Illinois Housing Task Force Foreclosure Working Group Final Report

Transcription

1 Illinois Housing Task Force Foreclosure Working Group Final Report

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3 Contents Introduction... 3 Summary of 2013 Activity... 3 Market Analysis... 4 Introduction... 4 Delinquency Rates... 4 Completed Foreclosures... 6 Median Sales Price... 8 Negative Equity Loans... 9 Zombie Properties Zombie Properties, continued Directory of Resources and Programs Housing Counseling Cook County Mortgage Foreclosure Mediation Program Will County Foreclosure Mediation Program Illinois Foreclosure Prevention Network National Foreclosure and State Payment Settlements National Foreclosure Mitigation Counseling Program Programs Making Home Affordable Shared Appreciation Modification Program (SAM) Hardest Hit Fund Innovative and Ongoing Resources Land Banking (Cook County, South Suburban) Highland Park Community Land Trust Affordable Housing Planning and Appeal Act Abandoned Properties Program Blight Reduction Program Single Family Owner Occupied Housing Rehabilitation Programs Homebuyer Assistance Programs Keep Chicago Renting Ordinance Final Recommendations and Conclusions Conclusions on Market Analysis Delinquency Rates Sales Price Negative Equity Share Zombie Properties Best Practices and Final Recommendations Detroit Vacant Property Campaign Foreclosure Mitigation Counseling Appendix State Payment Settlement Fund Awards State Payment Settlement Fund Awards, continued Abandoned Residential Property Program Recipients and Grant Amounts Members of the Illinois Housing Task Force Foreclosure Working Group Members of the Illinois Housing Task Force Foreclosure Working Group, continued Works Cited

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5 Introduction The Illinois Housing Task Force formed the States Foreclosure Working Group (FWG) at the request of the Illinois General Assembly in May of 2011, with passage of Senate Joint Resolution 30. Duties of the FWG include: monitoring Illinois housing problems and making recommendations, overseeing actions and activities that prevent foreclosures, providing insight about the rebuilding process caused by the housing crisis, monitoring foreclosure activity, and recommending outreach and counseling programs and procedures. The Working Group was made up of public, private, and not-for-profit housing industry stakeholders who have provided their expertise in areas of housing counseling, housing finance, housing development, and more. The Working Group s first meeting was held September 28, 2011, and since that time has provided foreclosure prevention and mitigation recommendations to agencies and organizations throughout Illinois. This document will be the Final Report of the Illinois Housing Task Force - Foreclosure Working Group, and will summarize Illinois current housing market, include an in-depth directory of programs and resources available to Illinoisans, and provide comprehensive recommendations for the state. Summary of 2013 Activity The Foreclosure Working Group held a meeting in June of 2013 to steer the group s Year Two activities. In Year One, the Foreclosure Working Group focused on examining foreclosure prevention and mitigation activities in Illinois and other states; highlighting best practices in its Year One Report. At the conclusion of the June 2013 meeting, the group agreed that Year Two activities be focused on four issues: 1. Monitoring the implementation of current and new foreclosure prevention and mitigation programs, such as Public Act (SB0016 Enrolled) 20ILCS 3805/7.30 (which established a foreclosure prevention counseling and an abandoned property program), and the Cook County Land Bank; 2. Strategizing product solutions for the different issues that current and prospective homeowners are confronting (e.g. principal reduction, underwater mortgages, rate resets, streamlined refinancing, and reverse mortgages); 3. Identifying best practices to address the effects that delinquent escrows have on homeowners who attempt to obtain loan modifications; and 4. Identifying possible priority areas for new resources (e.g., National Mortgage Settlement State funds, Foreclosure Prevention Program, Abandoned Property Program). As a precursor, the Working Group conducted preliminary research on Illinois housing market to better understand the overall market, where need continues to exist, and the impact of current foreclosure prevention and mitigation programs. Some results from this preliminary market research showed that from April 2012 to April 2013 both nationwide and in Illinois, there was an increase in building permits, especially of multi-family developments. From April 2012 to April 2013, sales of both new and existing homes increased (National Association of Home Builders), and during that same time, homeownership rates showed slow increases, and vacancy rates showed slow decreases (United Stated Census Bureau: Housing Vacancies and Homeownership). Additionally, increases in property taxes have possibly contributed to households with delinquent escrow and subsequent foreclosures. This preliminary research has encouraged the Working Group to develop a more concentrated market analysis, specifically examining distress, equity, and sales indicators commonly used in market analyses as a part of its Final Report in order to highlight the State s accomplishments and provide for further recommendations. 3

6 Market Analysis Introduction As aforementioned, in 2013 the Foreclosure Working Group concentrated its efforts on examining Illinois current housing market in order to further steer its Year Two priorities. In an effort to expand on this preliminary work, a more concentrated housing market analysis was conducted and focused on three housing indicators often used in foreclosure and housing market analyses: (1) distress indicators (delinquencies and completed foreclosures), (2) sales (median sales prices), and (3) equity (i.e. negative equity loans, or mortgages whose debt is greater than the current home value). For each of these indicators, data was collected dating back to 2009 for all (102) counties in Illinois. The following sections summarize national and statewide trends by indicator. Delinquency Rates In August of 2013, the Mortgage Bankers Association (MBA) published a press release titled Mortgage Delinquencies, Foreclosures Continue to Drop, which reported on both judicial and non-judicial foreclosure states. Judicial foreclosure states are those which during the foreclosure process require court intervention, and can take up to 700 days to complete. There are approximately 20 judicial foreclosure states in the U.S; Illinois being one of them. On the other hand, non-judicial foreclosure states do not require court intervention and have a much faster foreclosure transfer rate from the time a homeowner receives their Notice of Default to the time they receive their Notice of Sale. The report notes states with a judicial foreclosure system continue to bear a disproportionate share of the foreclosure backlog. While the percentage of loans in foreclosure dropped in both states with judicial systems and states with non-judicial systems, the average rate for judicial states was 5.59 percent, triple the average rate of 1.86 percent for non-judicial states. Both declined to recent lows, with judicial states seeing the lowest foreclosure inventory since 2009 and non-judicial states seeing the lowest foreclosure inventory since Along these trends, Illinois has seen steady drops in its delinquency rates since 2009/2010, the height of the foreclosure crisis. The following charts highlight the state s average delinquency rate by calendar year ( ) and the ten counties in the state with the highest average delinquency rate by calendar year. Illinois Average Delinquency Rate ( ) Average Delinquency Rate (90+ Day) (by year, ) YEAR Delinquency Rate % % % % % 4

7 Illinois Top Ten Counties with the Highest Average Delinquency Rate ( ) Delinquency Rate (10 counties with the highest average delinquency rates by calendar year) 2009 Count County Average Delinquency Rate 1 Cook 9.3% 2 Boone 9.2% 3 Kendall 8.2% 4 Kane 8.0% 5 Stark 7.6% 6 Will 7.5% 7 Alexander 7.0% 8 Mason 6.5% 9 Saint Clair 6.5% 10 Iroquois 6.4% 2010 Count County Average Delinquency Rate 1 Cook 11.9% 2 Boone 11.2% 3 Kane 10.6% 4 Kendall 10.6% 5 Will 9.8% 6 Lake 8.2% 7 Stark 8.1% 8 McHenry 8.0% 9 Grundy 8.0% 10 Mason 7.8% 2011 Count County Average Delinquency Rate 1 Cook 11.8% 2 Boone 11.1% 3 Kendall 10.6% 4 Kane 10.5% 5 Will 9.9% 6 Lake 8.8% 7 McHenry 8.5% 8 Mason 8.3% 9 Winnebago 8.2% 10 Alexander 8.0% 2012 Count County Average Delinquency Rate 1 Cook 11.7% 2 Kendall 10.9% 3 Boone 10.8% 4 Kane 10.4% 5 Will 10.0% 6 Alexander 9.1% 7 Lake 9.0% 8 McHenry 8.7% 9 Winnebago 8.5% 10 Grundy 7.9% 2013 Count County Average Delinquency Rate 1 Cook 9.7% 2 Alexander 8.8% 3 Will 8.5% 4 Kendall 8.4% 5 Kane 8.1% 6 Boone 8.0% 7 Winnebago 7.5% 8 Mason 7.2% 9 Lake 7.2% 10 McHenry 7.2% 5

8 Completed Foreclosures Since the recognition of the financial crisis in September 2008, approximately 5 million foreclosures have been completed nationally (CoreLogic National Foreclosure Report, April 2014). As of March 2014, the national foreclosure inventory was 1.8 percent compared to 4.4 percent in March Over the past 12 months (as of April 2014), completed foreclosures fell to 599,000, the lowest level since CoreLogic reports at the current pace of completed foreclosures, and given the current foreclosure inventory, it will take 14 months to move all of the foreclosed inventory through the pipeline (CoreLogic National Foreclosure Report, April 2014). Concerning Illinois, as of March 2014, 2.6 percent of homes were in foreclosure, compared to 4.4 percent in March 2013 (CoreLogic National Foreclosure Report, April 2014 and March 2013). The following charts display trends for total completed foreclosures, as well as trends for the 10 Illinois counties with the highest number of completed foreclosures. Unsurprisingly, the largest portions of completed foreclosures take place in counties with the largest populations and therefore more housing units; however, the majority of these counties are seeing decreases in the total amount of completed foreclosures. Illinois Total Completed Foreclosures ( ) 6

9 Illinois Top Ten Counties with the Highest Number of Completed Foreclosures ( ) COMPLETED FORECLOSURES (10 counties with the highest number of completed foreclosures by calendar year) 2009 Count County Completed Foreclosures % of Total Statewide Foreclosures 1 Cook % 2 Will % 3 Lake % 4 DuPage % 5 Kane % 6 Winnebago % 7 McHenry % 8 Madison % 9 Kendall % 10 Macon % Count County 2010 Completed Foreclosures % of Total Statewide Foreclosures 1 Cook % 2 Will % 3 Lake % 4 DuPage % 5 Kane % 6 Winnebago % 7 McHenry % 8 Kendall % 9 Madison % 10 Saint Clair % Count County 2011 Completed Foreclosures % of Total Statewide Foreclosures 1 Cook % 2 Will % 3 Lake % 4 Kane % 5 DuPage % 6 McHenry % 7 Winnebago % 8 Madison % 9 Kendall % 10 Saint Clair % Count County 2012 Completed Foreclosures % of Total Statewide Foreclosures 1 Cook % 2 Will % 3 Lake % 4 DuPage % 5 Kane % 6 McHenry % 7 Winnebago % 8 Saint Clair % 9 Kendall % 10 Madison % 2013 Count County Completed Foreclosures % of Total Statewide Foreclosures 1 Cook % 2 Will % 3 Lake % 4 DuPage % 5 Kane % 6 McHenry % 7 Winnebago 834 3% 8 Madison 672 2% 9 Kendall 640 2% 10 Peoria 472 2% 7

10 Median Sales Price CoreLogic reports home prices (including distressed home sales) rose by 10.5 percent in April 2014 compared to April 2013, and expects national home prices to rise by 6.3 percent from April 2014 to April According to the same report, Illinois home prices (including distressed home sales) rose by 9.1 percent in April 2014 compared to April 2013 (CoreLogic Housing Price Index Report, April 2014). The following graph and chart display trends for Illinois total sales and average sales price. Illinois Total Sales ( ) Illinois Average Sales Price ( ) Sales Price Calendar Year Average Sales Price Total Sales 2009 $ 107, , $ 109, , $ 109, , $ 114, , $ 117, ,432 8

