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U.S Department of Housing and Urban Development U.S. Department of the Treasury Spotlight on the Housing Market in Chicago-JolietNaperville, IL-IN-WI U.S. Department Efforts of Housing and Urbanthe Development | Officeand of Policy and Research | March 2012 The Obama Administration’s to Stabilize Housing Market HelpDevelopment American Homeowners The Chicago-Joliet-Naperville, IL-IN-WI Metropolitan Statistical Area (Chicago) is located along the western and southern coastlines of Lake Michigan and includes 14 counties in 3 states: Cook (includes City of Chicago), DeKalb, and six other counties in Illinois; Lake (includes City of Gary), and three other counties in Indiana; and Kenosha County in Wisconsin. The challenges in the diverse Chicago housing market have been more severe than those in most areas of the nation. During the early part of the last decade, local home prices grew at a slower pace than the national average; however, prices have since fallen by a greater percentage than in the nation as a whole. Declining property values in Chicago were fueled in part by excess housing construction in the years prior to the crisis, but also by rising defaults driven first by unsustainable mortgages then by the economic downturn and climbing unemployment. The foreclosure crisis in Chicago also came at the end of a significant uptick in suburban poverty rates. While the city’s low-income population remained basically flat during this time, the low-income population in surrounding Cook County increased by 7.4 percent. Other suburban areas saw increases by more than 50 percent. Economic conditions in Chicago are starting to improve, but the local housing market remains fragile - with high concentrations of distressed mortgages (those 90 or more days delinquent or in foreclosure), large numbers of vacant homes, and many severely underwater mortgages. Contributing to the high share of distressed mortgages is a longer than average foreclosure processing time in Illinois (averaging 575 days) which keeps those homes in the foreclosure pipeline longer. However, the Administration’s broad approach to stabilize the housing market has been a real help to homeowners in Chicago and surrounding cities. This addendum to the Obama Administration’s Housing Scorecard provides a summary of trends and conditions in the local economy and the impact of the Administration’s efforts to stabilize the housing market and help local homeowners. Population Growth, Employment, and Housing Market: With 9.46 million people according to the most recent Census, the Chicago MSA is the third largest in the nation. From 2000 to 2010, population growth was slow, increasing at an average rate of just 0.4 percent per year. Natural population growth (births minus deaths) accounted for all of that increase, as an average of 36,300 more people moved out of the Chicago MSA each year than moved in. In Cook County, the population declined by an average of 18,200 people, or 0.3 percent, annually. During the decade spanned by the Census, new housing production exceeded household growth in the Chicago MSA; net annual housing unit growth at 1.0 percent was approximately twice the corresponding population and household growth rates. This excess construction contributed to an oversupply of housing and led to steeper price declines after the housing bubble burst. According to the Census Bureau, the number of vacant units in Chicago increased by an average of 13,900 units, or 7.7 percent annually during the 2000s, almost twice the national rate during the same period. Unlike in other parts of the nation where investor speculation was a major cause of overbuilding prior to the crisis, investor home purchases in Chicago represented a relatively small share of total purchases. Specifically, from the first half of 2000 to the first half of 2006, home sales to investors in the Chicago-Joliet-Naperville Metropolitan Division rose from 5 to 10 percent of all sales, while the corresponding increase for the nation was 7 to 16 percent. Speculative construction of inner city condominium units occurred in Chicago, and these units did not sell to owner occupants or to investors, contributing to the overbuilding. Chicago Housing Unit Growth Outpaced Population and Household Growth During the Past Decade Date of Census 4/1/2000 4/1/2010 Chicago Population 9,098,970 9,461,105 Annual Growth Rate Chicago Households Annual Growth Rate Chicago Housing Units Annual Growth Rate - 0.4% 3,280,055 3,475,726 - 0.6% 3,462,197 3,797,247 - 1.0% Source: Census Bureau (2000 and 2010 Decennial) Spotlight on Chicago MSA | Page 1 people in Cook County increased by 7.4 percent. Although the city’s low-‐income populaGon remained basically or flat during this aGnnually me, the low-‐income 7.7 percent during the 2000s, almost twice the naGonal rate during the same period. Unlike other parts of the naGon for whi suburbs increased by more than 50 percent. Economic condiGons are starGng to improve in Chicago, but the local housing market remains fragile -‐ with speculaGon was a major cause of overbuilding prior to the