Woodstock Institute Senior Vice President Geoff Smith presented the findings of a new report that found that thousands of foreclosed, vacant homes in the City of Chicago are likely poorly maintained, lack clear ownership, and threaten to destabilize neighborhoods. “The steward relationship between loan servicers and the homes in our neighborhoods is broken,” noted Smith.  Smith recommended that loan servicers, who typically steward homes through the foreclosure process, focus on keeping families in their homes through widespread, sustainable loan modifications and that regulators hold servicers accountable for failing to comply with federal foreclosure prevention programs and local vacant property laws.

Chris Smith, Neighborhood Director of the Roseland Office of Neighborhood Housing Services (NHS) of Chicago, described the challenges Roseland faces in trying to keep the neighborhood stable and on the path to recovery. More than 38 homes out of every 1,000 homes with a mortgage in Roseland had a foreclosure filed on the property in 2010. The community has the second-highest numbers of “red flag” homes (137) in the City. Red flag homes are those potentially abandoned by their loan servicers in the foreclosure process. (See map for locations of vacant and potentially abandoned properties in Roseland.)

Housing Action Illinois Executive Director Sharon Legenza explained their efforts to hold loan servicers accountable for their foreclosure prevention efforts. Housing Action Illinois’ Servicer Accountability Initiative found that servicers are not agreeing to affordable loan modifications for the great majority of homeowners facing foreclosure and are not committing sufficient resources to respond to homeowners in an accurate and timely manner. Legenza reiterated the need for regulators to hold servicers accountable for complying with federal foreclosure prevention programs.

Senator Durbin reinforced his commitment to stopping the suffering caused by foreclosures in Illinois communities and across the country. Senator Durbin previously demonstrated leadership on foreclosure prevention by introducing legislation that would allow bankruptcy court judges to modify mortgages, but the Senator predicted that the current Congress would not approve such a measure.

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