11 Negative Equity Loans Nationally, at the end of the fourth quarter of 2013, 6.5 million or 13.3 percent of all residential properties with a mortgage were still in negative equity, that is, the value of these homes had fallen below their outstanding mortgages, a likely result of decreased market demand which has been affected by disruptions in the broader economy, such as unemployment. Other possible factors include inaccurate appraisals at the time of loan approval (inflated value), and supply/demand issues related to the volume of foreclosed properties on the market. CoreLogic notes that if home prices increased an additional 5 percent, 1.6 million homes would regain positive equity. At the end of 2013, Illinois and 13 other states had negative equity shares greater than the national average. The following charts trend Illinois average negative equity share, negative equity loans, and the negative equity shares for the 10 Illinois counties with the largest percent of negative equity loans. Illinois Average Negative Equity Share ( ) Negative Equity Share Calendar Year Average Negative Equity Share % % % % % Illinois Total Negative Equity Loans ( ) 9

12 Illinois Top Ten Counties with the Highest Number of Negative Equity Loans ( ) Negative Equity Loans (10 counties with the highest percent of negative equity loans by calendar year) 2009 Count County % of State Negative Equity Loans Negative Equity Share 1 Cook 50% 29% 2 Will 9% 27% 3 Lake 8% 24% 4 Kane 7% 30% 5 DuPage 6% 14% 6 McHenry 5% 28% 7 Kendall 2% 42% 8 Winnebago 2% 14% 9 Saint Clair 2% 18% 10 Madison 2% 14% 2010 Count County % of State Negative Equity Loans Negative Equity Share 1 Cook 49% 30% 2 Will 9% 30% 3 Lake 8% 25% 4 Kane 7% 32% 5 DuPage 7% 16% 6 McHenry 5% 29% 7 Kendall 2% 44% 8 Winnebago 2% 16% 9 Saint Clair 2% 18% 10 Madison 2% 14% 2011 Count County % of State Negative Equity Loans Negative Equity Share 1 Cook 49% 32% 2 Will 9% 32% 3 Lake 8% 29% 4 DuPage 7% 19% 5 Kane 7% 34% 6 McHenry 5% 33% 7 Kendall 2% 46% 8 Winnebago 2% 16% 9 Saint Clair 2% 22% 10 Madison 2% 16% 2012 Count County % of State Negative Equity Loans Negative Equity Share 1 Cook 49% 33% 2 Will 9% 31% 3 DuPage 8% 21% 4 Lake 8% 28% 5 Kane 6% 33% 6 McHenry 4% 33% 7 Kendall 2% 41% 8 Winnebago 2% 18% 9 Saint Clair 2% 24% 10 Madison 2% 16% 2013 Count County % of State Negative Equity Loans Negative Equity Share 1 Cook 50% 29% 2 Will 8% 25% 3 Lake 8% 25% 4 DuPage 7% 16% 5 Kane 6% 28% 6 McHenry 4% 29% 7 Winnebago 2% 16% 8 Saint Clair 2% 20% 9 Kendall 2% 32% 10 Madion 2% 13% 10

13 Zombie Properties In January 2014, the Woodstock Institute published a policy brief titled Unresolved Foreclosures: Patterns of Zombie Properties in Cook County. The brief explored unresolved foreclosure properties, what they call zombie properties. The report defines zombie properties as those with a foreclosure filing that has not been resolved for more than three years. As neither the borrower nor the servicer has clear control of the property, neither has a strong incentive to assume responsibility for the property and these seemingly abandoned properties can have negative impacts on communities (Cowen, Aumiller pg. 2). Using foreclosure records from the Circuit Court of Cook County, the report compares foreclosures initiated between 2008 and 2010 with reported sales at auction between 2009 and With this information, a dataset consisting of properties that had a foreclosure filing between 2008 and 2010 for which there was no sale at auction between 2009 and 2012 was produced. Records from the Circuit Court of Cook County showed that 134,043 foreclosures were filed between 2008 and 2010, with 56,009 (or 42 percent) of these filings sold at auction between 2009 and 2012, leaving 78,034 (or 58 percent) filings with no sale at auction within that same period. Zombie properties or foreclosed properties with no clear entity with control over the property are generally sold at auction. Properties that are sold at auction can be bid on by lenders and citizens alike. Similar to short sales, which are usually sold as-is. When a property is sold at auction, the lender does not make a profit. When the property is sold to the highest bidder, the liens are paid and any overage is given to the homeowner though typically, once the loans are paid, there is no money left for the homeowner (HomeFinder). Lenders sell static properties at auctions as a way to remove them from their portfolios, as these properties are no longer viewed as an investment to the lender. Properties which had not been sold at auction were then stratified into quintiles based on a weighted income scale of census tract household income distribution. Five-hundred homes in total were then randomly selected from each quintile in proportion to the share of the overall number of properties that were not sold at auction in each quintile (Cowen, Aumiller pg. 6). The five-quintile breakdown is below: Status of Foreclosure Filings in Sample, , Not Resulting in Sales at Auction, /30/2013 by Income Quintile Quintile 2 Quintile 3 Quintile 4 $25,491 - $49,013 $49,014 - $77,539 $77,540 - $121,689 Quintile 1 $0 - $25,490 Quintile 5 $121,690 or more Total Status foreclosed filings not auctioned Resolved with owner still in possession # % # % # % # % # % # % Title transferred Dismissed and refiled Case still pending

14 Zombie Properties, continued The following findings were reported in Unresolved Foreclosures: Patterns of Zombie Properties in Cook County: 1. Many more properties in Census Tracts in the lower-income quintiles had a foreclosure filing and those properties were more likely to be sold at auction than were properties in Census Tracts in higher-income quintiles percent of foreclosure filings that did not result in sales at auction were unresolved, with the original filing still pending after more than three years. 3. Servicers were more likely to leave cases unresolved for properties in Census Tracts in the bottom two income quintiles and were more likely to file a new foreclosure action after dismissal of the original filing for properties in the bottom three quintiles. 4. Properties in the bottom three income quintiles were more than 10 percent more likely to become zombie properties than were properties in Census Tracts in the top two quintiles. 5. Servicers leave about 8.7 percent of foreclosure filings unresolved, and the properties most at risk are those located in low-income Census Tracts, which have greater numbers of foreclosure filings. Of the estimated 11,709 zombie properties, 57.5 percent were in the bottom two income quintiles, while about 22.5 percent were in census tracts in the top two income quintiles. 6. Analyzing the ethnic and racial characteristics of the Census Tracts showed that properties in predominantly white Census Tracts (less than 20 percent minority) were less likely to be sold at auction than properties in more heavily minority Census Tracts. A property in foreclosure in a tract that is 80 percent more minority is about eleven percent more likely to be sold at auction than is a property in a tract that is less than 20 percent minority. 7. Servicers are more likely to leave foreclosures unresolved in Census Tracts that are more racially homogeneous, either less than 20 percent minority or more than 80 percent minority or African American, and more likely to file a new foreclosure action for properties in tracts that were majority minority of the 77 Chicago community areas are estimated to contain more than 100 zombie properties. More information on zombie properties and this policy brief can be found at 12

15 Directory of Resources and Programs Housing Counseling Cook County Mortgage Foreclosure Mediation Program The Cook County Mortgage Foreclosure Mediation Program was launched in April 2010 with funding approval by the Cook County Board. The program was designed to provide homeowners with critical support, and help them explore their options to stay in their homes or negotiate respectable exits as early as possible once the foreclosure process began. The program provides legal assistance and housing counseling to homeowners in need. It s made successful through a partnership between the Circuit Court of Cook County and several State and local organizations (Illinois Housing Development Authority, the Chicago Bar Foundation the Chicago Community Trust, the Center for Conflict Resolution, the Chicago Legal Clinic, and the Chicago Volunteer Legal Services Foundation). IHDA has been the administrator of the helpline and housing counseling portion of the program since the program began and has assisted over 22,500 homeowners with funds totaling $5.1 million. There is no charge to participate in the Cook County Mortgage Foreclosure Mediation Program. For more information on the Cook County Mortgage Foreclosure Mediation Program and to access services visit, Will County Foreclosure Mediation Program In July of 2010, the Will County Twelfth Judicial Circuit created a mandatory Foreclosure Mediation Program for residential owner-occupied properties where the foreclosure was filed after August 1, The program is funded solely through a $150 filing fee paid by plaintiff s filing foreclosures. For residential foreclosure cases, plaintiffs must send defendant borrowers a summons form that is approved by the court and includes a notification of the mediation program. The form notifies defendants of pre-mediation conferences, offered weekly, which lenders counsels, homeowners, and mediators are required to attend. At the conference, homeowners complete a questionnaire to determine their eligibility for loan workout or modification. A case is eligible for formal mediation if a homeowner's monthly income exceeds his or her expenses. A case may also be eligible for mediation if the homeowner is willing to discuss other alternatives to foreclosure, such as deed in lieu, or sale to a third party. At formal mediations, lenders are required to send a representative to the conference who has full authority to agree to a loan modification and participate in good faith, or face sanctions from the court. The homeowner must attend or the case will return to trial court, unless the absence was excusable. Excluding written agreements, all written communication held in the mediation conference is confidential and exempt from discovery. For more information, visit Illinois Foreclosure Prevention Network The Illinois Foreclosure Prevention Network (IFPN), a multi-agency, statewide initiative, coordinated by the Illinois Housing Development Authority, was established in 2012 through from the Foreclosure Prevention Program. The IFPN gathers all resources available to homeowners to ensure that families at risk of foreclosure can access the assistance they need in one location. IFPN offers a free hotline, provides a statewide housing counseling search engine, hosts outreach events across the state to provide free housing counseling services, legal advice, and advice on how to avoid mortgage fraud. The IFPN hotline has received over 144,712 calls and the website has received 869,000 hits. For more information on the Illinois Foreclosure Prevention Network and to access services visit, or call 855-KEEP

16 Foreclosure Prevention Program The Foreclosure Prevention Program (FPP) was established by Section 7.30 of the Illinois Housing Development Act in October 2010 in the Save Our Neighborhoods Act. FPP officially launched in June of Under the program, 141 grants have been awarded totaling $11,348, that served 70,753 households through September FPP is funded through the statewide fee that plaintiffs pay when filing a foreclosure complaint. The program allows for agencies to receive capacity building dollars for uses such as training, foreclosure prevention and preand post-purchase counseling. National Foreclosure and State Payment Settlements National Foreclosure Settlement Fund In February 2012, 49 State Attorneys General and the federal government announced a $25 billion joint statefederal settlement with the country s five largest mortgage servicers (Ally/GMAC, Bank of America, JPMorgan Chase, Citi, and Wells Fargo). In December 2013 the Consumer Financial Protection Bureau (CFPB) and Attorneys General in 49 states and the District of Columbia filed a proposed court order requiring the largest nonbank mortgage loan servicer in the country, Ocwen Financial Corporation, and its subsidiary, Ocwen Loan Servicing, to provide $2 billion in first lien principal reduction to underwater borrowers. The consent order addresses Ocwen s misconduct during the mortgage servicing process. It also covers two companies previously purchased by Ocwen, Litton Loan Servicing LP ( Litton ) and Homeward Residential Holdings LLC (previously known as American Home Mortgage Servicing, Inc. or AHMSI. Ocwen must also refund $125 million to the nearly 185,000 Ocwen, Litton, and Homeward borrowers who have already been foreclosed. This consent order requires that Ocwen follow servicing standards set up by the 2012 National Mortgage Settlement (NMS) with the five largest banks: Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo. State Payment Settlement Fund Approximately $105 million of the National Foreclosure Settlement will be distributed throughout the State of Illinois by the Illinois State Attorney General s Office. In December 2012, the Attorney General s Office announced a Request For Proposals (RFP) for programs providing housing counseling, mortgage acquisition and restructuring, and/or neighborhood stabilization and revitalization. Up to $70 million was to be distributed to respondents over three years. In July 2013, awards were announced. Illinois Housing Development Authority was to be awarded $2.5 million to invest these funds in housing counseling and redevelopment strategies and capacity building/technical assistance to communities and organizations outside of the Chicago metropolitan area. A full list of the awardees and dollar amounts can be found in the Appendix (State Payment Settlement Fund Awards). 14

