Durbin Discusses Next Steps to Address Foreclosure Crisis

CHICAGO, IL – September 3, 2009 – (RealEstateRama) — U.S. Senator Dick Durbin (D-IL) met with members of the Southwest Organizing Project (SWOP) to discuss the state of the foreclosure crisis on Chicago’s southwest side and to discuss a several legislative proposals he is considering introducing in the Senate this fall. One proposal would give homeowners facing foreclosure the right to temporarily remain in their homes by paying fair-market rent to the bank, another would provide funding to support mandatory arbitration programs in which homeowners and banks sit down face to face to work out loan modifications, and a third would extend the tax credit for first time home buyers enacted earlier this year to further reduce excess housing inventory that is dragging down sale prices.

“In order to more effectively combat this crisis, we need to apply innovative solutions,” said Durbin. “We have to continue improving the Administration’s Home Affordable Modification Program, updating the bankruptcy code, and extending the Homebuyer Tax Credit.”

“We need to think this through,” Durbin said. “Why not let a family stay in their own home and maintain it – and provide the bank some revenue – rather than let that home sit empty and become a blight on the neighborhood and possibly a haven for criminals, drugs, and gangs? And if these servicers, some of which have taken billions of dollars in taxpayer bailouts, refuse to meet the foreclosure-reduction standards and goals they have signed up for under the Administration plan, then there need to be some penalties for non-compliance.”

“Nationwide, over six million loans were either past due or in foreclosure in the second quarter of 2009, the highest level ever recorded,” said Durbin. “Right here in Illinois, nearly 14% of mortgages were in foreclosure or behind on payments at the end of the second quarter, up from 9% a year earlier. The efforts of organizations like SWOP are clearly more important now than ever as we work to help stabilize the home ownership of families in Illinois and throughout the country.”

SWOP is currently working to secure modifications for over 100 families at risk of foreclosure on Chicago’s Southwest side. Formed in 1966 SWOP’s mission is to build a broad-based organization of institutions in Southwest Chicago, which will enable families to exercise common values, determine their own future and connect with each other to improve their neighborhoods.

In Chicago, more than 550,000 homes had mortgages worth $134 billion that were underwater at the end of June. A slight decline in home prices would push an additional 100,000 homes into negative-equity status, which would mean that 38% of homes in the area encompassing Chicago, Naperville and Joliet would be underwater.

“The current recession started in America’s housing market and it is not going to end until America’s housing market is stabilized,” said Durbin.

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