crisis, investor home purchases in Chicago represented a smaller share of tota s of distressed mortgages, large numbers of vacant homes, and many severely underwater mortgages. ContribuGng to the high share of distressed in the naGon. Specifically, from the first half of 2000 to the first half of 2006, home sales to investors in the Chicago-‐Joliet-‐Naperville Met U.S Department Housing Urban Development 0 or more days delinquent or in of foreclosure) is a and long foreclosure processing Gme in Illinois (averaging 575 days) which keeps distressed mortgages in the Division rose from 5 to 10 percent of all sales, while the corresponding increase for the naGon was 7 to 16 percent. In Chicago, another c e longer. U.S. However, the AdministraGon’s approach to stabilize the housing market has been a real help to hoverbuilding omeowners pin Chicago surrounding Department of thebroad Treasury rior to the acnd risis was speculaGve construcGon of inner city condominium units which did not sell to owner occupants or to m to the Obama AdministraGon’s Housing Scorecard provides a summary of trends and condiGons in the local economy and the impact of the orts to stabilize the housing market and help local homeowners. owth, Employment, and Housing Market: f 9.46 million people, the Chicago MSA is the third largest in the U.S. Department the most recent Census. From 2000 to 2010, populaGon growth was an average rate of 0.4 percent per year. During this period, natural births minus deaths) accounted for all of the increase, as an average ple moved out of the Chicago MSA each year than moved in. In e the City of Chicago is located, the populaGon declined by an eople, or 0.3 percent, annually. Economic condiGons are starGng to improve in Chicago. Although the local economy expanded by an average of 42,700 jobs per year, re the 4 year period from the second quarter of 2004 through the first quarter of 2008, job losses were significant as a result of the recent r second quarter of 2008 through the first quarter of 2010, job losses averaged 165,500 jobs, or 3.6 percent per year. A modest recovery h averaging 26,700, aond percent. of The Policy professional and business services, construcGon, and wholesale trade sectors have been the major Chicago H ousing U nit G rowth O utpaced Population of Housing and Urban Development |r 0.6 Office Development and Research 2011, Household Growth During the Past increasing Decade jobs by a combined total of 40,700 per year. Offsegng job gains during this same period were declines in the governme losses of 6,500 and 3,400 jobs, respecGvely. The unemployment rate for the Chicago MSA remains high, but has improved from a high of 2011. The naGonal unemployment rate reached a high of 10.0 in October 2009 and fell to 8.5 by December 2011. Date of Census # December 4/1/10 Chicago Population # 9,461,105 Annual Growth Rate -‐ 0.4% The Obama Administration’s Efforts to Stabilize the Housing Market and Help American Homeowners | March 2012 # 3,475,726 138 1 136 1 Thousands 134 Millions Chicago Households Economic conditions in Chicago are showing strong Annual Growth Rsigns ate -‐ 0.6% Chicago Housing Units # 3,797,247 of improvement. Although the local economy expanded Job Market Conditions Improving for Chicago and the Nation Annual Growth Rate -‐ 1.0% Quarterly Nonfarm Employment by an average of 42,700 jobs per year, Source: representing Census Bureau a (2000 and 2010 Decennial) 1 percent pace of growth during the 4 year period from panned by the Census, new housing producGon exceeded household growth in the Chicago MSA, and this excess construcGon 4,600 the second ofdeclines 2004amer through thebubble first bquarter of to the Census, household versupply of housing and led to squarter teeper price the housing urst. According growth nt annually between 2000 job and 2losses 010, but were net annual housing unit as growth at 1.0 percent approximately twice the corresponding 2008, significant a result of thewas recent sehold growth rates. According to the Census Bureau, the number of vacant units in Chicago increased by an average of 13,900 units, 4,500 During the two ally during the 2recession. 000s, almost twice the naGonal rate dyear uring tperiod he same pfrom eriod. Uthe nlike second other parts of the naGon for which investor major cause of oquarter verbuilding of prior to the cthrough risis, investor home purchases in Cof hicago represented 2008 the first quarter 2010, the a smaller share of total purchases than fically, from the first half of 2000 to the first half of 2006, home sales to investors in the Chicago-‐Joliet-‐Naperville Metropolitan 4,400 region averaged 165,500 jobs lost, or 3.6 percent- per to 10 percent of all sales, while the corresponding increase for the naGon was 7 to 16 percent. In Chicago, another cause of the year. A modest recovery has been underway since, with o the crisis was speculaGve construcGon of inner city condominium units which did not sell to owner occupants or to investors. 