17 National Foreclosure Mitigation Counseling Program The National Foreclosure Mitigation Counseling (NFMC) Program was launched in December 2007 with funds appropriated annually by Congress to NeighborWorks, a national non-profit organization, to support the provision of foreclosure intervention counseling services in areas of greatest need. NeighborWorks administers a competitive grant application process to distribute funds to State housing finance agencies (HFAs), HUD-approved housing counseling intermediaries, and community-based NeighborWorks member organizations. Grants are also being made to fund legal assistance to homeowners and to train foreclosure counselors. In March 2014, NeighborWorks announced that $63.1 million was awarded to HFAs, 18 HUD-approved housing counseling intermediaries, and 67 community-based NeighborWorks organizations to provide counseling to families and individuals facing foreclosure. IHDA, the Illinois HFA, was awarded $1.97 million (the third highest State award) for Round 8 of NFMC. IHDA provides funds to sub-grantee partner agencies around the state that provide foreclosure prevention counseling services; and estimates these funds will provide assistance to 7,500 distressed homeowners. For more information, visit Funding Round National Foreclosure Mitication Counseling Program (NFMC) Previous Rounds of Funding Time Period Money Awarded Number of Agencies Homeowners Served Round 1 June April 2009 $1.57M 15 3,858 Round 2 June February 2010 $3.08M 26 6,190 Round 3 March November 2010 $1.39M 39 3,300 Round 4 December June 2011 $1.44M 40 3,912 Round 5 September March 2012 $2.27M 35 6,065 Round 6 September January 2013 $1.73M 30 4,406 Round 7 August June 2014 $2.68M 30 6,775 Round 8 August June 2015 (expected) $1.97M 27 7,500 (estimated) Programs Making Home Affordable In July 2014, the U.S. Department of the Treasury and the U.S. Department of Housing and Urban Development announced an extension of the Making Home Affordable Program (HAMP) to December 31, 2016 (the program deadline was previously December 31, 2013). The deadlines for the Home Affordable Refinance Program (HARP) and the Streamlined Modification Initiative for homeowners with loans owned or guaranteed by Fannie Mae and Freddie Mac are December 31, Making Home Affordable offers three programs particularly significant for homeowners facing foreclosure: Home Affordable Modification Program, Home Affordable Unemployment Program, and Home Affordable Foreclosure Alternatives. 15

18 Streamlined Modification Initiative In March 2013, the Federal Housing Finance Agency (FHFA) announced the Streamlined Modification Initiative. Under this initiative mortgage servicers are required to send homeowners a letter offering a mortgage modification. The offer includes a reduced mortgage payment based on a fixed interest rate. Additionally, in order to make modifications eligible to a wider range of homeowners, the program does not require borrowers to document hardship or their income to qualify for a Streamlined Modification. This initiative will be in effect until December 31, Homeowners eligible for this modification are those whose: 1. Mortgage is owned or guaranteed by Fannie Mae or Freddie Mac; 2. Mortgage is delinquent for 90 (3 months) to 720 days (2 years); 3. Mortgage has a first-lien that is at least 12 months old; and 4. Loan to value ratio is equal to or greater than 80 percent. For more information on the Streamlined Modification Initiative, visit; Home Affordable Refinance Program (HARP) The Home Affordable Refinance Program (HARP) was established in 2009 to assist homeowners unable to access a refinance due to a decline in their home value. HARP is available to homeowners who are not behind on their mortgage payments but are unable to get traditional refinancing because the value of their home has declined. HARP is designed to help homeowners get new, more affordable, and more stable mortgages. The Federal Housing Finance Agency (FHFA) reported that as of May 2014, HARP has assisted 3,171,138 homeowners nationally. In 2013, approximately 30 percent of total refinances in the State of Illinois were through HARP. Nationally, in 2013, HARP accounted for approximately 23 percent of total refinances (Refinance Report May 2014). Eligible homeowners include those whose: 1. Mortgage is owned or guaranteed by Freddie Mac or Fannie Mae; 2. Mortgage has been sold to Fannie Mae or Freddie Mac on or before May 31, 2009; 3. Current loan-to-value (LTV) ratio is greater than 80 percent; and 4. Mortgage is current at the time of refinance, with an acceptable payment history for the past year. HARP has been extended through the end of calendar year Homeowners interested in HARP should contact their mortgage company to see if they are eligible. For more information on HARP, visit; 16

19 Home Affordable Modification Program (HAMP) Home Affordable Modification Program (HAMP) is a federal loan modification program authorized by the Emergency Economic Stabilization Act of HAMP helps homeowners lower their monthly mortgage payments in order to make them more affordable and sustainable. As of May 2014, and since the program s inception (2009), approximately 2.2 million homeowners have enrolled in trial modifications, with 1.37 million permanent modifications started. As of May 2014, there are 48,933 active permanent modifications in Illinois. (Making Home Affordable Program Performance Report Through May 2014). HAMP is available to employed homeowners, who: 1. Obtained their mortgage on or before January 2009; 2. Owe up to $729,750 on their primary residence or single unit rental property; 3. Owe up to $934,200 on a 2-unit rental property; $1,129, 250 on a 3-unit rental property, or $1,403,400 on a 4-unit rental property; 4. Own property that has not been condemned; 5. Have a financial hardship and are either delinquent or in danger of falling behind on their mortgage payments; 6. Have documented income to support a modified payment; and 7. Have not been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction. HAMP has been extended through the end of Homeowners interested in HAMP should contact their mortgage company to see if they are eligible. For more information on HAMP, visit Home Affordable Unemployment Program (UP) Home Affordable Unemployment Program (UP) assists homeowners experiencing unemployment by reducing their mortgage payments to 31 percent of their income or suspending them altogether for 12 months or more. Since the program s inception (July 2010) there have been 39,887 UP forbearance plans started, 33,904 forbearance plans with some payment required, and 5,983 forbearance plans with no payment required (Making Home Affordable Program Performance Report Through May 2014). UP is available to homeowners, who: 1. Are unemployed and eligible for unemployment benefits; 2. Occupy the house as your primary residence; 3. Have not previously received a HAMP modification; 4. Have obtained their mortgage on or before January 1, 2009; and 5. Owe up to $729,750 on your home. Homeowners interested in UP should contact their mortgage company to see if they are eligible. For more information on HAMP, visit 17

20 Home Affordable Foreclosure Alternatives (HAFA) Home Affordable Foreclosure Alternatives (HAFA) is designed for homeowners who cannot afford their mortgage payments and want to transition to more affordable housing. The program provides two options for transitioning: (1) a short sale or (2) a Deed-in-Lieu of foreclosure. In a short sale, the homeowner s mortgage company allows the homeowners to sell their house for an amount that falls short of the amount they owe. In a Deed-in-Lieu, the mortgage company lets the homeowner give the title back, transferring ownership back to them. Since the program s inception (November 2012), nationally, HAFA has completed 294,598 transactions (Making Home Affordable Program Performance Report Through May 2014). HAFA offers homeowners the following assistance: 1. Free advice from HUD-approved housing counselors and licensed real estate professionals; 2. Unlike conventional short sales, a HAFA short sale completely releases homeowners from their mortgage debt after selling the property; meaning they will no longer be responsible for the amount that falls "short" of the amount they still owe. The deficiency is guaranteed to be waived by the servicer; 3. A less negative effect on your credit score compared to foreclosure or conventional short sales; and 4. HAFA may provide $3,000 in relocation assistance. Homeowners interested in HAFA should contact their mortgage company to see if they are eligible. For more information on HAMP, visit Shared Appreciation Modification Program (SAM) Ocwen Financial Corporation initiated a loan modification program designed to help distressed homeowners who owe more than their houses are worth and, at the same time, mitigate the likelihood of rewarding borrower delinquency. Ocwen s program is called the Shared Appreciation Modification (SAM). The program reduces delinquent customers principal owed but also compels them to share some of the appreciation with the mortgage s owner (not the servicer) if the house increases in value by the time they sell or refinance it. With a SAM, the principle balance of the loan is written down to 95% of the current value of the home. The written-down portion is forgiven in one third increments over 3 years, so long as the homeowner stays current on the modified mortgage. When the house is later sold or refinanced, the borrower must share 25% of the appreciation with the investors that own the loan; borrowers keep 75% of the gain. In calculating the amount of home value appreciation the homeowner gets full credit for all capital improvements made to the property during the term of the SAM. Like all modifications, SAMs help homeowners avoid foreclosure. More importantly they restore equity, which is a significant benefit to the homeowner. Ocwen launched the SAM program in August of 2010 on a pilot program. The initial pilot was very positive with an 80% acceptance rate and only a 2.63% default rate. Ocwen has since ramped up the SAM program nationally. Program data is not currently available for public consumption. 18

21 Federal Housing Finance Agency (FHFA) - Neighborhood Stabilization Initiative (NSI) The Neighborhood Stabilization Initiative (the NSI ) was jointly developed by the Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac to stabilize neighborhoods that have been hardest hit by the housing crisis. The program includes two distinct pre-foreclosure strategies and three distinct post-foreclosure strategies, all of which are intended to assist homeowners who are behind on their mortgages, help neighborhoods recover, and reduce the inventory of real estate owned (REO) properties held by Fannie Mae and Freddie Mac. Initial piloting of the program will occur within the city limits of Detroit, Michigan. Chicago, Illinois will be the second city for the federal government's Neighborhood Stabilization Initiative. The NSI program has three primary goals: (1) to increase the number of families able to stay in their current homes through loan modifications, (2) to effectively match distressed properties with responsible non-profits for property renovation and resale; and (3) to assist distressed communities in executing their building demolition plans. It is hoped that goals one and two will decrease vacant houses by increasing the number of properties occupied by owners or renters. Non-profits may renovate properties for sale to owner-occupants, lease back to current occupants when possible, or lease to other qualified renters. For pre-foreclosure properties, the program will offer incentives to current borrowers and non-profits maximize payment relief and increase chances for current or future occupants to stay in the home. When such efforts are not feasible, the delinquent notes will be conveyed to the National Community Stabilization Trust (NCST) for resolution. For post-foreclosure properties, the program plans to consider an array of neighborhood stabilization options such as donation, demolition, financial incentive mechanisms, repairs, and auctions. The following are pre and post foreclosure strategies that the initiative plans to use. Pre-Foreclosure Strategies: Distressed Region Modification Borrowers will be evaluated for a new loan modification that provides a greater reduction in monthly principal and interest payments than is available in the traditional loan modification programs. Non-Performing Loan Sale/Donation Severely delinquent low-balance loans secured by distressed properties may be transferred to a non-profit entity for resolution prior to foreclosure. Non-profits will work with seriously delinquent owners to determine the most feasible outcome for the household and the property. Solutions may include new affordable payment terms, a short sale, a deed-in-lieu of foreclosure, or foreclosure and subsequent repair or demolition, as appropriate. Post-Foreclosure Strategies: NCST Quick Look period Non-profits will have an opportunity to acquire certain REO properties (occupied or vacant) through purchase or receive properties as a donation prior to the Enterprises initiating their standard disposition processes. NCST will assist the Enterprises with these sales and donations. Post-Quick Look Occupied properties not sold or donated to non-profits during the Quick Look period will be sold at auction; vacant properties and those that do not sell via auction will be prepared for normal a REO sale, which starts with the First Look process, a 20-day period when properties are offered only to owner-occupants, nonprofits, and governmental entities. Enhanced First Look Process Properties will be offered to non-profits through NCST several days prior to being marketed through Multiple Listing Services (MLS). For low-value REO properties, Fannie Mae and Freddie Mac will work with NCST and local community organization to determine the optimum disposition of individual properties, which may result in donation, donation/demolition, or repair/rehabilitation. Discounts and incentives may be offered to non-profits depending on characteristics such as property condition, value, and location. For more information, visit 19

