With the rate of foreclosed homes in the city continuing to rise in the wake of the massive housing market boom that opened this decade, Cong. Danny Davis (D-7th) has convened a task force to study solutions and spur initiatives.
“We need to talk about cracking down on the predatory lending laws that are already in place, begin discussing new initiatives and how to educate homeowners about what to do to avoid losing their homes,” said Davis.
Representatives of the U.S. Department of Housing and Urban Development (HUD) and the Illinois Housing Development Authority were among the organizations attended the first task force meeting Wednesday at Davis’ West Side headquarters, 3333 W. Arthington.Davis said that oftentimes families can become victims of foreclosure if their aspirations override their fiscal capabilities.
“Some buyers fail to look realistically at their incomes, current credit rating and rising interest rates before they decide to buy,” he said. “The idea of having their own house for their family at a bargain rate-as little as 5 percent under certain interest-only loan guidelines-lulls people in, and they quickly are brought back down to earth when rates increase, but their income remains fixed.”
Cong. Davis noted that 27,000 homes were foreclosed in Illinois in the last year alone. Theresa Welch-Davis, assistant director for the South Austin Coalition (SACCC), said she has seen many more seniors facing foreclosure in recent years. She said this is caused by the fact that many must refinance their homes in order to afford repairs to a house they have lived in for 20 years or more.
However, because they live on a fixed-income they find themselves falling behind when they must make their payments. “Consequently, they are left with two choices: let their house fall apart or get a loan to pay to repair it, which they may or may not be able to pay back,” said Davis, no relation to Cong. Davis. “Many times they will pursue the loan and not be given accurate information about the ‘hidden clauses’ involved with paying the loan back.”
She said that prospective homeowners should hire a “legit” lawyer; not a “legal expert” or friend, but an established real estate lawyer who will cut through the jargon and give the potential buyers the honest truth about the home they seek to buy.
First-time homeowners, particularly those facing divorce or a change in their employment situation are also among those facing foreclosure issues, task force members note.
“Now suddenly that house that was affordable with two incomes now is impossible to afford when one spouse leaves or loses their job,” said Tumia Romero, director of policy and programs for Cong. Davis, who also organized the task force meeting. “It’s the ‘American Dream’ to own a home; property ownership builds wealth, it builds equity, it builds a positive credit which can allow one to gain access to even more property if they so chose,” she said, “however, it is so important to learn as much as you can before you purchase that home.”
“The most important thing,” Romero added, “is to find out about programs set aside for economic hardship or loss of employment. You don’t want your ability to keep your house to be solely based on your ability to never lose a job or become ill. Research as much as you can on real estate before you buy. You can never have too much information.”
Cong. Davis has yet to announce a chair for the task force nor a follow-up meeting. However, the congressman noted that he wants to begin working on initiatives as soon as possible, and that the task force will later announce their community appearances, allowing residents access to resources for handling their foreclosure issues expeditiously.