4,300 annual job gains averaging 26,700, or 0.6 percent. The professional and business services, construction, and 4,200 wholesale trade sectors have been the major contributors s are starGng to in Chicago. Although 2010 the local and economy expanded by an average of 42,700 toimprove job growth during 2011, increasing jobs by jobs per year, represenGng a 1.0 percent pace of growth during om the second quarter of 2004 through the first quarter of 2008, job losses were significant as a result of the recent recession. During the two year period from the a combined total of 40,700 per year. Offsetting job gains 008 through the first quarter of 2010, job losses averaged 165,500 jobs, or 3.6 percent per year. A modest recovery has been underway since, with annual job gains this same period were declines the government r 0.6 percent. Tduring he professional and business services, construcGon, and in wholesale trade sectors have been the major contributors to job growth during 2010 and Year and Quarter bs by a combined total information of 40,700 per year. Offsegng job gains during this same period were of declines in the government and informaGon sectors, wChicago ith average MSA annual NaGon (right axis) and sectors, with average annual losses 3,400 jobs, respecGvely. The unemployment rate for the Chicago MSA remains high, but has improved from a high of 11.1 in January 2010 to 10.0 percent in 6,500 and 3,400 jobs, respectively. Compared to the Seasonally A djusted D ata he naGonal unemployment rate reached a high of 10.0 in October 2009 and fell to 8.5 by December 2011. Source: Bureau of Labor StaGsGcs national unemployment rate -- which peaked in October 2009 at 10.0 and fell to 8.5 by December 2011 -- the unemployment rate for the Chicago MSA remains high, but Unemployment Rate Remains High has improved from a high of 11.1 in January 2010 to 10.0 Job Market Conditions Improving for Chicago and the Nation Monthly Unemployment Rate (Percent) percentQuarterly in December 2011. Nonfarm Employment 132 130 128 126 Millions 12 Home sales in the Chicago MSA remain at low levels.138 Existing home sales began a steep decline in 2006, 10 136 but have leveled off since 2008. New home sales have 8 134 been falling since 2005 but leveled off by 2009. Sales of bank-owned properties and short sales remain high132 at 6 35 percent of existing home sales in the Chicago market 4 compared to 29 percent nationally, which contributes 130 to 2 128 continued weakness in Chicago home prices. During the bubble years, a relatively sluggish economy and slow126 0 population growth kept Chicago home price increases lower than national rates. The CoreLogic repeat-sales house price index (HPI) shows that the rise in home prices in the Year and Quarter Chicago MSA NaGon Chicago-Joliet-Naperville, IL Metropolitan Division was Chicago MSA NaGon (right axis) Seasonally Adjusted Data less than two-thirds the national pace between 2000 and Adjusted Data Spotlight on the Housing Market in Chicago-Joliet-Naperville, Illinois-Indiana-Wisconsin Source: Bureau of Labor StaGsGcs mid-2006. From their peak in 2006 to the end of the house eau of Labor StaGsGcs price bubble in April 2009, home prices fell by 23 percent **Zip code areas used for neighborhoods n the Chicago MSA remain at low levels. ExisSng home sales began a steep decline in 2006, but Chicago, three-quarters off since 2008. in New home sales habout ave been falling since 2005, wof ith the sales national leveling off saverage ince 2009. -‐owned properSes and short sales remain high t 35 percent. percent of exisSng home sales in the peak-to-low decline of a31 However, Chicago home New and Existing Home Sales: Chicago Compared to the Nation ket compared to a naSonal rate of 29 percent. This high level of distressed sales contributes to prices to fallsluggish - an eadditional 14populaSon percent Annual Home Sales (thousands) eakness in Chicago home have prices. continued ReflecSng a relaSvely conomy and slow their peak in 2006 - compared additional ago home price from increases during the house price bubble were lower tto han an naSonal rates. The 3 400 peat-‐sales house price index (HPI) shows the rise in hsales ome prices in the Chicago-‐Joliet-‐ percent decline forthat national prices. Metropolitan Division was less than two-‐thirds the naSonal pace between 2000 and mid-‐2006. eak in 2006 to the end of the house price bubble in April 2009, home prices fell by 23 percent in The rentalpeak-‐to-‐low housingdecline market strong. Rental ut three-‐quarters of tChicago he naSonal average of 31 remains percent. However, Chicago have conSnued vacancy to fall -‐ an addiSonal percent from have their peak in 2006 -‐ compared an rates in14 Chicago historically beento lower than percent decline for naSonal sales prices. the national average, but according to Reis Inc., the overall rental housing m arket remains vacancy strong. Rental vacancy ates in Chicago have historically been apartment rate in rChicago was just 4.6 percent in he naSonal average. According to Reis Inc., the overall apartment vacancy rate in Chicago was 4.6 the fourth quarter of 2011, down from 5.6 percent a year e fourth quarter of 2011, down from 5.6 percent a year earlier and below the current naSonal earlier andquarter wellof below the current national average of 5.2 2 percent. During the fourth 2011, average rents in Chicago increased by 2 percent go to $1,086. Tpercent. he average rent naSonwide lso increased by 2 percent to $1,064 during the rents same During the afourth quarter of 2011, average in Chicago increased by 2 percent from a year ago to $1,086. The average rent nationwide also increased by 2 percent to $1,064 during the same period. 