THE JOURNAL & TOPICS NEWSPAPERS | THURSDAY, APRIL 3, 2008
Resurrecting Depression-Era Program Proposed In Fight Against Foreclosures
The housing market is in bad shape. This week, U.S. Rep. Mark Kirk and an economic think tank met, detailed how bad it is and offered a plan to mitigate the impact to local homeowners.
A study released last month by the Woodstock Institute studied foreclosure rates in detail across six northern Illinois counties.
Foreclosure hot spots include Palatine, Des Plaines, Hoffman Estates, Arlington Hts., Wheeling and small pockets of Rolling Meadows.
Kirk (R-10th) held a roundtable discussion with Woodstock Institute members at his office in Northbrook on Monday, Mar. 31 and offered his plan to help.
At the roundtable, experts outlined local trends while Kirk discussed his bill to revive a Depression-era banking institution to help homeowners in foreclosure by allowing the federal government to take over distressed loans.
"For the past two years, we have seen an increase in foreclosures," Congressman Kirk said. "Foreclosures hurt more than families, they depress the values of neighborhood homes and reduce the number of taxpayers supporting local schools. Abandoned, boarded-up homes encourage crime, further depressing property values and making our streets less safe."
The study's author, Jeff Smith, told the Journal that the current trouble in the real estate market would remain until at least the summer of 2009.
The Northwest suburbs faired better than most areas in the study and Chicago fairs better than many areas in the United States.
The study says that foreclosures are up 154% in northern Cook County and 99% in northwest Cook County between 2005 and 2007.
The area with largest rate of increase in recent foreclosures is northern Cook County. Smith said that is because northern Cook has had low rates of foreclosures and any increase will read as dramatic.
Southern Cook County and the South Side of Chicago had the highest rates of foreclosure over all in the six county area.
Smith said Kirk's bill to bring back the Home Owners' Loan Corporation (HOLC) is the best plan he has seen so far to allow people to stay in their homes, limit foreclosures and stabilize the housing market.
In 1934 the HOLC was established. Kirk's press release told the history: "HOLC purchased troubled mortgages from lenders at a substantial discount (on average 20 percent below their pre-depression value), then offering reasonable refinancing options to homeowners. This prevented a total collapse of banks and allowed families to remain in their homes."
The HOLC was liquidated in 1954 and returned $14 million to the tax rolls.
Kirk's bill would establish that entity again to purchase troubled mortgages and allow homeowners to restructure their loans.
Smith said plans by other politicians to reorganize the federal regulatory agencies, may help future economic downturns but will do little to help this one.