22 Hardest Hit Fund The U.S. Department of Treasury established the Hardest Hit Fund (HHF) in late 2010, providing targeted emergency mortgage assistance through State HFAs to families and persons experiencing unemployment or underemployment. The Illinois Housing Development Authority, the administrator of HHF for Illinois, was awarded approximately $445.6 million from the Troubled Asset Relief Program (TARP) for this program. IHDA established three sub-programs with these funds: the Homeowners Emergency Loan Program (HHF-HELP), the Homeownership Preservation Program (HHF-HPP), and the Mortgage Resolution Fund (HHF-MRF). In July 2014 IHDA established a Blight Reduction Program (BRP). Homeowner Emergency Loan Program (HELP): IHDA earmarked $317,896,200 to the Homeowner Emergency Loan Program (HELP) to provide temporary mortgage payment assistance to low and moderate-income families who lack sufficient income to support their monthly mortgage payment, or who need help paying off past due amounts. On October 1, 2013, HHF program staff ceased accepting new applications for HHF HELP estimating that there are sufficient applications on hand to fully allocate program funds and meet loan targets of approximately 13,000 households being assisted. Mortgage Resolution Fund (MRF): Pools of distressed home mortgages are bought on the private market and evaluated for long-term affordability by a coalition of non-profit organizations, including Mercy Housing, Enterprise Community Partners, National Community Stabilization Trust, and Housing Partnership Network. Eligible mortgagees are offered permanent loan modifications that incorporate principal forgiveness to bring the mortgage in line with the appraised value of the property. Mortgagees who do not meet minimum criteria receive Housing Counseling to discuss exit options including short sale and deed-in-lieu. MRF has recently concluded purchasing loan pools which are currently being reviewed. Home Preservation Program (HPP): Evolving from a pilot program in late 2012, HPP is a fully operational program with nine participating servicers who review their portfolios for potentially eligible households and use up to $50,000 to improve the terms of distressed loans through refinance, recast or modification upon approval from IHDA. Blight Reduction Program (BRP): On March 27, 2014, the Illinois Housing Development Authority (IHDA) announced plans to pursue establishment of a Blight Reduction Program which will provide up to $35,000 per unit for the demolition, greening, and maintenance of blighted properties in order to stabilize neighborhoods and prevent avoidable foreclosures. IHDA is leveraging up to $30 million of its federal Hardest Hit Fund (HHF) to operate this program. IHDA s first Request For Applications (RFA) went out in September of The following chart highlights the reach of HFF in Illinois. 20

23 Illinois Hardest Hit Fund (as of ) County Home Emergency Loan Program Households Assisted Mortgage Resolution Fund Households Assisted Home Preservation Program Households Assisted County Home Emergency Loan Program Households Assisted Mortgage Resolution Fund Households Assisted Home Preservation Program Households Assisted Adams 44 1 Livingston 11 Alexander 3 Logan 8 1 Bond 5 Macon 60 1 Boone 72 Macoupin 26 Brown 2 Madison 230 Bureau 27 Marion 18 Calhoun 1 Marshall 4 Carroll 4 Mason 9 Cass 5 Massac 1 Champaign 63 1 McDonough 9 Christian 26 McHenry 627 Clark 7 McLean 42 1 Clay 11 Menard 4 Clinton 13 Mercer 6 1 Coles 15 Monroe 11 Cook Montgomery 29 Crawford 3 Morgan 18 Cumberland 8 Moultrie 8 DeKalb 72 1 Ogle 50 Dewitt 3 Peoria Douglas 8 Perry 7 DuPage Piatt 5 Edgar 7 Pike 10 Edwards 2 Pope 1 Effingham 16 Pulaski 1 Fayette 17 Putnam 1 Ford 2 Randolph 12 Franklin 19 Richland 6 Fulton 8 Rock Island 94 1 Gallatin 2 Saint Clair 258 Greene 2 Saline 9 Grundy 63 1 Sangamon Hamilton Schuyler 1 Hancock 3 Scott 3 Hardin Shelby 9 Henderson 3 Stark 5 Henry 18 Stephenson 43 Iroquois 15 Tazewell 43 2 Jackson 13 1 Union 4 Jasper 6 Vermilion 24 1 Jefferson 21 1 Wabash 2 Jersey 10 Warren 4 Jo Daviess 7 Washington 3 Johnson 1 Wayne 3 Kane White 4 2 Kankakee 112 Whiteside 38 1 Kendall Will Knox 14 2 Williamson 25 La Salle 91 Winnebago Lake Woodford 9 Lawrence 4 Total Households Assisted Lee 35 Total Funds Dispersed $228,003,296 $16,117,553 $11,050,993 21

24 Innovative and Ongoing Resources Land Banking (Cook County, South Suburban) A number of Illinois Housing Task Force members have been involved in the creation and initial planning for two land banks in the Chicago metropolitan area: the Cook County Land Bank Authority, and the South Suburban Land Bank and Development Authority. These entities were created to acquire, maintain, and build or rehabilitate abandoned properties in communities affected by property abandonment and/or which desire to develop affordable housing. After properties are rehabilitated, they are sold with deed restrictions attached, and profits are recycled to repeat the process. In July 2013, the Cook County Land Bank Authority was awarded $6 million by the Attorney General s Office from the $70 million National Foreclosure Settlement to support its community revitalization efforts, assist in the startup of its land bank, and support the already existing South Suburban Land Bank. The Cook County Land Bank Authority received $250,000 and municipalities in the South Suburban Land Bank Authority received an aggregate of $550,400 from IHDA through the Abandoned Residential Property Program to secure, maintain or demolish abandoned properties. The two land banks will support municipalities in bringing vacant, abandoned, and foreclosed properties back to productive uses. Both the Cook County Land Bank Authority and South Suburban Land Bank and Development Authority are partnering with several municipalities to coordinate rebuilding efforts. For more information on the Cook county Land Bank Authority and the South Suburban Land Bank and Development Authority visit and respectively. Highland Park Community Land Trust Community Partners for Affordable Housing (CPAH) is a private, not-for-profit which operates Highland Park s Community Land Trust, with a mission to provide affordable housing to its residents by preserving and developing affordable housing. Illinois first community land trust, CPAH purchases properties from what is available in the private market, retains ownership of the land, and sells these residences at affordable prices to income-qualified buyers while leasing them the land, for an affordable fee ($25) per month. If residents of these units choose to move, the property is either sold back to the community land trust or to an income-qualified buyer at a formula that keeps the home affordable. Holding the property in a community land trust counters increasing housing costs that are driven by appreciating land values, while preserving existing affordable housing stock. For more information on Highland Park s Community Land Trust, visit 22

25 Affordable Housing Planning and Appeal Act The Affordable Housing Planning and Appeal Act addresses affordable housing production in communities (municipalities with populations over 1,000, and counties) throughout the state by encouraging communities with less than 10% affordable housing stock (known as non-exempt communities) to participate in activities that promote affordable housing in their communities; beginning with requiring them to create an affordable housing plan. While there are no major enforcement processes in this law, it codifies the State s intent in promoting the encouragement of affordable housing. The law established the State Housing Appeals Board (SHAB), appointed by the Governor, which is responsible for hearing appeals from developers who feel that one of their development proposals has been unfairly denied, or unreasonable conditions were placed upon the tentative approval of the development to make it economically unfeasible to carry out by a non-exempt local government. With amendments (August 2013) to the AHPAA, IHDA, the administering agency is now able to publish a list of non-exempt communities every five years, through the use of the U.S. Census Bureau s American Community Survey (ACS) data. Prior to these amendments, the AHPAA required the usage of the U.S. Decennial Census. However, some of the data elements used to produce the list using the U.S. Decennial Census are no longer collected through the U.S. Decennial Census, but are reported through the ACS. Technical assistance is available to non-exempt communities from IHDA and partnering organizations Business and Professional People for the Public Interest (BPI), Metropolitan Mayor Caucus, Chicago Metropolitan Agency for Planning (CMAP), and Metropolitan Planning Council (MPC)), on an ongoing basis. IHDA also developed and issued an AHPAA Handbook which fully describes the program and provides technical assistance to impacted communities. For more information on AHPAA, visit Abandoned Properties Program The Illinois Housing Development Authority s Abandoned Properties Program, which is funded through the Abandoned Residential Property Municipality Relief Fund (ARPMR), was created in 2010 with the passage of the Save Our Neighborhoods Act. Sufficient funds were not generated until the passage of SB16, codified as PA ILCS 3805/7.31, which changed the formula and foreclosure filing fee. Under this program, monies appropriated from the ARPMR (foreclosure filling fees) are now used by IHDA, the administrator of funds, to make grants to municipalities and counties to secure, maintain, demolish, or rehabilitate abandoned residential properties within their jurisdictions. A maximum grant award of $75,000 per applicant can be awarded to municipalities and counties based on ranked criteria. By statute, allocations will be distributed a follows: percent will be granted in the City of Chicago, percent will be granted in Cook County, percent will be granted in the Collar Counties (DuPage, Kane, Lake, McHenry, and Will), and percent will be granted in other areas of the State. IHDA accepted first-round applications for the Abandoned Residential Properties Program until December 6, Ninety two applications were received, requesting $9.5 million. In April of 2014, IHDA announced the awardees. Awardees and award amount are listed in the Appendix, Abandoned Residential Property Program Recipients and Grant Amounts. For more information on the Abandoned Properties Program, visit 23

26 Blight Reduction Program The United States Department of the Treasury allowed IHDA to use up to $30 million of its Hardest Hit Fund balance to demolish vacant properties affected by the foreclosure crisis. The program was announced in July of These funds will be used to operate IHDA s Hardest Hit Fund Blight Reduction Program (BRP), with the goal of decreasing preventable foreclosures through neighborhood stabilization, achieved through the demolition and greening of vacant, abandoned, and blighted residential properties throughout the state. These vacant and blighted residential properties will be returned to use through a process overseen by approved units of governments and their not-for-profit partners. Non-profit partners need to be identified to hold title to all properties. Round 1 applications were released in September 2014 and are due to the Authority on December 8, Single Family Owner Occupied Housing Rehabilitation Programs IHDA-HOME Single Family Owner Occupied Rehabilitation Program A major concern of low-income Illinois homeowners is keeping up with necessary but costly repairs. This is particularly true of older homes. Resources from the HOME Investment Partnership Program (HOME) are used to help low-income homeowners afford these expenses through local governments and non-profit organizations which are funded under the Single-Family Owner-Occupied Rehabilitation (SFOOR) program. SFOOR assistance to homeowners is provided in the form of a deferred, forgivable loan at zero percent interest. If the direct subsidy to the homeowner is less than $14,999, the loan is forgiven over a five year period. If the direct subsidy is between $15,000 and $40,000, the loan is forgiven over a ten year period. Household requirements include: 1. Household income must be at or below 80 percent of the area median income; 2. SFOOR participants must continue to occupy the property to be rehabilitated as their principal residence; 3. The appraised value of a property after rehabilitation must be under the Maximum Appraised Value ceiling set for a given area; and 4. Rehabilitated single-family properties must meet both federal and state standards for repair. The use of HOME funds carries certain restrictions. If the homeowner moves out or sells the home before the ten year time period has expired, a portion of the HOME funds may need to be repaid by the homeowner. Homeowners must contact one of the SFOOR participating agencies funded by IHDA to apply. For more information on this program and to locate a participating agency, visit 24