8,000 350 7,000 300 6,000 250 5,000 200 4,000 150 3,000 100 2,000 50 1,000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 NaSon: ExisSng Sales (right axis) NaSon: New Sales (right axis) Chicago MSA: ExisSng Sales Chicago MSA: New Sales Sources: CoreLogic, HUD/Census Bureau, and NaSonal AssociaSon of Realtors Home Price Rise Smaller Than for Nation Post Bubble Decline Continues Repeat-‐Sales House Price Index (Jan 2000 = 100) Spotlight on 220 Chicago MSA | Page 2 0 eak in 2006 to the end of the house price bubble in April 2009, home prices fell by 23 percent in ut three-‐quarters of the naSonal average peak-‐to-‐low decline of 31 percent. However, Chicago have conSnued to fall -‐ an addiSonal 14 percent from their peak in 2006 -‐ compared to an percent dU.S ecline for naSonal sales Department ofprices. Housing and Urban Development U.S. mDepartment of the Treasury rental housing arket remains strong. Rental vacancy rates in Chicago have historically been he naSonal average. According to Reis Inc., the overall apartment vacancy rate in Chicago was 4.6 e fourth quarter of 2011, down from 5.6 percent a year earlier and below the current naSonal 2 percent. During the fourth quarter of 2011, average rents in Chicago increased by 2 percent go to $1,086. The average rent naSonwide also increased by 2 percent to $1,064 during the same 300 6,000 250 5,000 200 4,000 150 3,000 100 2,000 50 1,000 0 2003 2004 2005 2006 2007 2008 2009 U.S. Department Efforts of Housing and Urbanthe Development | Officeand of Policy and Research The Obama Administration’s to Stabilize Housing Market HelpDevelopment American Homeowners 2010 2011 | March 2012 NaSon: ExisSng Sales (right axis) NaSon: New Sales (right axis) Chicago MSA: ExisSng Sales Chicago MSA: New Sales Sources: CoreLogic, HUD/Census Bureau, and NaSonal AssociaSon of Realtors Trends in Mortgage Delinquencies and Foreclosures: Chicago homeowners continue to struggle with some of the highest levels of mortgage delinquencies and foreclosures in the nation. As of January 2012, Chicago placed 28th out of 366 metropolitan areas ranked by share of mortgages at risk of foreclosure (90 or more days delinquent or in the foreclosure process) according to LPS Applied Analytics. LPS data also show that Chicago area mortgages at risk of foreclosure increased by 1.5 percent during the past year, from 125,400 in January 2011 to 127,300 in January 2012, compared with a national decline of 10.4 percent during the same period. CoreLogic data show that the rate of mortgages at risk of foreclosure in Chicago since 2006 has been Mortgage Delinquencies and Foreclosures: consistently higher than in the nation, with a sharp spike upward in wners conSnue 2009. to struggle with sTrac ome odata f the halso ighest show levels othat f mortgage delinquencies Realty foreclosure startsand increased the naSon. As of January 2012, Chicago ranked 28th out of 366 metropolitan areas for the share of abruptly (47 percent) in the Chicago MSA in 2007 and 2008, sk of foreclosure (90 or more days delinquent or in the foreclosure process) according to LPS when foreclosures largely driven iana-Wisconsin cs. LPS data show that Csingle-family hicago area mortgages at risk of were foreclosure increased by by 1.5 punaffordable ercent year, from 125,400 January 2011 to 127,300 in 2012, compared with a naSonal decline of loanin products. Beginning inJanuary 2009, foreclosures were increasingly dring forthe neighborhoods same period. CoreLogic data show that the rate of mortgages at risk of foreclosure in ana-Wisconsintriggered by loss of income, unemployment, and strategic defaults, en consistently higher than in the naSon since 2006, with a sharp spike upward in 2009. Realty Trac according to the Federal Reserve Bankin ofthe Chicago. that newly iniSated foreclosures increased abruptly (47 percent) Chicago MSA in 2007 and d for neighborhoods Home Price Rise Smaller Than for Nation Post Bubble Decline Continues Repeat-‐Sales House Price Index (Jan 2000 = 100) 220 200 180 160 140 120 100 Chicago Metropolitan Division ew and Existing Chicago the Nation in theHome nationSales: overall, it hasCompared improved. to According to Realty Trac, Annual Home Sales (thousands) Rental Vacancy Rates Consistently Lower Than Nation Quarterly Apartment Rental Vacancy Rates (Percent) 8,000 tressed mortgages in Chicago completions is currently at 9.6 ercent, matching its February 010 peak level; in foreclosure inpChicago declined from245,555 during al rates have declined from a high of 7.9 percent in February 2010 to 6.7 percent currently. A parSal 7,000 to 36,043 2011,in although lender reviewsa 8,000 the high level o2010 f mortgages at risk of ffor oreclosure Chicago is the Sme it process takes to complete linois. According to Realty Tto rac, the average foreclosure processing Slocally me in Illinois, hich employs 6,000 continue affect foreclosure completions andwnationally. A 7,000 closure process, was 575 days of in the fourth quarter of 2011 longest among major issue concern, however, is(fourth the relatively highstates) concentration 5,000 the naSonal rate of 348 days. 6,000 of distressed mortgages in many of Chicago’s neighborhoods. 