Just Updated:  Click here for a list of Programs and Policies Implemented by Municipalities to Address Foreclosed/Vacant Buildings 

On May 6, 2008, the Chicago Metropolitan Agency for Planning, Metropolitan Mayors Caucus, and Federal Reserve Bank of Chicago hosted a conference to discuss how foreclosures affect communities, and to share strategies aimed at lessening the negative impacts of vacant buildings.  Taking Action: Local Government Strategies to Mitigate the Impact of Foreclosures on Communities brought together more than 100 representatives from municipalities, county governments, and the housing and development field to share their experiences, successes, and challenges when facing the foreclosure crisis.  Foreclosures affect more than just those who do lose their homes. The ramifications can be felt in the surrounding neighborhood, the community as a whole, and even the larger metropolitan region.

The conference began with a welcome and opening remarks from the three host organizations, represented by Harry Pestine (Federal Reserve Bank of Chicago), Palatine Mayor Rita L. Mullins (Metropolitan Mayors Caucus) and Randy Blankenhorn (Chicago Metropolitan Agency for Planning).

The first speaker, Geoff Smith with Woodstock Institute, addressed the current foreclosure state of affairs in metropolitan Chicago, highlighting not only that foreclosure filings are on the rise, but that they are impacting communities of all types and in all parts of the region.  To view the presentation click here.
To view Woodstock Institutes 2007 Foreclosure Report Click Here 

He was followed by Steve Hermes of NeighborWorks America, who spoke on the topic of foreclosure prevention, and described the resources available to those at risk of foreclosure, such as the 1-888-995-HOPE hotline which connects individuals with housing counselors who may be able to help them to avoid losing their homes.  To view the presentation click here or to view the Illinois Foreclosure Network Agency List click here 

Foreclosures, however, affect more than just those who do lose their homes.  The ramifications can be felt in the surrounding neighborhood, the community as a whole, and even the larger metropolitan region.  As a city or village experiences a rash of foreclosures, properties can become blighted eyesores, residents see property values decline, municipal revenues drop, and the area becomes less attractive to potential new residents.  Bill Apgar, the Senior Scholar at Harvard University’s Joint Center for Housing Studies, addressed these impacts at the Taking Action conference.  In a paper he co-authored in 2005, Collateral Damage: The Municipal Impact of Today’s Foreclosure Boom, Bill explored the costs that foreclosures impress upon municipalities.  He estimates that 26 municipal government and county offices have a line item affected by foreclosures.  This puts pressure upon the governmental bodies as well as residents who see their neighborhoods decline while their taxes may be increasing.  To view the “Collateral Damage” report click here.

How communities can respond to this crisis was the focus of the second half of the Taking Action conference.  Many people had questions regarding what legal authority municipalities have in addressing vacant buildings.  Local municipal attorney Julie A. Tappendorf, a partner with Ancel Glink Diamond Bush DiCianni & Krafthefer P.C., discussed how Illinois law can be applied in these cases.  Thus far, the state has not been very active in this area, so there are not many statutes explicitly detailing what a municipality has the power to do.  The power of municipalities to enact laws to protect the public health, safety and welfare of their residents is one area in which municipal officials can base how they address foreclosures, as is their property maintenance codes, which allow communities to regulate landscaping, weeds, trash and debris, building materials, and dilapidated and unsafe conditions, among others.  When it comes to vacant building ordinances and registries, there is no express statutory authority in Illinois to enact these, but they may be incorporated through the property maintenance code. Julie covered a host of actions that municipalities can take including demolitions, liens, landbanking and adjudication options for code violations.  As with most programs, communities will need to determine how efforts to recapture vacant buildings will be funded.  To view Julie Tappendorf’s presentation click here or to view handouts click here.

The final session featured a panel of local officials discussing innovative programs that have been implemented to address foreclosures within their communities.  Highlighted programs included: fining banks for not maintaining vacant properties in Chula Vista, CA; vacant property ordinances and registries in Bellwood and Chicago, IL; modified land banking in Bellwood; decreasing the time required for vacant property disposition in Cuyahoga County, OH; Chicago’s Troubled Buildings Initiative and Slum Nuisance Ordinance; requiring banks or titleholders to pay for insurance on vacant homes in Bellwood and Chicago; and creating a land bank in Cuyahoga County.  The speakers discussed why their communities or counties chose to enact these programs and the success they have had so far.  While the size, character and composition of the governments represented on the panel differed greatly, each of the presenters spoke to the costs and related negative impacts stemming from the increased number of vacant buildings they had seen in recent years. 

The Taking Action conference provided information regarding a number of potential strategies to that can be implemented to mitigate those negative effects.  Attendees were encouraged to take these ideas back to their boards and staff to think about how something similar might work for them.  Continuing this conversation will enable the region as a whole to grow stronger and to better plan for the future.

Foreclosure Data Resources:

Woodstock Institute’s “Chicago Area Community Lending Fact Book” provides residential lending data to the public in a form that enables neighborhood residents, community organizations, policymakers, and lenders to monitor and manage mortgage lending activity and to ensure that each neighborhood has access to affordable and responsible credit:

RealtyTrac Foreclosure Report 2008 Q1

The Lane Guide:  The leading lender directory since 1957, the Lane Guide has been widely used by the industry to locate information concerning payoffs, demands, verifications, returned check disposition, loss mitigation, REO contacts, bank/lender mergers, acquisition references, mortgage discharges and other types of financial information.  The Lane Guide lists over 140,000 open and closed lenders, creditors and banks nationwide. 

Note- in response to questions regarding registries: When setting up a Vacant Building Registry, communities should notify local banks and lenders that the registry has been created and that foreclosed properties must be registered.  To do so, send the local ordinance to these groups.  They forward the information to almost all the lenders in the US.

Publications:

The Federal Reserve Bank “Consumer Handbook for Adjustable-Rate Mortgages”  This handbook explains how ARMs work and discusses some of the issues that borrowers may face. It includes ways to reduce the risks and gives some pointers about advertising and other ways you can get information from lenders and other trusted advisers.

Joint Center for Housing Studies of Harvard “America's Rental Housing: The Key to a Balanced National Policy”

Center for Neighborhood Technology H + T Affordability Index: The Housing and Transportation Affordability Index, developed through CNT’s partnership in the Center for Transit Oriented Development (CTOD), is an innovative tool that measures the true affordability of housing. The traditional measure of affordability used by planners, lenders, and most consumers recommends that housing should be less than 30 percent of income. The Housing and Transportation Affordability Index, in contrast, takes into account not just the cost of housing, but the costs of housing and transportation. 

Foreclosure Prevention Resources:

Neighborhood Housing Service of Chicago, Inc.- The Illinois Statewide Foreclosure Prevention Network 

Foreclosure Counseling Hotline:  For homeowners facing foreclosure, immediate help is available for you. Call 1-888-995-HOPE

To View a list of HUD approved housing counseling agencies click here. 

IHDA Homeowner Outreach Days
The Illinois Housing Development Authority is bringing mortgage loan providers, local housing assistance groups and state agencies together in one place to help homeowners who are struggling to pay their mortgages.

Upcoming Events:

Metropolitan Planning Council- Without a Safety Net “How can suburban communities prepare for new market realities”