27 IHDA Trust Fund Homebuyer Rehabilitation Assistance Program IHDA s Homebuyers Rehabilitation Assistance Program offers financing from the Illinois Affordable Housing Trust Fund to non-profit organizations and local governments to assist low- and very low-income individuals for acquisition and rehabilitation of vacant properties. Households earning at or below 50 percent of the area median income (AMI) are eligible for a maximum grant amount of up to $5,000. Households earning between 51 percent and 80 percent of the area median income are eligible for a maximum grant of up to $3,000 to purchase a vacant home. Acquisition assistance is provided as a forgivable grant with a five-year recapture period. In addition to acquisition assistance, households may be eligible for up to $20,000 in rehabilitation assistance for eligible home repairs and improvements. Rehabilitation assistance is also provided as a forgivable loan with a five-year recapture period. Basic eligibility requirements include: 1. Property must be a vacant single-family property (mobile homes and properties with more than one unit are not eligible); 2. Household income must be at or below 80 percent of the AMI; 3. Homebuyer participants must occupy the property as their principal residence; 4. Homebuyer must contribute at least $1,000 or 1% (whichever is greater) to the purchase. For more information on this program and to locate a participating agency, visit IHDA Trust Fund Emergency Home Repairs Program In September 2013, the IHDA Board approved the first awarding of funds for the Emergency Repair Program. Approximately $5 million in Affordable Housing Trust Fund dollars was awarded to 22 local governments and nonprofit organizations for rehabilitation assistance to assist 206 low-income households. Homeowners may receive up to $20,000 as a forgivable loan to rehabilitate their single-family properties. These funds are generally available to communities not receiving direct HUD funding locally. Subsequent to IHDA s approval of the program awards, certain areas of Illinois suffered damage from severe storms, straight-line winds and tornadoes in November IHDA saw the opportunity to use its new program to assist the tornado victims, by increasing not only the amount of assistance, but also the coverage areas. In December 2013 the IHDA Board approved the Tornado Relief Fund, a subset of the Emergency Repair Program. Two and a half million dollars of Housing Trust Fund monies was reserved for the Fund, to assist low-income homeowners impacted by the November 2013 tornadoes. The following counties have been declared designated tornado affected counties: Champaign, Douglas, Fayette, Grundy, Jasper, LaSalle, Massac, Pope, Tazewell, Wabash, Washington, Wayne, and Woodford. Households in these counties are eligible for assistance through the Tornado Relief Fund. The Tornado Relief Fund will provide emergency rehabilitation assistance to approximately lowincome affected households. Eligible homeowners will receive up to $40,000 to assist with home repairs caused by tornadoes. Funds may also be used as assistance for homeowner's insurance deductible (minimum of $500). These funds are generally available to communities not receiving direct HUD funding locally. Households must meet the following requirements: 1. Household incomes must be at or below 80 percent of the area median income; 2. Property must have sustained damage due to severe storms; 3. Homeowners must be current on their mortgage payments and the property must be the homeowner's primary residence; and 4. Only single-family properties are eligible for the program. Homeowners must contact one of the Tornado Relief Program participating agencies funded by IHDA to apply. For more information on this program and to locate a participating agency, visit 25

28 IHDA Home Modification Program Assistance through IHDAs Home Modification Program is available to income-eligible elderly persons and persons with disabilities to modify or repair their homes to improve mobility. Homeowners can receive up to $25,000 in assistance in high-cost metropolitan areas and a maximum of $15,000 in the remainder of the state. Assistance is provided as a five-year forgivable loan. The Home Modification Program is offered through the collaboration of the Authority, the Illinois Department of Human Services and the Illinois Department on Aging in an effort to prevent premature and unnecessary institutionalization of elderly persons and persons with disabilities by funding home repairs in existing housing. Basic eligibility requirements include: 1. Must be an elderly person with a physical limitation or a person with a disability; 2. Must have a documented need for accessibility/mobility modifications; 3. Household income must not exceed 50 percent of the area median income; 4. Home must be an owner occupied residence; and 5. Must be referred to project from an IDHS or IDoA funded service agency. Homeowners must contact one of the Home Modification Program participating agencies funded by IHDA to apply. For more information about these agencies, visit Community Development Block Grant (CDBG) Entitlement Communities Most of Illinois Community Development Block Grant (CDBG) entitlement cities and counties receive direct local allocations of HUD funding under this program to operate local housing rehabilitation programs. A list of CDBG entitlement grantees and contact information is located at here; entitlement. Local CDBG Entitlement Grantees/Local HOME Participating Jurisdictions (PJ s) Some of the same cities and counties qualify as HOME participating jurisdictions and receive federal HOME fund allocations directly from the U.S. Department of Housing and Urban Development (HUD) each year. Homebuyers living in these localities should contact a participating jurisdiction directly (however, this does not guarantee these communities have homebuyer programs nor homebuyer resources available). Illinois HOME contacts can be found here or contact a participating agency, which can be found here HOMEProgram.pdf. State CDBG Program/CDAP Housing Rehabilitation Program The Community Development Assistance Program (CDAP)/Housing Rehabilitation Grant Program assists eligible CDAP Housing Rehabilitation Grant Program local governments in helping homeowners (for non entitlement areas of the state) in making necessary repairs and improvements to their homes in order to eliminate health and safety problems, correct building code violations, and to preserve the long-term integrity of the units. Housing rehabilitation work is completed by local contractors who have been selected by competitive bid and who meet all insurance requirements. Grant funding is provided to eligible units of general local government through the Community Development Assistance Program which is administered by the Department of Commerce and Economic Opportunity (DCEO). For more information, visit 26

29 USDA Rural Development - Section 504 Emergency Home Repair Loan and Grant Program The USDA-Rural Development s Section 504 program provides loans and grants directly to very low-income homeowners to repair, improve, or modernize their dwellings or to remove health and safety hazards. Loans of up to $20,000 and grants of up to $7,500 are available. Eligible homeowners must be unable to obtain affordable credit elsewhere and must have very low incomes, defined as below 50 percent of the area median income, and must be 62 years old or older to qualify for grants. They must need to make repairs and improvements to make the dwelling more safe and sanitary or to remove health and safety hazards. A homeowner must reside in a defined rural area and in a community of 10,000 in population or less. For more information about this program and to locate local Rural Development offices, visit 27

30 Homebuyer Assistance Programs IHDA-Smart Move Mortgage Program Smart Move was the Illinois Housing Development Authority s flagship program and was geared to both first-time homebuyers and to buyers who currently own a home or want to refinance. Smart Move had the following variations: 1. Smart Move: offered an affordable rate first mortgage and up to $6,000 in downpayment assistance to qualified buyers. 2. Smart Move Trio: combined the first and second mortgage feature of the Smart Move product with a Mortgage Credit Certificate (MCC). 3. Smart Move Plus: was geared towards non first time homebuyers, and provides an affordable rate mortgage for those looking to buy a home or refinance their current mortgage. In 2013, these three programs assisted 1,923 Illinois homebuyers. The chart below displays Smart Move assistance throughout the state by county. For more information on Smart Move programs, visit Smart Move County Households Assisted Amount Issued County Households Assisted Amount Issued Adams 3 $296,609 Macon 79 $5,340,331 Boone 33 $2,773,867 Macoupin 3 $192,975 Bureau 1 $30,612 Madison 30 $2,465,578 Champaign 34 $3,358,370 Marion 1 $71,020 Christian 6 $485,922 Marshall 1 $69,840 Clinton 1 $72,751 Mason 2 $143,594 Coles 2 $117,077 McHenry 38 $4,582,542 Cook 557 $76,470,725 McLean 55 $5,159,126 De Witt 2 $159,275 Menard 2 $95,366 DeKalb 8 $1,038,864 Mercer 1 $75,600 Douglas 2 $209,081 Morgan 3 $267,058 DuPage 63 $8,775,526 Moultrie 1 $70,141 Franklin 1 $59,183 Ogle 2 $225,452 Fulton 3 $206,485 Peoria 61 $5,265,143 Grundy 5 $665,667 Randolph 1 $57,653 Henry 1 $118,877 Richland 1 $54,253 Iroquois 1 $40,500 Rock Island 26 $2,330,848 Jefferson 11 $851,540 Sangamon 138 $11,379,892 Kane 62 $7,470,933 St. Clair 21 $2,123,740 Kankakee 2 $205,392 Tazewell 81 $6,908,415 Kendall 37 $5,268,376 Vermilion 3 $281,082 La Salle 12 $738,929 Will 98 $12,786,932 Lake 33 $3,567,145 Williamson 9 $882,866 Lee 3 $306,120 Winnebago 148 $10,513,682 Livingston 3 $147,112 Woodford 2 $187,441 Macon 79 $5,340,331 Total 1693 $184,965,508 28

31 Smart Move Trio County Households Assisted Amount Issued Boone 3 $ 237,953 Champaign 9 $ 936,690 Cook 78 $ 10,912,868 DeKalb 1 $ 168,150 Douglas 1 $ 116,000 DuPage 13 $ 1,573,626 Grundy 2 $ 243,575 Jefferson 1 $ 86,734 Kane 4 $ 662,390 Kendall 4 $ 581,622 Lake 5 $ 602,385 Lee 3 $ 198,600 McHenry 2 $ 225,321 McLean 16 $ 1,426,824 Mercer 1 $ 82,142 Peoria 8 $ 742,430 Rock Island 1 $ 70,000 Sangamon 4 $ 359,363 St. Clair 1 $ 94,751 Tazewell 16 $ 1,559,744 Whiteside 2 $ 113,600 Will 15 $ 1,755,856 Winnebago 19 $ 1,563,520 Woodford 1 $ 83,460 Total 210 $ 24,397,604 Smart Move Plus County Households Assisted Amount Issued Cook 9 $ 1,470,515 DuPage 1 $ 57,000 Grundy 1 $ 122,618 Jefferson 1 $ 75,204 Lake 1 $ 160,050 Macon 4 $ 405,697 Sangamon 1 $ 173,145 Shelby 1 $ 52,000 Will 1 $ 270,801 Total 20 $ 2,787,030 29

