According to Chicago Foreclosure Update 2007, a report released by National Training and Information Center (NTIC), the West Side’s Austin neighborhood has the highest number of foreclosures in the entire city. Austin topped the list in 2006 with 642 foreclosures, compared to 538 in West Englewood and 497 in Roseland. NTIC, along with other community organizations, are closely examining Austin to root out predatory lending practices and help residents keep their properties.

“Brokers sell loans to people that they can’t afford,” said NTIC Interim Executive Director David Rose. A rise in property value, he says, is one of the ways brokers justify getting people to agree to more expensive loans. More than half of the loans that went into foreclosure were very new-less than 24 months old. “That’s an indication that people were kind of set up for failure. When loans go bad that fast, that’s a sign that people didn’t know what’s going on,” explained Rose.

He also pointed out that almost half the loans ending in foreclosure-48.6-had Adjustable Rate Mortgage (ARM) payments. The typical ARM loan has an interest rate competitive with the markets, and adjusts up or down with interest rates in the months and years to come.

Rose, however, said a lot of ARMs nowadays are not like that at all. “The initial interest rate is much lower than the market,” he noted. “And when they adjust, they adjust much higher,” he said. “You’re going along with an affordable payment and then all of a sudden, one month your payment increases tremendously. Now you can’t afford the loan.”

On Sept. 26, NTIC launched “Save the American Dream,” an aggressive foreclosure prevention campaign in a demonstration held in Cleveland, Ohio in the Slavic Village neighborhood, which is known to have the highest foreclosure rate in the country. The campaign calls for: A moratorium on ARM resets (NTIC named Wells Fargo and Countrywide the two key lenders and servicers that played a critical role in the rise of foreclosures); national regulations that place criminal penalties on individual brokers and lenders that knowingly engage in abusive lending practices; and expanding regulatory laws to include mortgage companies, which are currently unregulated in their lending policies to low- and moderate-income communities.

“If we can get the industry’s largest lenders to change and work with us to keep the borrowers in their homes, then the rest of the industry will follow,” said Rose. “These banks can agree to do this if they want to. Otherwise we’ll continue putting pressure on them.”

NTIC works with the South Austin Coalition Community Council (SACCC) to help residents battle against the odds to remain homeowners. Juanita Rudess of SACCC said many homeowners in Austin are elderly, have been in the area for a long while, and have since retired and live on a fixed income. Therefore, many of the houses are now in need of repair, forcing people to rely on refinancing their homes without being knowledgeable about what they’re getting into. “We have to go and refinance our homes, sometimes at a higher rate. A lot of folks don’t understand that they are putting themselves in danger,” Rudess said.

SACCC works to educate the Austin community on predatory lending practices, how to discern when predatory brokers are around, and what options they have to save their homes. Assistant Director Teresa Welch wants those residents who are in foreclosure to not be ashamed or afraid, but to talk to their lender. “Let them know that you are in financial difficulty, and see what programs or products they have to assist,” she said. Secondly, she suggests going to a counseling agency or calling the city’s mortgage assistance program.

To contact SACCC, call 773/287-4570. To contact NTIC, call 312/243-3035 or visit www.ntic-us.org.