By Marilyn Kennedy Melia
Special to the Tribune
Published April 30, 2006

“City Mortgage” is back, aimed at Chicago buyers on a budget.

Every tick up in interest rates holds more families back from affording a home.

Because of recent rate rises, the Chicago housing department is again sponsoring City Mortgage. A fixed-rate, 30-year loan at a competitive rate, the City Mortgage also provides up to 4 percent in closing costs for eligible borrowers.

You’ll have to fall under certain income levels, and buy a one- to four-unit home in Chicago under a certain price to qualify for the loan. The limits increase slightly for properties in “target” areas where the city wants to promote development.

To get a City Mortgage, you have to apply through one of the participating lenders to be posted on the city Web site, (Click on Home & Property; next, click on For Home Buyers; then Housing; and Financial Assistance on upper-left side.) Lenders should start offering the City Mortgage next month, says Molly Sullivan, housing department spokeswoman.

– Advantage: New research shows Chicago’s dominance over the regional housing market is growing.

Not only is the city attracting more buyers, but fewer owners are losing their homes to foreclosure.

The Woodstock Institute, a Chicago non-profit, recently released the “Chicago Area Community Lending Fact Book” that shows in 2004, more than 28 percent of loans made to purchase homes in the six-county Chicago metro area were made in the city, an increase of 3.4 percentage points from 1999.

The suburban counties also gained buyers, but by a smaller margin.

Between 1999 and 2004, foreclosures in the metro area outside of the city jumped 20 percent, while city foreclosures decreased 1.2 percent.

While the trend is positive in the city, foreclosures are still a problem there, notes Smith. In fact, there are still more foreclosures in the city than in the area counties, with 13 foreclosures per 1,000 city properties.

McHenry County registered the biggest foreclosure increase, a 232.9 percent jump between 1999 and 2004, with a rate of 8.7 foreclosures per 1,000 properties. Next was Will County with a 41.7 percent increase, followed by Kane County with a 28.7 percent jump. While Northern Cook County showed a 4.8 percent decline in its foreclosure rate, the southern part of Cook came in with a 28.6 percent increase.

Low- and moderate-income home buyers have been effectively priced out of the city, says Geoff Smith, Woodstock Institute project director. But no matter where they buy, affordability is a big issue for lower-income households, he observes.

Traditionally, a financial crisis like a job loss causes foreclosures. Some of the recent foreclosures trends also may be due to wages not keeping pace with home prices, and buyers taking mortgages that make buying more affordable initially, but have features that can increase foreclosure risks, Smith says.

– It’s a FACT: You’re entitled to find out what insurers report about you.

If you receive your homeowner insurance bill is significantly higher but you haven’t filed any claims, you can complain to the insurer.

You also may want to take if there are mistakes in the information that the insurance industry keeps on consumers.

Just as credit card companies report to credit bureaus, homeowner and auto insurers report to the Comprehensive Loss Underwriting Exchange (CLUE) or the Automated Property Loss Underwriting System (A-PLUS).

And just as a recent law known by another acronym, the FACT Act, lets consumers view what’s in their credit report, the law also allows consumers one free look each year at what insurers say about the claims they file.

To get the CLUE, which a majority of homeowner and auto insurers report to, visit the Web site, Or you can call 866-527-2600 and follow the prompts for getting the free CLUE.

To obtain the A-PLUS report, call 800-709-8842.

Consumers can complain about any errors they see by following the instructions on how to register a dispute that’s included in the report.

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