32 IHDA-Welcome Home Illinois Mortgage Program (including refinancing loans) IHDA launched Welcome Home Illinois in April 2014 to replace the Smart Move Program. It provides first-time homebuyers up to $7,500 in down-payment assistance with an interest rate as low as 3.75 percent for a secure, 30-year fixed rate mortgage. The program is tailored to working families, with borrower income limits up to 140 percent of the area median income (AMI). As of July 2014, 4,379 homebuyers in 88 counties have reserved more than $500 million in financing. The following chart displays reservations by county. For more information on Smart Move programs, visit Welcome Home Illinois County Loans Reserved Loan Amount County Loans Reserved Loan Amount Adams 47 $ 4,074,593 Logan 13 $ 902,805 Bond 4 $ 482,924 Macon 53 $ 3,667,796 Boone 34 $ 2,665,561 Macoupin 11 $ 853,517 Bureau 5 $ 314,863 Madison 131 $ 11,001,594 Carroll 2 $ 95,087 Marion 13 $ 857,994 Cass 1 $ 128,545 Marshall 13 $ 1,213,773 Champaign 124 $ 12,654,174 Massac 3 $ 248,503 Christian 10 $ 739,249 McDonough 4 $ 368,607 Clark 1 $ 53,215 McHenry 151 $ 19,117,317 Clay 4 $ 283,234 McLean 164 $ 18,130,627 Clinton 9 $ 754,325 Menard 8 $ 912,676 Coles 11 $ 864,649 Mercer 7 $ 673,391 Cook 1,259 $ 183,073,613 Monroe 3 $ 383,673 Cumberland 2 $ 118,622 Montgomery 1 $ 64,900 De Witt 11 $ 807,364 Morgan 14 $ 1,014,604 DeKalb 48 $ 5,331,136 Moultrie 5 $ 422,260 Douglas 2 $ 183,030 Ogle 24 $ 2,484,899 DuPage 260 $ 40,400,895 Peoria 157 $ 13,217,557 Edgar 2 $ 158,116 Perry 2 $ 114,080 Effingham 12 $ 981,196 Piatt 14 $ 1,204,177 Fayette 4 $ 233,028 Pike 1 $ 58,500 Ford 4 $ 351,139 Putnam 1 $ 50,510 Franklin 9 $ 567,963 Randolph 4 $ 333,331 Fulton 17 $ 1,207,302 Richland 3 $ 225,409 Gallatin 1 $ 59,183 Rock Island 119 $ 9,849,137 Greene 2 $ 115,317 Saline 5 $ 313,835 Grundy 20 $ 2,469,304 Sangamon 169 $ 14,696,301 Hamilton 3 $ 192,345 Schuyler 2 $ 56,950 Hancock 1 $ 21,100 Scott 1 $ 65,816 Henry 22 $ 2,044,717 Shelby 4 $ 189,131 Iroquois 4 $ 369,928 St. Clair 93 $ 9,271,812 Jackson 10 $ 950,676 Stark 4 $ 248,447 Jasper 1 $ 78,979 Stephenson 9 $ 650,861 Jefferson 20 $ 1,386,280 Tazewell 109 $ 9,895,859 Jersey 4 $ 346,375 Union 3 $ 210,861 Johnson 2 $ 154,018 Vermilion 10 $ 563,645 Kane 202 $ 26,245,799 Warren 3 $ 200,539 Kankakee 24 $ 2,300,067 Washington 3 $ 222,745 Kendall 79 $ 11,048,647 White 2 $ 81,070 Knox 10 $ 745,213 Whiteside 20 $ 1,446,237 La Salle 23 $ 1,825,655 Will 268 $ 38,360,322 Lake 130 $ 16,689,498 Williamson 28 $ 2,430,413 Lee 11 $ 1,036,442 Winnebago 257 $ 19,767,773 Livingston 5 $ 331,052 Woodford 14 $ 1,393,137 Total 4379 $ 512,371,808 30

33 IHDA-Welcome Home Heroes Homebuyer Program-for Veterans IHDA s Welcome Home Heroes Homebuyer program is available to qualifying veterans statewide. The program is also available to active military persons, reservists, and members of the National Guard. Welcome Home Heroes offers down-payment assistance up to $10,000 and an annual mortgage credit certificate worth 20 percent of the mortgage interest paid each year for the life of the loan (up to 30 years). In 2013, Welcome Home Heroes financed 623 homes for veterans. For more information on Welcome Home Heroes, visit IHDA-HOME Homebuyer Assistance Program HOME is a federally-funded program formula designed exclusively to create affordable housing for low-income households. Approximately $1 billion is awarded to states and local governments nationwide. IHDA's Homeownership Programs Department offers HOME funds directly to units of local governments, community action agencies, non-profit organizations and community housing development organizations (CHDOs) to assist with purchase and rehabilitation assistance for homebuyers, and the rehabilitation of single family owner-occupied homes for homeowners. These are targeted to cities and counties not receiving direct HOME Program funds from HUD. IHDA grants its Homebuyer Assistance Program through eligible non-profits and local governments. Eligible homebuyers opting for acquisition assistance only can receive up to $10,000 for down payment and up to $2,000 in closing cost assistance to help with the purchase of their first home. Homebuyers opting for both the acquisition and rehabilitation assistance can receive a maximum of $40,000 in total costs. Basic eligibility requirements include: 1. Household income must be at or below 80 percent of the AMI; 2. Homebuyer participants must occupy the property as their principal residence; 3. Homebuyer must contribute at least $1,000 to the purchase; and 4. Homebuyer is required to attend first-time homebuyer counseling. If rehabilitation assistance is received, additional eligibility requirements include: 1. Appraised value of a property after rehabilitation must be under the maximum appraised value ceiling set for a given area; and 2. Rehabilitated single-family properties must meet both federal and state standards for repair. Potential partners, homebuyers, and homeowners can find more information on HOME Homebuyer Assistance, here CDBG Entitlement/HOME Participating Jurisdictions Many of the same local governments identified earlier in this section also administer CDBG- or HOME-funded homebuyer assistance programs. Please contact them directly for more information. 31

34 IHDA Building Blocks Program The Illinois Building Blocks Program helps strengthen targeted communities by turning vacant foreclosed homes into homeownership opportunities using a three-pronged approach. To start, IHDA offers financing for developers interested in redeveloping abandoned properties in each of the designated targeted communities. Once renovations are complete, IHDA provides up to $10,000 in down payment assistance to homebuyers interested in the properties to improve their marketability. The third prong is foreclosure prevention. These coordinated efforts are intended to help stabilize neighborhoods and provide affordable homeownership to first time homebuyers. The program was expanded and is currently offered in 15 communities: 1. Belleville 2. Berwyn 3. Blue Island 4. Champaign 5. Chicago Heights 6. Cicero 7. Crest Hill 8. Joliet 9. Lockport 10. Lynwood 11. Melrose Park 12. Maywood 13. Park Forest 14. Peoria 15. South Holland In 2013, the Building Blocks Program helped finance the rehabilitation of 19 homes (all in the initial 5 pilot communities: Berwyn, Maywood, Park Forest, Chicago Heights, and South Holland), and assisted 365 first-time homebuyers in these communities and counties. Federal Home Loan Bank of Chicago - Down Payment Plus Program The Federal Home Loan Bank of Chicago is a $72 billion wholesale bank and one of 12 district banks chartered in 1932 by the U.S. Congress to improve the availability of funds to support homeownership. The Federal Home Loan Bank of Chicago is a member-owned cooperative serving members in the district of Illinois and Wisconsin. The Federal Home Loan Bank of Chicago offers a program to its members, which provides up to $8,000 in homebuyer assistance under its Down Payment Plus Program, to be used toward down payment and closing costs to homebuyers. The subsidy may also be used for homebuyer counseling costs (up to $650), and/or eligible rehabilitation costs associated with the purchase of a home. Eligible homebuyers are those who: 1. Contribute at least $1,000 to the purchase of the home; 2. Participate in homebuyer and financial literacy counseling; 3. Live in the home as their primary residence; and 4. Very low-, low-, and moderate-income homebuyers. More information can be found at USDA Rural Development Section 502 Homebuyer Direct Loan and Loan Guarantee Program USDA Rural Development Section 502 direct loans are primarily used to help low-income individuals or households purchase homes in rural areas. Funds can be used to build, repair, renovate or relocate a home, or to purchase and prepare sites, including providing water and sewage facilities. USDA Rural Development also offers Section 502 loan guarantees through local participating lenders. In 2013, Rural Development made 222 direct loans totaling over $16 million and approved approximately $426,000,000 million in guarantee authority for 4,446 homebuyer households. Applicants for loans may have an income of up to 115% of the median income for the area. Families must be without adequate housing, but be able to afford the mortgage payments, including taxes and insurance. In addition, applicants must have reasonable credit histories. For more information, visit 32

35 HUD Home Equity Conversion Mortgages (HECM) for Seniors A Home Equity Conversion Mortgage (HECM), also known as a reverse mortgage, is a federally-insured loan that enables eligible homeowners to withdraw the equity in their home or use loan proceeds to buy a new primary residence that they will occupy. The HECM is a safe alternative resource that can provide older Americans with greater financial security and independence. Many seniors use it to supplement Social Security, meet unexpected medical expenses, make home improvements, and more. Eligibility homeowners must be: years of age or older 2. Property used as collateral must be the primary residence 3. No delinquencies on any federal debt, suspensions, debarments, or excluded participation from FHA programs For more information, visit Keep Chicago Renting Ordinance On June 6, 2013 the City Council passed the Keep Chicago Renting Ordinance (S ). It requires most entities that do not take ownership in arm s length transactions of foreclosed rental building to offer legitimate tenants rent-controlled leases or give them $10,600 per unit in relocation assistance. If the renters remain in the building, their rent cannot increase more than 2 percent a year. Purchasers of foreclosed buildings at auctions must also provide notice to tenants of the change in the ownership and the renters rights. The ordinance does not apply to (1) anyone who buys a foreclosed rental property in a private transaction after a court-supervised auction, (2) people who buy a property with the intention of making it their own primary home, or (3) nonprofits that buy a foreclosed property at auction with the intention of converting it into affordable housing. The ordinance exempts: 1. An owner of a foreclosed rental property who was the owner prior to the effective date of this chapter; 2. Any bona fide third-party purchaser; 3. A person appointed as a receiver and issued, or assigned, a Receiver's Certificate under 65 ILCS 5/ or 765 ILCS 605/14.5 who becomes an owner due to the foreclosure on the Receiver's Certificate; 4. An owner who will occupy the rental unit as the person's principal residence; and 5. A bona-fide not-for-profit in existence continuously for a period of five years immediately prior to becoming the owner of the rental unit and whose purpose is provide financing for the purchase or rehabilitation of affordable housing. The owner of a foreclosed rental property shall pay one-time relocation assistance fee of $10,600 to a qualified tenant unless the owner offers such tenant the option to renew or extend the tenant's current rental agreement with an annual rental rate that: (1) for the first twelve months of the renewed or extended lease, does not exceed 102 percent of the qualified tenant's current annual rental rate; and (2) for any twelve-month period thereafter, does not exceed 102 percent of the immediate prior year's annual rental rate. 33

36 Final Recommendations and Conclusions Conclusions on Market Analysis Since the foreclosure crisis began in 2007/8, Illinois has implemented several products which have positively impacted the State s foreclosure reduction and outlook (i.e. Hardest Hit Fund, IFPN, etc.). Illinois, over the past four years has seen strides in all three housing market analysis indicators (distress, sales, and equity) discussed in the Market Analysis section. Counties with the highest rates of delinquency, completed foreclosures, and number of negative equity loans have seen significant decreases. Delinquency Rates Delinquency rates have steadily declined for the state since 2009; however, 2013 data show that approximately 35 percent of Illinois counties have delinquency rates higher than the national average of 5.5 percent. In particular, Cook, Boone, Kane, and Kendall counties, while having declining delinquency rates, have consistently had some of the highest delinquency rates in the state over the last four years. The 2013 State average of 4.39 percent undoubtedly signifies immense improvements. However, many counties in the state are still heavily impacted by high delinquency rates. It is recommended that, at least in the near future, housing counseling and loan modification products available to Illinoisans should remain a priority for the State, at least into the near future. Top Counties with Highest Delinquency Rates 13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% COOK BOONE KANE KENDALL Sales Price Nationaly, home prices have risen 10.5 percent between April 2013 and April Average home prices in Illinois increased by approximately 3 percent between 2012 and 2013, with approximatly 50 percent of Illinois counties seeing an increase in their average sales prices. As sales prices increase, negative equity shares are expected to continue to decrease. Chicago Metropolitain Area Collar Counties Average Sales Price Trends 350, , , , , , , Cook DuPage Kane Lake McHenry Will