4,000 reclosure rate iCoreLogic n Chicago remains than in talmost he naSon one-fourth overall, it has According datahigher show that ofimproved. mortgage loansto 5,000 eclosure compleSons in Chicago declined from 45,555 during 2010 to 36,043 for 2011, although 3,000 in Chicago are in neighborhoods where the share of distressed 4,000 reviews conSnue to affect foreclosure compleSons locally and naSonally. A major issue of concern, 2,000 than twice the national rate.neighborhoods. These hardest hit3,000 relaSvely high cmortgages oncentraSon oisf dmore istressed mortgages in many of Chicago's show that almost one-‐fourth of mortgage loans in Chicago are in neighborhoods where the share 1,000 of areas are also experiencing high levels of residential vacancies, gages is more than twice the naSonal rate. These hardest hit areas are also experiencing high levels 2,000 underwater mortgages, and homeIn price declines. Inthese an effort to0 cancies, underwater mortgages, and home price declines. an effort to stabilize 1,000 numerous bneighborhoods, y state 2007 and local enSSes in partnership with the sponsored federal 2004 programs 2005 sponsored 2006 2008 2009 programs 2010 2011 stabilize these numerous by e currently underway. CoreLogic reports that 25 percent of mortgages in the Chicago MSA are state and local entities in partnership with the federal government 0 NaSon: E xisSng S ales ( right a xis) NaSon: N ew S ales ( right a xis) water – compared to 23 percent naSonally -‐ represenSng addiSonal homeowners and loans 2005 2006 2007 CoreLogic 2008 2009 that 2010 2011 of are currently underway. reports 25 percent sk. 2004 Chicago MSA: ExisSng Sales Chicago MSA: New Sales currently underwater NaSon: ExisSng Smortgages ales (right axis) in the Chicago MSA are NaSon: New Sales (right axis) – c, HUD/Census Bureau, and NaSonal AssociaSon of Realtors compared to 23 percent nationally Chicago - representing additional Chicago MSA: ExisSng Sales MSA: New Sales homeowners and loans potentially at risk. c, HUD/Census Bureau, and NaSonal AssociaSon of Realtors Home Price Smaller Than for Nation The share ofRise distressed mortgages in Chicago is currently at 9.6 Post Bubble Decline Continues percent, matching its February 2010 Repeat-‐Sales ouse Smaller Price Index (Jan for 2000 = peak 100) level; in contrast, Home PriceHRise Than Nation national have declined from a high of 7.9 percent in February Postrates Bubble Decline Continues 2010 to 6.7 percent partial explanation for Chicago’s Repeat-‐Sales House Price currently. Index (Jan A 2000 = 100) higher share of mortgages at risk of foreclosure is the time it takes to complete a foreclosure in Illinois. According to Realty Trac, the average foreclosure processing time in Illinois, which uses the judicial foreclosure process, was 575 days in the fourth quarter of 2011 (fourth longest among states) while the national rate was 348 days. Area Foreclosure Completions Chicago Metropolitan Division Chicago MSA 9,400 0.2% Foreclosure Completions NaSon 111,900 ic. Metro area HPI is reported for the Chicago-‐Joliet-‐Naperville, IL Metropolitan Division. Chicago Division Nation Metropolitan 175,800 0.1% NaSon 2,574,400 ic. Metro area HPI Note: is reported for the CRates hicago-‐Joliet-‐Naperville, Metropolitan Division. Foreclosure as Percent of AllIL Housing Units; Data through January 2011 for Foreclosures since April 2009 Source: Realty Trac and Census Bureau Quarterly Apartment Rental Vacancy Rates (Percent) 9 8 9 7 8 6 7 5 6 Foreclosure Completion Rates in the Chicago MSA Fourth Quarter 2011 Since April 1, 2009 Foreclosure Foreclosure Foreclosure Foreclosure Completions Rate Completions Rate Chicago M SA 9 ,400 0.2% 1 11,900 2.9% 4 Nation 175,800 0.1% Year 2,574,400 and Quarter 2.0% Note: Foreclosure Rates as Percent of All Housing Units; Data through January 2012 for Foreclosures since April 2009 Year and Quarter Chicago Metro Area NaSon Source: Realty Trac and Census Bureau Source: Reis Inc. 4 Area5 Chicago Metro Area NaSon Source: Reis Inc. Share of Distressed Mortgages Substantially Higher Than the Nation Mortgages 90+ Days Delinquent (Percent of All AcSve Mortgages) 12 Share of Distressed Mortgages Substantially Higher Than the Nation Mortgages 90+ Days Delinquent (Percent of All AcSve Mortgages) 10 12 8 10 6 8 4 6 0 2 Since April 1, 2009 Foreclosure Rate Rental Vacancy Rates Consistently Lower Than Nation 2 4 Foreclosure Completion Rates in the Chicago MSA Fourth Quarter 2011 NaSon Source: CoreLogic. Metro area HPI is reported for the Chicago-‐Joliet-‐Naperville, IL Metropolitan Division. gle-‐family foreclosures were largely by unaffordable loan to products. Beginning in 2009, ew and Existing Home Sales:driven Chicago Compared the Nation re