Marilyn Kennedy Melia

Special to the Tribune

October
8, 2006

 

Of all the grim housing news lately, probably the most
dire surrounds statistics and predictions about foreclosures.

 

Here, a look behind the numbers and at ways homeowners
may find help:

 

– Chicago
officials are counting the number of foreclosures that didn't happen.

 

It adds up to 1,300 homeowners in the last three years
who were able to hold on to their homes. That count comes from numbers tracked
by the Homeownership Preservation Initiative (HOPI), a collaborative effort
among the city, the non-profit Neighborhood Housing Services of Chicago,
mortgage firms and other non-profit and government groups.

 

The city slogan "every minute counts" is to
encourage homeowners to dial 311 as soon as they can't pay their mortgage. The
line connects homeowners with a counselor who can negotiate with their lender,
says Chicago housing commissioner
John G. Markowski.

 

Since the 311 line was established in March 2003, about
4,300 Chicago residents have
called.

 

The 1,300 who kept their homes called before they missed
several months of payments, Markowski says. At an early stage, mortgage lenders
are more apt to agree to a "workout" to extend the loan or make
similar adjustments so paying is easier, Markowski says. When owners are behind
several months, their mortgage amount grows, making a plan less feasible.

 

Callers to 311 were an average of 5.3 months behind on
their payments, a study of the program shows.

 

– Statistics don't lie, but they can confuse.

 

Consider: Last month, Irvine,
Calif., firm RealtyTrac announced that
foreclosures nationwide jumped 24 percent in August from July, and foreclosures
in the Chicago area shot up 58
percent.

 

Also last month, the Mortgage Bankers Association (MBA),
a Washington, D.C.,
based trade group, said the percentage of loans in foreclosure at the end of
the second quarter of 2006 was .99 percent, up .01 percent from the same time
last year.

 

How can the RealtyTrac stats sound so dire, while the MBA
announcement seems relatively benign?

 

"There are different ways to track changes in
foreclosures," says Geoff Smith, project director at the Woodstock
Institute, a Chicago non-profit that keeps foreclosure stats.

 

The MBA is reporting the number of bad loans out of the
number of mortgages outstanding, and the number of total mortgages has grown
substantially in the fading housing boom.

 

RealtyTrac is counting the number of foreclosures
recorded within certain geographic regions. The number of foreclosures
"started," or recorded with county government, can be about 60
percent more than the number that end up being foreclosed upon, says Rick
Sharga, vice president at RealtyTrac. That's because some homeowners sell their
house or work out a plan with their lender first.

 

Still, Smith says counting foreclosures started is valid,
because it indicates how many homeowners have difficulty affording their homes.

 

Another measurement compiled by RealtyTrac looks at the
ratio of foreclosure starts to total households in a given area. In August,
they report one foreclosure filing for every 1,003 households in the U.S.,
while Illinois had one filing per
693 households.

 

– Note to homeowners facing foreclosure: Those scary
mortgage company letters are worth opening.

 

As part of a class-action suit, Ameriquest, an Orange,
Calif., loan company, has been ordered to send borrowers facing foreclosure a
notice stating that, if their loan was taken out in a refinance in the last
three years and the borrower did not receive a proper notice of a three-day
right to cancel, they may be able to rescind their loan.

 

Rescind means they may be able to pay off the original
loan amount borrowed, minus finance charges, which includes interest
paid-to-date and closing costs, says Dan Lindsey, a supervisory attorney with
the Legal Assistance Foundation of Metropolitan Chicago.

 

Take the notice to an attorney, he says. Some who
receives this re-notification from Ameriquest may be able to pay off their
original loan amount and stay in their home, provided they can find a loan they
can afford, Lindsey says.