37 Negative Equity Share At the end of the fourth quarter of 2013, 13.3 percent of all residential properties with a mortgage were underwater. In 2013 the average negative equity share for Illinois residential properties was 15 percent. In 2013, 19 counties had more than 15 percent negative equity shares Counties with Highest Negative Equity Shares County Negative Equity % of total State Share Negative Equity Loans Kendall 31.58% 2% Boone 30.15% 1% McHenry 29.31% 4% Cook 29.20% 50% Kane 27.93% 6% Whiteside 25.78% 0% Will 25.01% 8% Kankakee 24.59% 1% Lake 24.51% 8% DeKalb 22.28% 1% Randolph 21.70% 0% Marion 20.52% 0% Saint Clair 20.28% 2% Clay 20.24% 0% Grundy 19.34% 0% La Salle 17.83% 1% Montgomery 17.52% 0% DuPage 16.02% 7% Winnebago 15.93% 2% Three of these counties experienced drastic changes in their negative equity shares from 2009 to Available data show that Whiteside, Kankakee, and Marion counties have seen their negative equity shares increase faster than other counties in the state. It is anticipated that development, sales, and prices continue to increase around the country and state, negative equity shares should decrease. Community and economic development efforts, especially in communities experiencing high vacancy and abandonment rates should remain a priority for the state. 30% 25% Negative Equity Share Trends: Whiteside, Marion, Kankakee 20% 15% 10% 5% 0% Whiteside Marion Kankakee Although the State is experiencing improvements in its housing market, it is recommended that stakeholders should continue to provide and expand on housing counseling services and product solutions (such as those mentioned in the resources section) to homeowners facing foreclosure. It is also recommended that greater attention should continue to be expanded to recovery and revitalization efforts; particularly in neighborhoods and communities disproportionally affected by housing vacancies and abandonment. 35

38 Zombie Properties The Woodstock Institutes study Unresolved Foreclosures: Patterns of Zombie Properties in Cook County highlighted many concerns that communities in the Chicago region are continuing to experience in the aftermath of the foreclosure crisis. The report suggests that servicers leave approximately nine percent of foreclosure filings unresolved, with most properties at risk located in low-income census tracts (where greater number of foreclosure are located). If this estimate is applied to the state, which in 2013 had filings, approximately 72,500 of these properties were at risk of being unresolved. Zombie properties may have very different impacts depending on neighborhood conditions. For example, servicers may be more likely to maintain properties still in the foreclosure process in neighborhoods that are in predominantly affluent or white areas compared with properties in neighborhoods that are predominately poor or non-white. Zombie properties that are poorly maintained and become blighted threaten the desirability and stability of the surrounding neighborhood (Cowen, Aumiller pg. 12). Estimates show less affluent neighborhoods are more likely to have higher numbers of zombie properties than more affluent neighborhoods, and therefore face more serious threats of being negatively impacted by poorly maintained zombie properties than higher income neighborhoods. In its report, the Woodstock Institute provides several recommendations which include: 1. Mortgage servicers should be required to notify borrowers, local governments, and courts when they decide to stop pursuing a foreclosure. 2. Mortgage servicers should coordinate with local governments, non-profits, and land banks to return zombie properties to productive use. 3. Municipalities should enact vacant building ordinances that hold servicers and mortgagees accountable for maintaining homes, even before taking title to the home. 4. Municipalities should seek creative ways to expand or leverage existing code. In addition, it is recommended that legislative solutions be explored to possibly create tools for fasttracking condemnation procedures for such properties by municipalities. 36

39 Best Practices and Final Recommendations Detroit Vacant Property Campaign Vacant properties are an expense that grows every year a property remains vacant or abandoned. Studies have shown that over the past five years, St. Louis has spent $15.5 million, or nearly 100 per household, to demolish vacant buildings, while Detroit spends $800,000 per year and Philadelphia spends approximately $1.8 million per year cleaning vacant lots. A 2001 study found that houses within 150 feet of a vacant or abandoned property experienced a net loss of $7,627 in value (Vacant Properties: The True Costs to Communities pg. 1). Lastly, research has shown that rehabilitation of vacant or abandoned buildings generally saves more money than demolition. For example, an examination of the St. Paul Minnesota budget for maintenance and security costs associated with vacant buildings revealed that while demolition saved $4,697, the rehabilitation of a vacant building saves an estimated $7,141, in maintenance costs over a twenty-year period (Vacant Properties: The True Costs to Communities pg. 6). The Michigan Vacant Property Campaign (MVPC), a collaboration between four organizations with unique expertise related to vacant property issues: the Center for Community Progress, Community Economic Development Association of Michigan, Michigan Municipal League and Michigan Community Resources, provides education and outreach, community and partner technical assistance, and local campaign formation and policy and systems development to organizations in the Midwest, equipping them with resources that they need to revive their communities. The Detroit Vacant Property Campaign (DVPC) is a cross-sector collaboration of community advocates and leaders led by Michigan Community Resources. The DVPC has made small grants to neighborhood associations to enable neighbors to care for vacant houses and protect homes going through mortgage foreclosure from destruction. The DVPC exemplifies strategies that neighbors, with the assistance of grants and resources, can implement to temporarily deter negative impacts of vacant and abandoned buildings in their neighborhood. These strategies include: (1) disguising vacancy by mowing lawns, cleaning up leaves and debris, planting flowers to improve landscape, installing decorative solar lighting, and applying attractive temporary fencing, (2) protecting the structure by reporting code violations to the city, boarding up entrances, and installing motion-activated lights or alarms, (3) by improving the properties appearance by installing graphic windows and doors over boards, or painting boards, incorporating art through murals, or starting an adopt-a-house program where a block or homeowner maintains the property exterior, and (4) reusing properties for things such as tour events to display available vacant structures, by facilitating temporary ( pop-up ) uses of vacant commercial space, planting flower gardens, or using the property as an art garden. These on-the-ground strategies can be utilized by homeowners and neighborhood community organizations. The DVPC has created a Vacant Property Toolkit which recommends varied strategies depending on neighborhood type (i.e. low vacancy or high vacancy neighborhoods). These efforts cross state boarders and are applicable for many communities facing low to high amounts of vacancies due to the foreclosure crisis. 37

40 Foreclosure Mitigation Counseling The importance of foreclosure mitigation counseling has been analyzed by a number of agencies and organizations including the U.S. Department of Housing and Urban Development (HUD), the Urban Institute, and NeighborWorks America. HUD conducted a study lasting from 2009 to 2012, evaluating the reach of HUD-funded housing counseling agencies providing foreclosure mitigation services. The study analyzed both pre-purchase counseling and foreclosure counseling. The study, titled Foreclosure Counseling: Outcome Study - Final Report, was published in May of The foreclosure counseling study involved twenty four HUD-funded counseling agencies dispersed across the United States, which identified and enrolled a total of 824 homeowners into the study. At the time of enrollment, the study participants completed baseline surveys that collected demographic, financial, housing, mortgage delinquency, and reasoning for seeking counseling information. The baseline surveys showed that the participants had lower incomes than most homeowners. The median income of foreclosure counselees at the time of seeking counseling was approximately $36,000, which was only 56 percent of the median income for all U.S. homeowners at the time. Additionally, most counselees in the study had little in savings (over 36 percent of counselees had no savings at all), and most homeowners in the study had high monthly debt burdens (Foreclosure Counseling Outcome Study pg. xiii-xiv). More than one-half (54 percent) of study participants were more than 1 month behind on their mortgage payments at the time they sought counseling, but 46 percent initiated counseling before missing a payment. Most counselees who were behind were between 1 and 6 months behind, and most had experienced an income reduction that caused them to fall behind (Foreclosure Counseling Outcome Study pg. xv). Over the six-month period, housing counselors recorded details about the counseling services provided to the study participants. About a year after (approximately 18 months) the participants enrolled in the study, the counselees were invited to complete a follow-up survey. The survey documented their current housing situation and the foreclosure mitigation strategies pursued during and after housing counseling. During the six-month period homeowners were informed of their options which included loan modification, refinance, repayment or forbearance plan, partial claim or partial release, balance reduction, a loan or grant from another lender, or bankruptcy. Of 824 study sample, 539 completed the follow-up survey. Overall, the study found that (Foreclosure Counseling Outcome Study, pg 6): 1. With a counselors help 69 percent of counselees obtained a mortgage remedy, and 56 percent were able to become current on their mortgages. 2. Housing outcomes for foreclosure counseling clients were closely related whether the client was delinquent at the time he or she sought counseling. Nearly 70 percent of clients who sought counseling before becoming delinquent were in their home and current on their mortgage payments at the 18 month follow-up period, whereas only 30 percent of clients who were 6 or more months behind at the time they entered counseling were in their home and current at the follow-up. 3. On average, counselees who were in the home and current at follow up had higher credit scores at the time of seeking counseling than counselees who at follow up were either in the home and behind or out of the home. Outcomes from this HUD evaluation highlight the importance of foreclosure mitigation counseling. In addition to HUD, NeighborWorks America evaluated the reach of the National Foreclosure Mitigation Counseling Program. From February 26, 2008 to May 31, 2013, the NFMC Program served a total of 1,576,047 homeowners, and had awarded nearly $654.3 million in grants to 187 HUD-Approved Housing Counseling Intermediaries, State Housing Finance Agencies (HFAs), and NeighborWorks organizations to fund foreclosure counseling and legal assistance to at-risk homeowners (National Foreclosure Mitigation Program Congressional Update, pg. 5). 38

41 NeighborWorks, through a contract with the Urban Institute, conducted a multi-year ( ) evaluation of the NFMC Program and the impact of foreclosure intervention counseling. The analysis was based on a representative sample of approximately 180,000 mortgage loans, and evaluated NFMC Program performance with respect to helping counseled homeowners achieve the following three goals: (1) curing an existing foreclosure, (2) obtaining loan modifications with lower monthly payments than are obtainable without counseling and (3) achieving sustainable loan modifications that avoid redefault and foreclosure. The evaluation confirms that the NFMC Program has made a difference in these areas (National Foreclosure Mitigation Program Congressional Update, pg. 11): 1. On average, the Urban Institute estimated that NFMC Program clients who received loan modifications in the first two program years reduced their monthly payments by $176 more than they would have without NFMC Program counseling, resulting in $2,100 of annual savings per counseled homeowner. 2. The Urban Institute report estimated that, for a typical group of NFMC Program clients, 67 percent of those who received a loan modification remained out of serious delinquency or foreclosure for at least nine months. 3. In 2008 and 2009, the NFMC Program helped save local governments, lenders, and homeowners approximately $920 million. These savings translated to three times the total of NFMC Program Rounds 1 and 2 funding to support counseling services to at-risk homeowners. The Urban Institute estimated this cost savings based on the assumption that the loans that avoided foreclosure due to NFMC Program counseling would not complete a foreclosure action in the future. In September 2014, NeighborWorks published its Final Report evaluating the National Foreclosure Mitigation Counseling (NFMC) Program. Its final report evaluated approximately 140,000 NFMC clients who received counseling between July 2009 and June 2012, and of which had their loan performance tracked through June The Urban Institute s evaluation showed similar results to their above mentioned evaluation. The following are highlights additional outcomes from their program evaluation (National Foreclosure Mitigation Counseling Program Evaluation, Final Report, Rounds 3 through 5): 1. Owners who cure their troubled loans with the help of an NFMC counselor were less likely to have their mortgages return to a troubled status. 2. NFMC counselors also help clients who are not good candidates to remain in their homes. Clients are more likely to complete a short sale than are non-nfmc owners, and, for NFMC clients who cannot cure a troubled mortgage, NFMC clients helps to resolve their cases more quickly, thereby reducing the time a client spends in an unresolved status. 3. NFMC clients received loan modifications with larger payment reductions than did borrowers in a comparison group who received loan modifications without the assistance of NFMC counselors. Foreclosure counseling has had a significant impact on the housing crisis, and has helped millions of homeowners mitigate their foreclosures. Funding of counseling agencies remains important, and counseling should remain a high priority for the state as many homeowners continue to need assistance. In addition to foreclosure counseling and place-based, on-the-ground strategies, it is further recommended that other strategies previously discussed in this report (i.e. community land trusts, community land banking, and various blight reduction programs) should also remain important priorities to pursue to impact Illinois future housing market landscape. Alternative programs such as these, along with conventional support mechanisms such as loan modifications, and refinancing products should continue to remain a priority for the state as these combined strategies are proving to have a positive impact on the housing market. 39