increasingly triggered by loss of income, nemployment, Annual Home Sales (uthousands) and strategic defaults, according to the Although the foreclosure rate in Chicago remains higher than Bank of Chicago. Foreclosure Rate 2.9% 2.0% 0 Source: CoreLogic Chicago MSA NaSon Chicago MSA NaSon Source: CoreLogic Spotlight on Chicago MSA | Page 3 0 U.S Department of Housing and Urban Development U.S. Department of the Treasury U.S. Department Efforts of Housing and Urbanthe Development | Officeand of Policy and Research | March 2012 The Obama Administration’s to Stabilize Housing Market HelpDevelopment American Homeowners Spotlight on the Housing Market in Chicago-Joliet-Naperville, Illinois-Indiana-Wisconsin MSA he Administration’s Efforts to Stabilize the Chicago Housing Market: The Administration’s Efforts to Stabilize the Chicago Housing Market: om the launch of the AdministraEon’s assistance programs in April 2009 through the end of January 11, more than 220,500 mortgage assistance intervenEons have been offered to homeowners in the icago metropolitan area. More than 132,500 intervenEons were offered through the Home ffordable ModificaEon Program (HAMP) and the Federal Housing AdministraEon (FHA) loss miEgaEon d early delinquency intervenEon programs. An esEmated addiEonal 88,000 proprietary mortgage odificaEons have been offered through HOPE Now Alliance servicers. While some homeowners may ve received help from more than one program, the number of Emes assistance has been offered in e Chicago MSA From is nearly the double the number of foreclosures completed during this period (111,900). In launch of the Administration’s assistance diEon to offers programs of mortgage aid homeowners, AdministraEon’s Neighborhood StabilizaEon into April 2009the through the end of January ogram (NSP) and Hardest Hit Fund have helped to stabilize the Chicago housing market. 2011, more than 220,500 mortgage assistance ven over three rinterventions ounds, the Neighborhood tabilizaKon Program as invested $7 billion have Sbeen offered to hhomeowners innaEonwide to lp localiEes work with non-‐profits and community development corporaEons to turn tens of the Chicago metropolitan area. More than 132,500 ousands of abandoned and foreclosed homes that lower property values into homeownership were offered throughneed. the In Home portuniEes and interventions the affordable rental housing that communiEes addiEon Affordable to stabilizing ighborhoods and providing affordable housing, N SP funds have helped jobs. Each home Modification Program (HAMP) and thesave Federal Housing rchased, rehabilitated and sold through the NSP program is the result of the efforts of 35 to 50 local Administration (FHA) loss mitigation and early delinquency mployees. Mortgage Aid Extended More an 220,500 Times to Mitigate Rising Foreclosures Chicago MSA: CumulaEve Offers of Aid by Source Compared with Foreclosures Since April 1, 2009 (Thousands) Mortgage Aid Offers in Chicago MSA from April 2009 through January 2012: 220,500 Foreclosure CompleEons Over Same Period: 111,900 250 200 150 100 50 0 intervention programs. An estimated additional 88,000 erall, a total of $264.9 million has been awarded to twelve grantees in the Chicago MSA: the ciEes of proprietary mortgage modifications have been offered icago, Elgin, Gary, and Evanston; the counEes of Cook, DuPage, Kane, McHenry, Will, Lake County, IL, Now Alliance servicers. While some d Lake County, through IN. Eleven gHOPE overnment jurisdicEons received $119.3 million in NSP1 funds, two ceived $116.1 mhomeowners illion in NSP2 funds, and fihave ve received $29.5 million in Nfrom SP3 funds. Approximately 248 may received help more than useholds have already benefited from NSP, and acEviEes funded by the program are expected to one program, the number of times assistance has been ovide assistance to an addiEonal 1,823 owner and renter households. Examples of how these funds in the Chicago MSA is nearly double the number ve been put to offered use are provided below. of foreclosures completed during this period (111,900). In addition to offers of mortgage aid to homeowners, the Administration’s Neighborhood Stabilization Program (NSP) and Hardest Hit Fund have helped to stabilize the Chicago housing market. 864 30 0 0 hborhood enEEes. MPS has experienced management staff and protocols established for quickly hasing and rehabilitaEng units to halt neighborhood deterioraEon. Mercy has been successful at iring and renovaEng both single-‐family and mulEfamily units in the city’s NSP1 target areas. th NSP2 funds of Chicago $98.0 million, he City of Chicago has tailored to the local cCompleted ondiEons of MSAtNSP Activity (Housing Units)programs Projected e neighborhood types to reverse the decline ed by foreclosed NSP1 and abandoned homes: a) communiEes prone to growth and 865 quick recovery, b248 ) Total muniEes that can be stabilized around targeted stment areas, and c) Construction communiEes requiring onsolidaEon to reduce the of new chousing 2 1 Rehabilitation/reconstruction of residential structures NSP2 Total Construction of new housing Rehabilitation/reconstruction of residential structures