By Tim Jones
July 22, 2010
In the Bungalow Belt of northwest Chicago, houses sink into the morass of foreclosure every day, leaving behind boarded-up windows, scraggly lawns, plummeting home values and an unintended invitation for squatters to settle in.
This is life for residents in the old industrial enclave of the Belmont Cragin community, where a flood of more than 900 foreclosure filings struck last year, the second-highest rate in the city.
Federal aid has arrived to help neighborhoods around the city deal with the destructive effects of the measles-like spread of mortgage defaults. But not in Belmont Cragin, about eight miles northwest of the Loop and directly north of the Austin neighborhood.
In fact, the vast majority of neighborhoods north and northwest of the Loop, where nearly 9,100 foreclosure filings were made last year, find themselves left behind in the federally funded effort to offset the damage from foreclosures. Only 28 of the city’s 77 neighborhoods — most of them on the West and South sides — are eligible for assistance from Washington’s $6 billion Neighborhood Stabilization Program, from which $155 million has been allocated to the city of Chicago, largely to rehabilitate and resell abandoned homes.
Why? Because Belmont Cragin and many other neighborhoods north and northwest of the Loop suffered the untimely misfortune of tumbling headlong into the abyss of foreclosure too late in the crisis, after most of the funding had been committed to the early subprime loan fatalities of 2006 and 2007. In the last two years, foreclosure filings in Belmont Cragin exceeded 1,600, tripling the combined number of filings reported in the neighborhood in 2006 and 2007.
“It started here in late 2008, with people losing their jobs. Now you’ve got doctors, attorneys and self-employed people,” said Liz Caton, director of counseling services for the Northwest Side Housing Center.
“We’re all questioning why we weren’t included,” added Anne O’Doherty Kamykowski, executive director of the Belmont-Central Chamber of Commerce. “If you looked at what was going on with mortgages in 2006, you could see this coming.”
The U.S. Department of Housing and Urban Development oversees the distribution of cash from the Neighborhood Stabilization Program, and communities apply for assistance. Chicago made two bids for funding.
Katie Ludwig, manager of the stabilization program for the city’s Department of Community Development, said the city based its application on the percentage of subprime loans in a community, the potential economic damage from foreclosures and the number of completed foreclosures in 2007.
The West and South Side neighborhoods of Austin, West Englewood and West Pullman — each of which receives assistance from the stabilization program — were the first and hardest hit by the foreclosure boom in 2006 and 2007. Those three neighborhoods alone combined for more than 3,700 foreclosure filings during those two years.
Much has changed, though, since 2007, when nearly 13,900 foreclosure filings were recorded in the city. For one thing, filings leaped 65 percent in the next two years, and the crisis began to envelop higher-income individuals and neighborhoods.
Condominium foreclosures took root, hitting Rogers Park and West Ridge. The two neighborhoods had reported a combined 180 foreclosures in 2006. Last year, the number skyrocketed to 1,200. The effects of condominium foreclosures are obscured because, unlike a boarded-up single-family home, a condo that is largely empty shows few outward signs of distress.
While there has been talk in Washington of expanding the stabilization program, it is clear that the amount of money needed would not be nearly enough to address the galloping effects of mortgage defaults.
“The South and West sides had first dibs on this, and my guess is there were more problems in those areas, (but) we’re experiencing a lot of problems,” said Ald. Ariel Reboyras, 30th, whose ward includes part of Belmont Cragin and six other communities, some of which receive stabilization program funding.
“It’s a good program,” Reboyras said. “It’s a drop in the bucket, unfortunately.”
Reboyras said he keeps three weed whackers in his neighborhood office to tend to lawns of abandoned homes. David Potete, a pastor in Belmont Cragin, said he mowed a lawn on the street where he lives for more than a year.
“I’ve never seen anything like this. Every block seems to have seven or eight (foreclosed) houses on it,” Potete said.
The accumulation of foreclosed houses is by no means unique to Belmont Cragin or the city of Chicago, where nearly 23,000 foreclosure filings were made last year, according to the Woodstock Institute, which tracks housing developments in the region. In the first half of this year, foreclosure filings in the six-county region topped 39,200, a 37 percent increase over the first half of 2009, according to the institute.
Foreclosure filings jumped 95 percent in Palatine during the first six months of 2010, according to Woodstock data. Foreclosures in Rolling Meadows increased 55 percent; in Hoffman Estates, 86 percent; and Crystal Lake, 75 percent, underscoring the reality that the foreclosure crisis is having a bigger impact in the suburbs.
“You’re already seeing it in northwest Cook County, and you’ll see more of it in DuPage, Lake and a lot of places that have not had high (foreclosure) rates,” said Geoff Smith, senior vice president of the Woodstock Institute.
As foreclosure filings have mounted — there were more than 11,100 in Chicago alone during the first half of the year — Smith said the “shock value has worn off” with much of the public.
Belmont Cragin, which began stirring as a neighborhood in the 1830s after George Merrill opened a saloon at Armitage and Grand avenues, symbolizes the challenge that cities across the country face as the number of foreclosures grows. It struggles with high unemployment, stagnant or falling wages, and tight credit that discourages or stifles private investment.
Belmont Cragin, formerly an immigrant working-class neighborhood notable for small mom-and-pop storefronts on Belmont Avenue that sported signs in English and Polish, has substantially redefined itself during the last two decades. Hispanics, which comprised 30 percent of the population in 1990, now represent more than 65 percent of the 78,000 people living in the neighborhood, according to the Census Bureau. And even as property values skyrocketed in the mid-2000s, income levels stayed relatively flat, helping create a housing market that could not sustain itself when the subprime bubble burst.
“We have not hit bottom,” said Art Neville, vice president and senior loan officer at Community Savings Bank, a local lender. “A 40 to 50percent drop in housing values is not unusual in Belmont Cragin. It’s one of the more harder-hit neighborhoods.”
Felix Ayala lost his $352,000 home earlier this year after living in it for seven years. The economic slump of late 2008 led to a dramatic cut in his work hours as a restaurant waiter. Ayala sought a modification in his loan agreement in early 2009, but the bank foreclosed on him. “It just depresses you,” said Ayala, whose work schedule is diminished and sporadic.
Short of any unforeseeable new government assistance, the neighborhood’s fortunes hinge on a substantial reduction in unemployment, which in Chicago is at its highest level in 25 years.
“People have lost jobs,” Neville said. “We used to give loans partly based on overtime slips. Now overtime has gone away, and you’re seeing people working 30 to 32 hours a week instead of 50 to 55.”
The damage to the community is substantially covered up, due largely to pride and a concern about the negative effects abandoned homes have on adjoining properties. Neighbors mow the yards of those who have moved out. Some things, though, are tougher to deal with, like the abandoned home on Mango Avenue, where neighbors say squatters moved into the basement six months ago, coming late at night and leaving early in the morning, presumably for work.
In the meantime, foreclosure filings mount, documented by official notices in Chicago’s Northwest Side Press. On any given week, foreclosures will consume a quarter to a third of the weekly’s pages.