,” Kugelberg said.

The city of Northlake has also seen an increase in foreclosures. From 2008 to 2009, foreclosures increased from 127 to 172.

“It drives everybody’s property values down,” said Mayor Jeff Sherwin. “When houses are eventually sold, they are sold for much less.”

In the interim, the city’s public works department takes on maintenance — which costs the city time and money.

Geoff Smith, senior vice president of the Woodstock Institute, expects foreclosures to continue to remain high. The fourth quarter of 2009 saw the highest number of foreclosure filings since the mortgage crisis began.

“The economy is a weird and tricky thing,” said Smith. “We can see the gross domestic product and stock market going up. That doesn’t translate into jobs necessarily. Jobs tend to be the last thing to recover in a recession.”

In the meanwhile, Smith suggests the focus be on ways to keep people in their homes.

“If you let a person stay in a property, they have a place to live,” Smith said. “From a lender perspective, if they want to sell at some point, they have someone maintaining it.”

The Illinois Housing Development Authority has approved a grant of $266,000 for a financial assistance program to be administered by the Housing Center’s West Cook Homeownership Center. Grants and forgivable loans will be available for low- and very low-income households looking to buy homes in western Cook County. More information will be available in the summer of 2010.

Our Executive Director Rob Breymaier attended a forum convened by the U.S. Dept. of Housing and Urban Development to discuss issues regarding housing and GLBT communities. Rob focused on three issues including how the federal definition of a family negatively impacts the availability of public and subsidized housing for low-income GLBT housing seekers.

The Housing Center negotiated on the behalf of over 80 organizations and government commissions across the nation. Our fundamental opposition to the policy was rooted in its use of ZIP codes as a basis for determining the amount of down payment required of a borrower. We understood this policy to be akin to redlining and negotiated with Fannie Mae, the nation’s largest underwriter of mortgages, to remove the geographic determinants of the policy.

Largely due to conversations the Housing Center and Ms. Adams held with Fannie Mae, the policy will end on June 1. Fannie will institute a national policy in its place that does not include geography as a determinant. In addition, the nation’s second largest underwriter of loans, Freddie Mac, will follow suit and abandon its declining markets policy as well.

This victory provides an example of the Housing Center’s leadership in the fair housing community. Because of our strong commitment to fair housing principles and our solid community base, we were able to take a lead role in ensuring that national underwriting policy provided the fairest terms possible. Moreover, this change will benefit the communities we serve by ensuring that Fannie Mae’s lending policies do not create disincentives for borrowers looking to call Oak Park, Berwyn, and other western suburbs home.