NSP3 Total Rehabilitation/reconstruction of residential structures EsEmated Hope Now ModificaEons Foreclosure CompleEons 1.636935 NSP1 funds were granted to all states and selected local 834 0 94 governments on a formula basis under Division B, Title 0 94 0 III of the Housing and Economic Recovery Act (HERA) of 2008; NSP2 funds authorized under the American e City of Chicago’s NSP strategy has b een to invest in strategically neighborhoods with Recovery and Reinvestment Act (thechosen Recovery Act) of 2009 Eonal investment support from local and naEonal partners. The city has formed a unique partnership provided grants tonon-‐profit states,housing localagovernments, Mercy Porkolio Services (MPS), a major gency, to invest its Nnonprofits SP1 funds of $55.2 on through an eand xtensive etwork of more of than 50 compeEEvely selected and non-‐profit a nconsortium nonprofit entities ondevelopers a competitive Homeownership assistance to low- and moderate-income Hamp ModificaEons basis; and NSP3 funds authorized under the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 provided neighborhood stabilization grants to all states and select governments on a formula basis. Given over three rounds, the Neighborhood Stabilization Program has invested $7 billion nationwide to help localities work with non-profits and pa MSA NSP Activity (Housing Units) development corporations to turn Projected Completed community tens of Total 865 248 thousands of abandoned and foreclosed homes that lower nstruction of new housing 2 1 property values into homeownership opportunities and 56the meownership assistance to low-‐ and moderate-‐income 33 habilitation/reconstruction of residential structures 830 191 affordable rental housing that communities need. Total nstruction of new housing habilitation/reconstruction of residential structures Total habilitation/reconstruction of residential structures FHA Loss MiEgaEon Note: Data on HOPE Now proprietary mortgage modificaEons are not available at metropolitan area level. However, HOPE Now Alliance reports 164,600 non-‐HAMP modificaEons since April 1, 2009 in the states of IL, IN, and WI of which 54 percent are esEmated by HUD to have occurred in the Chicago MSA. Sources: Departments of HUD and Treasury, HOPE Now Alliance, and Realty Trac. 33 56 830 191 864 0 30 0 834 0 94 0 94 0 In addition to stabilizing neighborhoods and providing affordable housing, NSP funds have helped save jobs. Each home purchased, rehabilitated and sold through negaEve impacts of blighted is structures. The city’s goal iefforts s to reverse in hlocal ome sales, lock in housing the NSP program the result of the ofthe 35decline to 50 employees. affordability for buyers and renters, and support local economic development and job growth. The City of Chicago is a naEonal innovator in both the scale and intensity of this type of targeEng. Overall, a total of $264.9 million has been awarded to twelve grantees in the • UChicago nder NSP3, the City of the Chicago has tof argeted areas where a modest investment an have a significant impact and of MSA: cities Chicago, Elgin, Gary, and cEvanston; the counties act as a market sEmulus. The program has invested in such areas throughout the city, focusing on communiEes that Cook, DuPage, Will, sLake County, IL,Wand Lake County, Eleven have high shares of REO pKane, roperEes McHenry, (foreclosed properEes Ell owned by banks). ith an N SP3 grant of $16.0 IN. million, the program is turning vacant mulEfamily properEes ainto very-‐low income rental housing in and NSP1 acquiring and government jurisdictions received total of $119.3 million funds, two demolishing homes that impose safety and health hazards. These laher properEes have been land banked for future received $116.1 million inwtotal NSP2 funds,aand five received $29.5 redevelopment. All of the NSP3 acEviEes ill provide much-‐needed ffordable housing, eliminate blight, amillion nd put in total NSP3 funds. neighborhoods on a pApproximately ath to stabilizaEon. 248 households have already benefited from NSP, and activities funded by the program are expected to provide assistance to an additional • The City of Elgin was awarded $2.2 million in NSP1 funds. A porEon of these funds has been used to rehabilitate 5 1,823 owner and households. Examples these been single-‐family homes and the crenter ity is working with Habitat for Humanity of of the how Northern Fox Vfunds alley to chave omplete four put to addiEonal homes. These homes are both affordable and in close proximity to such resources as the Hemmens use are provided below. Cultural Center, Gail Borden Public Library, and commuter rail lines. The ICity of Chicago’s NSP strategy invest in strategically chosen • L• ake County, L was awarded $4.6 million under NSP1 and $1.4 mhas illion been under Nto SP3. Single-‐family foreclosed properEes neighborhoods in the Waukegan, Round Lake, Round Lake Beach, and Mundelein areas ofrom f Lake Clocal ounty, hand ave been with additional investment support national purchased and rehabilitated with part of these NSP funds. In all of these areas, the foreclosed properEes had partners. The city has formed a