Seeking to give struggling homeowners some relief, Cook County
commissioners are committing $3 million to create a foreclosure
The program provides a way for homeowners and lenders to meet
face-to-face and sort out their options with the help of
It’s similar to programs that have cropped up in places like
Philadelphia and New York State. Proponents say it’s a vital lifeline
to homeowners who otherwise would abandon their homes or fall further
But skeptics say such programs simply delay the inevitable.
“You can counsel them all you want, but there’s no solution to their
problem,” says Commissioner Tony Peraica, the lone nay vote on the
issue’s inclusion in the budget.
But supporters like Braden Listmann, a field director for Action
Now, a community organization that works with residents on the South
and West sides, say the program will have just the opposite effect. He
says it will not only help people out of foreclosure, but educate them
on how to deal with problems that surround foreclosure.
Chief among obstacles for homeowners served with foreclosure
notices, he says, is that many don’t realize the notice is also a court
“A lot of people think that’s it, they’ve lost their house, and they
won’t show up to the court date,” Listmann says. “They’ll just make
plans to move out.”
The money will fund a three-pronged program, introduced by
Commissioners Larry Suffredin and Forrest Claypool and advocated by the
Chief Judge Timothy Evans, incorporating door-to-door outreach,
mediation and loan counseling.
Under the program, the county would retain lawyers familiar with
foreclosure practices. Whether they are paid or not is up in the air.
When homeowners are issued a foreclosure notice, they are given the
court summons with information on how to meet face-to-face with their
lender. At this point, lawyers and lenders will work to devise a
solution for homeowners.
Forcing lenders to meet with homeowners could go a long way in
mitigating the housing crisis in the county, says Commissioner Bridget
“The incentive has to be that the lenders know they’re not going to get an easy order in foreclosure,” she says.
According RealtyTrac, a Web site that tracks foreclosures, there
have been 156,218 new foreclosure filings in Illinois in 2009,
including 9,130 in Cook County in November, a 134 percent jump from a
Such programs are good not only for people who face losing their
homes, but also for lenders, who often lose huge chunks of change when
their properties going into foreclosure, says Dennis Bordyn, a attorney
in Kane County’s Maple Park who specializes in loan modification and
“The lenders lose substantially more money in a foreclosure than in
any other situation,” he says. “It would be a different story if the
lenders made out on foreclosures … But it’s also in the lenders’ best
interest that they can avoid as many foreclosures as possible, in which
they would take a far great loss than the alternatives to foreclosure.”
Lenders lose an average of 40 percent when homes go into
foreclosure, he says, often because vacant homes are stripped of
valuables, like copper wiring, damage that occurs because of winter
weather and vandals. It’s even worse when a home is among several in a
neighborhood in foreclosure.
“One of the problems in Chicago and other poor neighborhoods is once
a house goes into foreclosure and the homeowner gives up, frequently
they walk away from the house,” Bordyn says.
As the country continues to grapple with the effects of an economic
meltdown and a lending crisis precipitated by bad loans, the Obama
administration has also stepped forward to offer some relief. In
November, the administration moved to speed up plans to allow
homeowners to modify their loans by up to 31 percent.
In Cook County, a $28 million U.S. Department of Housing and Urban
Development grant has been helping areas that have been or are likely
to be affected by foreclosures and abandonments.
Still, helping hands like these and the county’s program are
short-term fixes, says Matthew Weisberg, a Philadelphia attorney who
used to represent lenders in foreclosure cases and now works with
consumers on similar cases. He calls it nothing more than a “stopgap.”
Philadelphia was the first city in the nation to enact a foreclosure mediation program.
Part of the problem he sees in Philadelphia is banks sending
attorneys who have no authority to mediation sessions. So when
homeowners think a deal has been made, higher-ups need to sign off on
it, further complicating the process.
“That’s classic banks. It’s form over substance,” he says. “It’s
arguably what has caused the entire financial problem. The right hand
doesn’t know what the left hand’s doing, and no one’s looking to the
Weisberg says lenders are easy to blame, but homeowners who default on their mortgages should also be held accountable.
“My perception is that it does not work,” Weisberg says. “It depends
what you call working. If you think getting someone an extra four
months in their house is working … then it works.”