Rahm Emanuel announces $20 million loan pool to target foreclosures
BY FRAN SPIELMAN City Hall Reporterfirstname.lastname@example.org August 17, 2011 2:38PM
Mayor Rahm Emanuel is trying a new approach to combat foreclosures in nine Chicago neighborhoods. | Sun-Times files
Updated: November 3, 2011 9:58AM
Nine Chicago neighborhoods riddled with foreclosures will get a blitzkrieg of cash and attention to turn those properties around, thanks to a $20 million loan pool unveiled Wednesday.
With foreclosures rising by 20 percent in 2010, and resources steadily declining, Mayor Rahm Emanuel is trying a new approach to combat the epidemic that threatens to tear down entire inner-city neighborhoods.
Instead of approaching the problem on a house-by-house basis, the mayor is targeting “small sub-sections” of nine neighborhoods hardest-hit by the foreclosure epidemic: Humboldt Park; Chatham; Chicago Lawn; West Woodlawn; Auburn-Gresham; West Pullman; Belmont-Cragin, Englewood and Grand Boulevard.
All nine have a concentrated number of foreclosures, continued “market interest by potential homeowners and residential developers” and a history of prior investments by neighborhood development corporations.
The goal of the so-called “Micro-Market Recovery Program” is to bring new ownership to 2,500 foreclosed homes over the next few years using up to $20 million in loans provided by the John T. and Catherine D. MacArthur Foundation.
That seed money is expected to leverage private capital — primarily from area banks holding foreclosed properties — to grow the loan pool to $50 million.
The city hopes to use the money to “foster the reoccupation” — either by assisting homeowners under water, rehabilitating foreclosed homes and providing “multiple incentive programs” to potential buyers or by providing financing to “approved developers” who will market the units themselves.
Banks will be asked to either bankroll the renovations or turn the properties over to the city for remodeling. They will also be asked to contribute to the pool of loans.
Last month, the City Council agreed to hold banks responsible for maintaining and securing foreclosed properties to rid Chicago taxpayers of the $15 million-a-year burden.
Housing and Economic Development Commissioner Andy Mooney said that ordinance will now be used to hold the banks’ feet to the fire.
“Until now, we’ve been in general discussions [with banks]. We’re gonna stop that conversation [and] say, ‘Mrs. Jones’ home down the block needs a restructuring. We want you to do that.’ Or, ‘There’s a vacancy. We want you to be part of the loan pool that’s gonna help bring that vacancy back,’” Mooney said.
If the banks refuse to cooperate, Mooney said, “We intend to use all of the city’s police powers when necessary — including the ordinance recently passed.”
Standing in front of a once-foreclosed, now renovated home in the 7800 block of South Ada, Emanuel said it makes sense to target distressed neighborhoods instead of individual homes.
“We have a problem throughout the city. … We don’t have all the resources to deal with it yet throughout the city,” the mayor said.
“So, it’s taking your resources … in a targeted way in the communities most in need right now that you can start to impact. It’s acknowledging our limitation of resources and making sure they achieve their maximum benefit.”
Last year, 10,500 foreclosures were completed in Chicago, 20 percent more than the year before. Roughly 95 percent of those properties are now vacant.
“It brings everything down,” said Ald. Latasha Thomas (17th), whose ward includes parts of Auburn-Gresham and Englewood.
“It’s a constant [burden] trying to check on the building, keep it up yourself or the city trying to keep it clean, constantly trying to make sure it’s closed and not any crime element going into it. We have a neighborhood with a lot of seniors who can’t do that, and they’re afraid.”