A warning for homeowners - Rising foreclosures concern experts
A warning for homeowners - Rising foreclosures concern experts
By Gerry Smith
Copyright © 2007, Chicago Tribune
Published July 15, 2007
More than a hundred people gathered Saturday in the Austin neighborhood as housing experts sought to raise awareness about an epidemic that has left in its wake a growing number of boarded-up houses across Chicago.
During a town hall meeting at the Austin Senior Wellness Center, experts said the city is in the midst of a foreclosure crisis and urged homeowners to seek counsel before signing a mortgage. They also warned about "predatory lenders" offering interest rates that may increase dramatically over the life of a loan.
The forum came as the number of new foreclosure cases in Chicago increased 36 percent over the last year, from 7,558 to 10,294, the biggest single-year increase since 1993, according to the National Training and Information Center, a Chicago-based organization that compiles reports on the home-loan industry. More than half of foreclosures were on loans less than two years old.
Illinois is ranked the eighth highest state for foreclosures, according to RealtyTrac.com, which monitors foreclosures.
Meanwhile, economists are predicting that homeowners will start feeling squeezed as low interest rates that fostered the real estate boom begin to rise. The national average for 30-year fixed-rate mortgages has grown from 6.18 percent to 6.74 percent this year, Freddie Mac, one of the nation's largest mortgage investors, said last month.
At the forum, Michelle Rodriguez-Taylor, a housing organizer at the information center, said the problem has spread in Chicago neighborhoods such as Austin, where boarded-up houses highlight a 65 percent jump in new foreclosure cases since 1993.
U.S. Rep. Danny Davis (D-Ill.), whose district includes Austin, attributed the rise of foreclosures to homeowners signing mortgages without fully understanding the conditions of their loans.
"They've invested everything they have into a place they can call their own," Davis said. "And then they have that taken away and they don't understand why."
Rodriguez-Taylor said many lending companies are skirting an Illinois law designed to protect borrowers from high interest loans by offering mortgages with adjustable rates that start as low as 4 percent but rise as high as 12 percent within a year.
"We're seeing people paying over 50 percent of their income on their loans," she said.
Michael van Zalinger, who works at the Neighborhood Housing Services of Chicago, said he often sees foreclosures occur when subprime loans with a fixed rate for the first two years start to increase every six months for the life of the loan.
He said many homeowners are falling behind on monthly payments that can start as high as 50 percent of their pre-tax income. When the interest rate increases after two years, he said, borrowers are paying as high as 90 percent of their take-home income.
Speakers at the meeting urged anyone who has fallen behind on their mortgage payments to call the National Foreclosure Prevention hot line at 888-995-4673.
----------
gfsmith@tribune.com
By Gerry Smith
Copyright © 2007, Chicago Tribune
Published July 15, 2007
More than a hundred people gathered Saturday in the Austin neighborhood as housing experts sought to raise awareness about an epidemic that has left in its wake a growing number of boarded-up houses across Chicago.
During a town hall meeting at the Austin Senior Wellness Center, experts said the city is in the midst of a foreclosure crisis and urged homeowners to seek counsel before signing a mortgage. They also warned about "predatory lenders" offering interest rates that may increase dramatically over the life of a loan.
The forum came as the number of new foreclosure cases in Chicago increased 36 percent over the last year, from 7,558 to 10,294, the biggest single-year increase since 1993, according to the National Training and Information Center, a Chicago-based organization that compiles reports on the home-loan industry. More than half of foreclosures were on loans less than two years old.
Illinois is ranked the eighth highest state for foreclosures, according to RealtyTrac.com, which monitors foreclosures.
Meanwhile, economists are predicting that homeowners will start feeling squeezed as low interest rates that fostered the real estate boom begin to rise. The national average for 30-year fixed-rate mortgages has grown from 6.18 percent to 6.74 percent this year, Freddie Mac, one of the nation's largest mortgage investors, said last month.
At the forum, Michelle Rodriguez-Taylor, a housing organizer at the information center, said the problem has spread in Chicago neighborhoods such as Austin, where boarded-up houses highlight a 65 percent jump in new foreclosure cases since 1993.
U.S. Rep. Danny Davis (D-Ill.), whose district includes Austin, attributed the rise of foreclosures to homeowners signing mortgages without fully understanding the conditions of their loans.
"They've invested everything they have into a place they can call their own," Davis said. "And then they have that taken away and they don't understand why."
Rodriguez-Taylor said many lending companies are skirting an Illinois law designed to protect borrowers from high interest loans by offering mortgages with adjustable rates that start as low as 4 percent but rise as high as 12 percent within a year.
"We're seeing people paying over 50 percent of their income on their loans," she said.
Michael van Zalinger, who works at the Neighborhood Housing Services of Chicago, said he often sees foreclosures occur when subprime loans with a fixed rate for the first two years start to increase every six months for the life of the loan.
He said many homeowners are falling behind on monthly payments that can start as high as 50 percent of their pre-tax income. When the interest rate increases after two years, he said, borrowers are paying as high as 90 percent of their take-home income.
Speakers at the meeting urged anyone who has fallen behind on their mortgage payments to call the National Foreclosure Prevention hot line at 888-995-4673.
----------
gfsmith@tribune.com
posted by Carlos T Mock at 6:17 AM
0 Comments:
Post a Comment
<< Home