42 Appendix State Payment Settlement Fund Awards Community Revitalization Awardees Organization Amount Rewarded Affordable Housing Corporation of Lake County $ 2,000,000 Chicago Neighborhood Initiatives $ 1,500,000 Community Foundation of the Fox River Valley $ 3,000,000 Community Investment Corporation $ 2,200,000 Community Service Council of Northern Will County $ 1,237,000 Cook County Land Bank Authority $ 6,000,000 Decatur Housing Authority $ 2,000,000 Evanston Community Revitalization Partnership $ 1,500,000 Genesis Housing Development Corp $ 750,000 Habitat for Humanity Champaign County $ 2,000,000 Habitat for Humanity Chicago South Suburbs $ 1,000,000 Habitat for Humanity of McHenry County $ 1,360,000 Hispanic Housing Development Corp $ 3,000,000 IFF (formerly known as Illinois Facilities Fund) $ 3,000,000 Justine Petersen Housing and Reinvestment Corp $ 1,000,000 Lake County Residential Development Corp. $ 1,500,000 Latino Policy Forum $ 1,500,000 Lawndale Christian Development Corp. $ 900,000 Local Initiatives Support Corporation, Chicago $ 3,000,000 Local Initiatives Support Corporation, Greater Peoria $ 3,000,000 Metropolitan Mayors Caucus $ 335,536 Mid Central Community Action, Inc. $ 1,500,000 Neighborhood Housing Services of Chicago, Inc. $ 1,750,000 NW Homestart $ 2,500,000 Preservation of Affordable Housing $ 750,000 Rock Island Economic Growth Corporation $ 3,500,000 Southwest Organizing Project $ 3,000,000 The Resurrection Project $ 2,000,000 Westside Health Authority $ 400,000 Will County Center for Community Concerns $ 3,000,000 Windy City Habitat for Humanity $ 800,000 Total Amount Awarded for Community Revitalization $ 60,982,536 40

43 State Payment Settlement Fund Awards, continued Housing Counseling Awardees Organization Amount Awarded Chicago Urban League $ 150,000 Chinese American Service League $ 150,000 DuPage Homeownership Center (DHOC) $ 750,000 Illinois Assistive Technology Program $ 150,000 Institute for Consumer Credit Education $ 150,000 Metropolitan Tenants Organization $ 200,000 Northwest Side Housing Center $ 300,000 Rogers Park Community Development Corp. $ 800,000 Spanish Coalition for Housing $ 1,100,500 Urban League of Metropolitan St. Louis $ 150,000 Total Amount Awarded for Housing Counseling $ 3,900,500 Expert Awardees Organization Amount Rewarded Access Living of Metropolitan Chicago $ 150,000 Chicago Area Fair Housing Alliance $ 100,000 Chicago Metropolitan Agency for Planning $ 448,448 Corporation for Supportive Housing $ 50,000 DePaul University Institute for Housing Studies $ 500,000 Housing Action Illinois/NeighborWorks America $ 750,000 Housing Action Illinois/Neighborhood Housing Services of Chicago $ 500,000 Illinois Association of Community Action Agencies $ 250,000 Illinois Housing Development Authority $ 2,500,000 Mission Strategy Consulting $ 94,875 National Consumer Law Center $ 41,000 Teska Associates $ 150,000 Woodstock Institute $ 500,000 Total Amount Awarded to Experts $ 6,034,323 41

44 Abandoned Residential Property Program Recipients and Grant Amounts Applicant Name Statute Area Award Amount City of Chicago City of Chicago $ 2,045, City of Aurora Collar Counties $ 250, City of Braidwood Collar Counties $ 41, City of Joliet Collar Counties $ 75, City of Warrenville Collar Counties $ 30, City of Waukegan Collar Counties $ 250, City of Zion Collar Counties $ 250, South Suburban Land Bank and Development Authority Collar Counties $ 260, Village of Beach Park Collar Counties $ 60, Village of Bensenville Collar Counties $ 75, Village of Carpentersville Collar Counties $ 75, Village of Glendale Heights Collar Counties $ 75, Village of Grayslake Collar Counties $ 50, Village of Hawthorn Woods Collar Counties $ 27, Village of Lake Zurich Collar Counties $ 41, Village of Round Lake Beach Collar Counties $ 75, Village of Woodridge Collar Counties $ 20, Will County Illinois Collar Counties $ 150, City of Berwyn Cook County $ 75, City of Blue Island Cook County $ 75, City of Chicago Heights Cook County $ 75, City of Elgin Cook County $ 26, City of Evanston Cook County $ 75, City of Harvey Cook County $ 250, Cook County DPD Cook County $ 250, Cook County Land Bank Authority Cook County $ 250, South Suburban Land Bank and Development Authority Cook County $ 289, Town of Cicero Cook County $ 250, Village of Calumet Park Cook County $ 75, Village of East Hazel Crest Cook County $ 75, Village of Glenview Cook County $ 75, Village of Hanover Park Cook County $ 18, Village of Justice Cook County $ 60, Village of Robbins Cook County $ 75, Village of South Chicago Heights Cook County $ 67, Village of South Holland Cook County $ 75, City of Alton Rest of State $ 75, City of Barry Rest of State $ 25, City of Bloomington Rest of State $ 52, City of Champaign Rest of State $ 50, City of Decatur Rest of State $ 75, City of East St. Louis Rest of State $ 227, City of Freeport Rest of State $ 25, City of Kankakee Rest of State $ 64, City of Mattoon Rest of State $ 25, City of Moline Rest of State $ 58, City of Mt. Vernon Rest of State $ 25, City of Peoria Rest of State $ 75, City Of Quincy Rest of State $ 25, City of Rock Falls Rest of State $ 26, City of Rockford Rest of State $ 250, City of Savanna Rest of State $ 25, City of Springfield Rest of State $ 75, City of Streator Rest of State $ 44,

45 Members of the Illinois Housing Task Force Foreclosure Working Group Membership / Representation (as specified by SJR 30) Housing policy and research background (two (2) positions) Homeowner impacted by foreclosure crisis Local financial or lending institution Housing Task Force - Foreclosure Working Group (SJR 30): Membership List Housing Industry, Not-For-Profit Community and Financial Institutions Members: Certified HUD Housing organizations providing foreclosure services (two (2) positions) Academic with background in housing trends Non-Profit Legal Representative with foreclosure experience Background / Expertise in Affordable Housing issues Name Title Organization Bob Campbell Executive Director Rockford Area Affordable Housing Coalition Brian Hollenback Executive Director Rock Island Economic Growth Corporation Ofelia Navarro Executive Director Spanish Coalition for Housing Margaret Wooten Director Chicago Urban League Development Corporation Geoff Smith Executive Director DePaul Institute for Housing Studies Janet Smith Associate Professor University of Illinois at Chicago Phil Ashton Associate Professor University of Illinois at Chicago Kathy Clark Executive Director Lawyer's Committee for Better Housing Dan Lindsey Supervisory Attorney LAF Adam Gross Director, Regional Affordable Housing Initiative BPI Robin Synderman Vice President of Community Development MPC/State Housing Task Force Michelle Rodriquez Taylor Executive Director Northwest Side Housing Center Sharon Legenza Executive Director Housing Action Illinois Juliana Gonzalez-Crussi Policy Analyst, Housing Outreach Coordinator Latino Policy Forum Dory Rand President Woodstock Institute Roberto Requejo, Senior Analyst Federal Reserve Bank Debbie Hillman Chairperson Evanston Food Council Jack Markowski President CIC Patricia Holden Senior Vice President Bank of America Other Members - recommended by Housing Task Force for Working Group to carry out its duties and work more effectively: Court Representative - Cook County Carina Segalini Mortgage Foreclosure Case Management Coordinator Circuit Court of Cook County Funder/philanthropist Juanita Irizarry Program Officer CCT Municipal Expertise Tammie Grossman Housing Programs Manager Village of Oak Park Bill Goldsmith President Mercy Portfolio Services HHF - MRF Vice President, National Community Rob Grossinger Revitalization Initiative Enterprise Community Partners, Inc. Senior Housing Concerns Ryan Greunenfelder Associate State Director, Advocacy & Outreach AARP Cook County Katie Sabo Chief of Staff Commissioner Bridget Gainer City of Chicago Gerald Alder Assistant to the Mayor Chicago Mayor's Office Mike Simmons Policy Director Chicago Mayor's Office Realtor Sharon Gorrell Local Government Affairs Director IAR Community Banking Advocacy Jackie Leavy Volunteer Coalition for Community Banking Federal Government Dennis Hawkins District Programs Coordinator Office of Congressman Bobby Rush 43

46 Members of the Illinois Housing Task Force Foreclosure Working Group, continued State Agency Members: Division of Banking Member from the Illinois Department of Financial and Professional Regulation Subprime Lending/Foreclosure expert from the Office of the Attorney General Homeless Prevention Program Member from the Illinois Department of Human Services Manny Flores Director, Division of Banking Illinois Department of Financial and Professional Regulation David Espinoza Assistant Director, Residential Finance Illinois Department of Financial and Professional Regulation Steve Wrone Consumer Policy Advisor Illinois Attorney General's Office Lisa Thompson-Bennett Consumer Outreach Liaison Illinois Attorney General's Office Mary Sue Cox Illinois Department of Human Services Governor's Office John Kamis Senior Advisor Office of the Governor Illinois General Assembly Members: Senate President Appointment Senate Minority Leader Appointment Speaker of the House Appointment Housing Task Force - Foreclosure Working Group (SJR 30): Membership List Senator Iris Martinez (Kerry O'Brien) State Senator Ana Maria Rosario (Sen. Martinez Staff) Staff ILGA ILGA Senator Pamela Althoff State Senator ILGA Representative Karen Yarbrough State Representative House Minority Leader Appointment Rep. Ed Sullivan State Representative ILGA ILGA Representative LaShawn K. Ford's Foreclosure Task Force IHDA Staff: IHDA Staff Athena Williams Political Action Committee Westside Ministers Coalition Evelyn Coker Director of Clinical and Social Services PLCCA Phyllis Logan Vice President, Operations VOCMA Rob Breymaier Executive Director Oak Park Regional Housing Center Robert Sanders Senior Housing Counselor Partners in Community Building Mary Kenney Cami Freeman Adonya Little Charlotte Flickinger Nicki Pecori Joe Mcgavin Tracy Grimm Bill Pluta Jennifer Novak Chan Aisha Turner Executive Director Executive - Senior Policy Director Multifamily/Neighborhood Stabilization Program (NSP) Legislative Liaison Community Affairs HHF Loan & Portfolio Management Office of Housing Coordination Services (OHCS) OHCS OHCS 44

47 Works Cited CoreLogic National Foreclosure Report, April CoreLogic. June 1, < CoreLogic National Foreclosure Report, March CoreLogic. June 1, < CoreLogic Housing Price Index Report, April CoreLogic. June 1, < Cowan, Spencer; Aumiller, Michael. Unresolved Foreclosures: Patterns of Zombie Properties in Cook County. Woodstock Institute. January < Foreclosure Counseling Outcome Study: Final Report. U.S. Department of Housing and Urban Development. July, 1, < HomeFinder. The Smart Way to Buy Foreclosures. August 11, < Making Home Affordable Program Performance Report Through May Unites States Department of the Treasury. June 1, < National Association of Home Builders: Housing Starts. National Association of Home Builders. June 6, < National Foreclosure Mitigation Counseling Program. Congressional Update: October NeighborWorks America. July 1, < National Foreclosure Mitigation Counseling Program, Final Report, Rounds 3 through 5. The Urban Institute. September 24,2014. < Refinance Report May Federal Housing Finance Agency. July 21, < Vacant Properties: The True Costs to Communities. National Vacant Properties Campaign: Creating Opportunity from Abandonment. June 27, < United States Census Bureau: Housing Vacancies and Homeownership. United States Census Bureau. June 6, < 45