Durbin: New Report Shows Foreclosure Crisis Has Rising Impact on Middle Class

Foreclosures not limited to predatory lending as more homeowners are “underwater”

CHICAGO, IL – March 15, 2010 – (RealEstateRama) — More homeowners across Chicago find themselves at risk of foreclosure as property values drop and families struggle with unemployment, U.S. Senator Dick Durbin (D-IL) said today at a news conference to release National People’s Action’s 2009 Chicago Foreclosure Report.

“Foreclosures are no longer being driven primarily by predatory lending,” Durbin said. “Most of those homes, sadly, are already gone. The crisis has now evolved into an ‘underwater’ problem and an unemployment problem—and those problems have seeped into neighborhoods across Chicago.”

According to the new report, more than 23,000 homes were in foreclosure in 2009—16 percent more homes than were lost to foreclosure in Chicago in 2008. The total represents three times the number of homes that were in foreclosure each year in Chicago in the years running up to the beginning of this crisis in 2007.

In addition to those who are already in default, another 11 million homeowners nationwide owe more than their homes are worth, which is known as being ‘underwater.’ As of the 4th Quarter of last year, the average underwater borrower owes $70,000 more than the home is worth according to property data compiled by First American CoreLogic.

“With the unemployment rate now above 11 percent in Illinois, many families are facing difficulty making their mortgage payments,” Durbin said. “Even if they want to move, these families are stuck, because they often can’t pay off the mortgage even by selling the house. Far too often, foreclosure is the only option left.”

A copy of today’s report is available for download here: http://showdowninamerica.org/files/npa_2009_chicago_foreclosure_report.pdf