There is a significant need for programs that prevent foreclosure for underwater homeowners in the Chicago area. More than one in five homeowners in the Chicago region is underwater, and negative equity is disproportionately concentrated in communities of color. Woodstock Institute research found that homeowners with mortgages in African American communities are more than twice as likely to be underwater as homeowners in white communities.

“Underwater homes pose persistent challenges to the Chicago region, which has the second-highest rate of negative equity in the country,” said Woodstock Institute president Dory Rand. “Negative equity makes it harder for homeowners to sell their homes, afford their monthly payments, avoid foreclosure, and build wealth for the future. We applaud the FHFA for encouraging underwater homeowners to access more affordable monthly payments through HARP.”

“There are problems caused by negative equity that HARP cannot fix, however, and the FHFA needs a broader range of tools in its toolkit to address underwater homes,” Rand continued. “Research shows that reducing the outstanding principal balance is highly effective at reducing the likelihood of foreclosure—even more effective than reducing the interest rate alone, which HARP does. We strongly urge the FHFA to end its longstanding policy of prohibiting principal reductions on loans backed by Fannie Mae and Freddie Mac. The Chicago region and the nation need a principal reduction program that could help homeowners who HARP and other programs cannot reach.”

For more information, please contact Katie Buitrago at or 312-368-0310.