By Dennis Rodkin
July 8, 2009 

By now, it’s pretty well known that the
foreclosure crisis is no longer limited to lower-income households. Large
numbers of middle- and upper-income homeowners are falling into default, too.
But a new report from the Woodstock Institute points out that (.pdf of report
available here), in many parts of the Chicago region, more affluent households
are far less likely than lower-income homeowners to get specialized counseling
about the foreclosure process—and that could potentially shut them off from some
valuable resources.

Consider, for instance, the case of a middle-income
household falling into foreclosure because of a job loss (as opposed to a
low-income household headed for foreclosure because of a predatory loan’s
skyrocketing interest rate). “There may be opportunities there to renegotiate,
and foreclosure may be more preventable,” says Geoff Smith, Woodstock’s
vice-president. But without consulting the agencies monitoring the chaotic
foreclosure process, middle-income homeowners might not find their way to those
options, Smith says.

The Woodstock Institute and others have established
that homeowners who have sought out counseling have a higher likelihood of
staying in their homes than those who don’t get counseling. That makes even more
significant the statistics from the Woodstock report, “On the Foreclosure Front
Lines: Surveying the Capacity of HUD-Certified Housing Counseling Agencies in
Illinois,” which was released Monday. In parts of the city and suburbs where
low-income households are concentrated and where foreclosure problems predate
the crisis of the past two years, the report notes that there may be seven or
more counseling sessions per 100 foreclosure filings.

But that ratio
doesn’t hold true in suburbs with a higher concentration of middle-income
households. In Algonquin, for instance, where 476 homes were foreclosed in 2008,
there were no counseling sessions, Smith says. In Crystal Lake, there were 310
foreclosures and no counseling sessions. Bolingbrook, with 700 foreclosures, had
only six counseling sessions, while McHenry, with 411 foreclosures, had only one
counseling session.

Smith acknowledges that middle- and upper-income
homeowners may have established resources of their own to draw on—friends and
family who can provide not only financial support, but also legal advice or help
in networking toward a solution. Still, says Smith, foregoing counseling can put
these people at a disadvantage in the foreclosure process. “They don’t know
everything that might be available to them,” he says. “They need to have the
right representation as they’re going through this.”

Smith also notes
that most counseling programs are available from agencies oriented toward
helping lower-income people with their housing problems. Before the foreclosure
crisis hit, says Smith, “there was not as strong a network of agencies” helping
middle-class people homeowners. The large-scale solution—creating and
publicizing more foreclosure-counseling agencies in middle-income areas—can’t
happen overnight. And as Mary Ellen Podmolik of the Chicago Tribune wrote on
Tuesday, the Woodstock report details a massively over-burdened
foreclosure-counseling network, already incapable of handling the crushing
caseload.

Nevertheless, for middle- to upper-income homeowners in
crisis, the lesson may be that you don’t have to try to navigate the treacherous
waters of foreclosure alone. There’s help available, even if it’s slow in
coming. “Just building awareness of that is a beginning,” Smith says.