How much is enough?
THE BURST HOUSING BUBBLE led directly to a foreclosure crisis, with boarded-up homes dotting block after block in low-income communities across the country. Homeowners may have breathed a sigh of relief when Congress passed the Housing and Economic Recovery Act of 2008, which provides funding to buy vacant, foreclosed homes, and the Home Affordable Modification Program (HAMP) earlier this year to give homeowners some breathing room in the face of foreclosure proceedings.
The City of Chicago used its $55.2 million in federal funds for the city's Neighborhood Stabilization Program (NSP), choosing 25 neighborhoods based on factors such as area unemployment rate and percent of loans that are high cost. "It's just such a gargantuan problem, and difficult decisions had to be made to allocate the funds," says Erin Kelley, a recent SSA graduate and a former board member of the Community Economic Development Organization, a joint student organization between SSA and the Harris School of Public Policy Studies. In May, CEDO invited five panelists from different parts of the city to a discussion of foreclosure relief in Chicago.
Chicago's response to the crisis has been cited as a model for other cities, but the problem is far from over. For the first half of 2009, foreclosure filings in the city increased 10.3 percent compared to the same period from last year, according to the Woodstock Institute, and HAMP has been widely criticized as too weak. The nonprofit Neighborhood Housing Services of Chicago is advocating for loan modifications as opposed to foreclosures, making investor participation in loan modifications mandatory, and using more localized data to monitor the foreclosure rates in Chicago.
"The need for foreclosure counseling has increased across the city," says Kristen Komara, an SSA grad and the director of financial services for The Resurrection Project, a nonprofit based in Pilsen that develops affordable housing and provides financial counseling. "And banks are incredibly difficult to deal with."
— Sam Barrett