Front-Yard Signs Call Out Banks on Foreclosures

Southwest Organizing Project (SWOP) is "naming names" of banks that are foreclosing on properties on Chicago's Southwest Side, where 7,300 foreclosures have been filed over two years in four area ZIP Codes. The bank names are prominently featured on yard signs that say "Deutsch Bank (or Citibank or JP Morgan Chase or Bank of America) failed this neighborhood through foreclosures."

First Business News filed a news report on June 14, below.

Report on the Economy, via the Hair Salon

There's a price war going among the hair salons and barber shops on Clark Street in Rogers Park, and that's bad news for Alicia, the woman who's been cutting my hair for the last 10 years.

When I stopped in at La Bella Unisex today, she got right to the point. Business is bad. It's not just that people have lost jobs and are pinching pennies; it's the price competition. The place right next door has a big sign in the window: Hair Cut $5. And there's another down the street charging the same amount.

I asked how anyone can make money charging only $5. They can't. With storefronts renting for $1,200 a month, she said, even if you could fill the chairs all day long it would be hard to make it. And the chairs are rarely full.

Alicia asked when I thought the economy would turn around. I told her I've been working on a foreclosure-response project and the experts aren't optimistic; they are worried, in fact, that things could get much worse in some areas as the hundreds of boarded and abandoned buildings trigger a free-fall in what's left of the market.

Why a free fall? Alicia's husband had good work for years doing construction on condominium conversions. But no work lately. Her son, just out of high school, is an apprentice at an auto repair shop on Jarvis. It's a good opportunity but the pay isn't there. And her own business is way down. She's nervous about the family scraping together enough money to pay the mortgage on their own condominium . . . and it's a good bet that the people working next door, at $5 a cut, are having similar troubles.

As Alicia finished up with the razor, trimming the wild hairs off my ears, a man walked in and asked "How much for a haircut?"

"Ten dollars for a normal haircut," Alicia replied, sizing up the potential client. She hesitated a split second, then added, "and if you need just a simple cut, five dollars."

"Yes, just a simple cut," he replied.

So that's the view from Clark Street, where people are hurting.

Video: Communities Respond to Foreclosure Storm

Just in from our colleagues at TuMultimedia, Sarahmaria Gomez and Alex Fledderjohn, here's a powerful video about the massive impact that the foreclosure crisis has brought down on neighborhoods, and how some communities are fighting back with trainings for homeowners as well as political and social activism. It's a nine-minute piece featuring trainers, organizers and people who have fought -- or are fighting -- to keep their homes.


Foreclosures Hit Hard; Chicago Neighborhoods Respond from Tu Multimedia on Vimeo.

If you'd like a copy of this video to use at community meetings about foreclosures, contact Gordon Walek of the Chicago Neighborhood News Bureau: gwalek@lisc.org

Illinois Settlement Helps Homeowners

Maybe I'm just out of it, but it took me until this morning to learn that on October 6, Attorney General Lisa Madigan reached a settlement with Bank of America, which acquired notorious mortgage lender Countrywide earlier this year. Among other benefits, the settlement will stop Countrywide's pay-option ARM loans from putting homeowners in the position of increasing the principal owed on their house even as they make payments ("negative amortization"). Her office says 11,000 Illinois homeowners should benefit.

Here's the gist from her office's press release:

As part of this landmark agreement, Countrywide agreed to implement a range of homeowner relief programs and to drastically modify its future lending practices. Specifically, Countrywide agreed to:

* Suspend foreclosures on the riskiest loans to determine if borrowers qualify for modification.
* Establish a Foreclosure Relief Fund of $8.5 million for borrowers in subprime and pay-option ARM loans who lost their homes due to early payment default or default at the time the interest rate reset. Early payment default is a strong indication that the loan was not underwritten properly and that the homeowner couldn’t afford the loan from the beginning.
* Help homeowners through a $1 million relocation assistance program, which will provide payments to homeowners who cannot qualify for a loan modification. The funds will help borrowers relocate if necessary.
* Waive loan modification fees and late fees.
* Waive prepayment penalties on subprime and pay-option ARM loans owned by Countrywide.
* Pay $1.7 million for the costs incurred in Madigan’s investigation, eliminating taxpayer expense.

Let's get the word out in the neighborhoods to help stop the bleeding from the foreclosure crisis.

Foreclosure map: 'A total gut-punch'

Sometimes a photo or graphic is worth far more than a thousand words, as demonstrated on the home page of the Southwest Organizing Project's web site. The map they used to show the spread of foreclosures across the 60629 ZIP code area is what one of my colleagues calls "a total gut-punch." It makes very clear that the wave of foreclosures represents a tremendous threat to Chicago neighborhoods.

Neighborhoods and housing organizations are mobilizing to strike back, with help from the MacArthur Foundation, designing a wide variety of programs and outreach to help people keep their homes and to get boarded buildings back into productive use. Urban affairs writer John McCarron is working on a story about the problem and local responses, which we'll link to as soon as it is public.

Foreclosure in the news and in the neighborhoods

This week's Crain's Chicago Business has a big cover story, "Foreclosure Fallout," on the impact the subprime mortgage crisis is having in Chicago neighborhoods, both city and suburban. Since you can't read it online unless you subscribe, stay with me here for some of the details.

Over 800 Austin homeowners lost their homes to foreclosure last year, the most of any Chicago neighborhood. Although home prices have fallen in Austin after a steep three-year rise, prospective buyers are finding it harder to get a mortgage due to the credit crunch. Homes sales have plunged to 79 in the last six months, from 192 in the same period the year before.

It's well known that empty houses often become nests of drug dealing and prostitution. I see it firsthand. We have an empty house on my block, and it's been a constant battle to keep squatters involved in those illegal activities out. Right now we're winning, but that could change any minute.

The Crain's story also profiles a pastor fighting drug trafficking in abandoned houses in Humboldt Park and a Logan Square business owner whose cafe, Cherubs, has seen sales fall 20 percent since December.

Times are tough and will get tougher. Many homes bought with adjustable-rate mortgages will shift to higher interest rates over the next two years. This includes the house next door to me, which is in worse shape than mine and costs my neighbors at least $200/month more than mine costs me. They are talking about selling when the mortgage resets, but I shudder to think how hard it will be for them to find a buyer. There's a brand-new brick three-bedroom house across the street that's been on the market for nearly a year.

Despite all the gloom and doom, a few relentless optimists remain in action. One is Carlos Nelson of the Greater Auburn Gresham Development Corporation. I stopped by his office a couple of weeks ago and asked how the mortgage crisis and slowing economy were affecting Auburn Gresham. Rather than give me a long list of new businesses on 79th Street or an explanation of how one person's challenge is another opportunity, Carlos and board member Byam Alexander shifted gears from community developers to rap artists and delivered a quick remake of this famous Public Enemy song:

We ain't in a recession
We in a progression
On the 7-9
Don't. . . don't. . .don't. . .don't believe the hype!