From City Hall Press Release
January 14, 2008

Chicago Mayor Richard M. Daley said the city will create a new “early warning” program to help give Chicago residents more time to escape the possibility of losing their homes in the current national foreclosure crisis.

“Currently, homeowners automatically receive foreclosure prevention information from the City within six months after their lender files a foreclosure action against them. The foreclosure process usually takes about a year.

“But we can provide more help to our residents than that, and so starting January 1 the City will send out foreclosure prevention information as soon the foreclosure process is initiated, giving homeowners more time to work out solutions,” Daley said in a December 13, 2007 news conference.

In addition to the new “early warning” program, the city will expand numerous programs already in place to help residents facing foreclosure, Daley said.

“As far as I’m aware, no other city or state is addressing this challenge in the way we are. Since I’ve been Mayor, I’ve worked hard to keep Chicago’s neighborhoods affordable for everyone,” Daley said.

“But, over the last year, our nation, our state and our city have been ravaged by a new challenge—foreclosures on home mortgages. It’s become a national and local crisis, devastating the lives of many families around the country,” he said.

Nationally, the number of mortgage loans entering the foreclosure process in the second quarter of 2007 set another record. In 2006, there were more than 1.2 million foreclosure filings in the United States, Daley said.

Chicago is doing better than some other cities, but the numbers are too high, the Mayor said. In the first half of this year, 6,339 foreclosures were filed in the city, up from 4,695 in the same period in 2006.

In addition to the “early warning” program, the city will expand current measures to help residents avoid foreclosure, Daley said.

The city will substantially increase the number of credit counselors available to support, educate and assist homeowners. As a result, more homeowners will be able to seek help from trusted, HUD certified credit counselors in their own neighborhoods and ask other lending institutions to do the same.

The city will increase the number of borrower outreach days in the hardest hit communities. There will be a total of seven between January and March, 2008.

The city will step up its educational efforts to help protect current homeowners from unscrupulous lenders or companies that offer to refinance homes or help homeowners get out of trouble.

And the city will support responsible action by Congress to address this challenge.

“Yesterday the City Council joined us in supporting H.R.3648, which gives tax relief to a homeowner who loses his or her home and S.2136, which gives help in bankruptcy court to those who have lost their homes,” Daley said

“I’m especially concerned about the ‘phantom income tax’ under which victims of foreclosure realize after they’ve lost their homes that they’re subject to the federal income tax – only adding to their financial devastation.

“The President has suggested some of the steps that need to be taken, and he should be congratulated for them.

“But, my concern is for those who are not covered by his approach, which focuses only on those who have not missed any housing payments. That’s why earlier today my staff met with a group of lenders to discuss additional ways to help the many people who would not be helped by the President’s proposal,” he said.

Since 2003, the City and its partners have been working to combat foreclosures through the Home Ownership Preservation Initiative, or HOPI, Daley said.

HOPI is a unique, award-winning partnership between the City of Chicago, Neighborhood Housing Services of Chicago (NHS), the Federal Reserve Bank of Chicago, and 22 lending institutions that was formed to address the rapid rise in the number of foreclosure filings in the City over the last decade.

Since 2003, the City and its partners have been working to combat foreclosures through the Home Ownership Preservation Initiative, or HOPI. In that time, the program has counseled and educated 6,300 Chicagoans, prevented almost 1,600 foreclosures and reclaimed 395 vacant, troubled buildings.

Through the initiative, any Chicago resident who is having trouble paying their mortgage can be connected to a financial counselor simply by calling 311, the City’s non-emergency number.