July 25, 2007
If you think the subprime mortgage foreclosure crisis is
just an urban or low-income phenomenon, think again.
North Cook County,
County and DuPage County
saw the highest percentage increase in home foreclosures in the six-county area
from 2005 to 2006, said Geoff Smith, research director for the Woodstock
Institute, a nonprofit research and policy group.
Foreclosures in those three areas increased by 52.1
percent, 48.7 percent and 46.4 percent, respectively, Smith said.
Suburbanites shouldn't necessarily panic yet —
foreclosure rates in those areas were below the six-county 2006 average of 14.6
foreclosures per 1000 properties. Because the foreclosure rates were low to
begin with, any change can register as a big percentage increase, Smith noted.
But while that explains some of the jump, the other
contributing factor is that suburbanites, just like everyone else, fell victim
to sub-prime loans, particularly those offering introductory "teaser"
rates that later converted to much higher rates a few years in.
"The foreclosure problem is trickling into other
areas," said Smith, who gave an overview of the foreclosure problem at
Illinois Attorney General Lisa Madigan's Homeownership Preservation Summit
Tuesday in Chicago.
Just as in urban areas, lenders induced suburbanites into
homes that may have been more than they could afford. While the homes may have
been affordable at the initial teaser rate, they weren't manageable at the
higher rate, Smith noted.
"When you get loan products like that and you don't
put much equity down … that leaves you vulnerable," said Smith.
Madigan convened Tuesday's summit of experts from the
mortgage lending industry, nonprofit consumer advocacy groups and government
agencies to try to brainstorm for ways to stem the foreclosure tide and to tout
her pending legislation for the problem.
In 2006, Illinois
foreclosures increased 55 percent — to 72,455 — and are tracking even higher
for 2007, Madigan's office said. Foreclosures are expected to reach 36,000 in
2007 in Cook County alone, a prepared statement from
Madigan said. In McHenry
County, foreclosures went
from 889 in 2005 to 1,098 in 2006 and are already at 698 through the end of
Madigan's bill would require lenders to verify a borrower's
ability to repay an adjustable rate loan at its high end, not just the low end.
Foreclosure experts recommend talking to your mortgage
company — and a HUD-certified non-profit housing counselor — before you fall
behind in payments.
But, conceded Lynette Briggs, Executive Director of the DuPage Homeowner
Center, some lenders
won't budge or cut you slack on interest rates until you start missing
"They're like, 'If they're managing with the
payment, why should we do anything?,'" said Briggs.