unique partnership with Mercy Portfolio lowered property values and increased rates of vandalism and crime. Services (MPS), a major non-profit housing agency, to invest its NSP1 funds • In Will Cof ounty, part of million a $5.2 million grant under SP1 has gone network towards a program designed minimize risk to $55.2 through an Nextensive of more thanto 50 competitively the county by finding a buyer before a foreclosed or abandoned home is purchased and rehabilitated. The success of selected developers and non-profit neighborhood entities. MPS has experienced this program has been set in moEon by the partnerships the county has developed with construcEon and insurance management staff and protocols established for quickly purchasing and companies, realtors, and housing counselors. rehabilitating units to halt neighborhood deterioration. Mercy has been successful at acquiring and renovating both single-family and multifamily units in the city’s NSP1 target areas. With NSP2 funds of $98.0 million, the City of Chicago has tailored programs • to the local conditions of three neighborhood types to reverse the decline caused by foreclosed and abandoned homes: a) communities prone to growth and quick recovery, b) communities that can be stabilized around targeted investment areas, and c) communities requiring consolidation to reduce the negative impacts of blighted structures. The city’s goal is to reverse the decline in home sales, lock in housing affordability for buyers and renters, and support local economic development and job growth. The City of Chicago is a national innovator in both the scale and intensity of this type of targeting. Spotlight on Chicago MSA | Page 4 U.S Department of Housing and Urban Development U.S. Department of the Treasury U.S. Department Efforts of Housing and Urbanthe Development | Officeand of Policy and Research | March 2012 The Obama Administration’s to Stabilize Housing Market HelpDevelopment American Homeowners • Under NSP3, the City of Chicago has targeted areas where a modest investment can have a significant impact and act as a market stimulus. The program has invested in such areas throughout the city, focusing on communities that have high shares of REO properties (foreclosed properties still owned by banks). With an NSP3 grant of $16.0 million, the program is turning vacant multifamily properties into very-low income rental housing and acquiring and demolishing homes that impose safety and health hazards. These latter properties have been land banked for future redevelopment. All of the NSP3 activities will provide much-needed affordable housing, eliminate blight, and put neighborhoods on a path to stabilization. • The City of Elgin was awarded $2.2 million in NSP1 funds. A portion of these funds have been used to rehabilitate 5 single-family homes and the city is working with Habitat for Humanity of the Northern Fox Valley to complete four additional homes. These homes are both affordable and in close proximity to such resources as the Hemmens Cultural Center, Gail Borden Public Library, and commuter rail lines. • Lake County, IL was awarded $4.6 million under NSP1 and $1.4 million under NSP3. Single-family foreclosed properties in the Waukegan, Round Lake, Round Lake Beach, and Mundelein areas of Lake County, have been purchased and rehabilitated with part of these NSP funds. In all of these areas, the foreclosed properties had lowered property values and increased rates of vandalism and crime. • In Will County, a portion of the county’s $5.2 million NSP1 grant has gone towards a program designed to minimize risk to the county by finding a buyer before a foreclosed or abandoned home is purchased and rehabilitated. The success of this program has been set in motion by the partnerships the county has developed with construction and insurance companies, realtors, and housing counselors. As part of the State of Illinois’ housing recovery efforts, the Illinois Hardest Hit Fund program was launched in July 2011 to help Illinois homeowners who have experienced a substantial decrease in income due to job loss or underemployment, by providing a mortgage payment bridge while they seek new or better employment. The Illinois Hardest Hit Fund program is funded by a grant of more than $400 million from the Administration’s Hardest Hit Fund and administered by the Illinois Housing Development Authority (IHDA). Assistance is provided primarily through the Homeowner Emergency Loan Program (HELP), which provides up to 18 months of payments (with a cap of $20,000 to $25,000) to the mortgage lender to assist unemployed and underemployed borrowers with their first mortgage until they can resume full payments on their own. Homeowners who have recently become reemployed after a stretch of unemployment may also be eligible for assistance to cure arrearages. Homeowners must meet all eligibility requirements to be considered for the program. Homeowners experiencing a reduction in household income must have a documented hardship due to unemployment or underemployment through no fault of their own. The homeowner’s household income is reviewed to determine the level of assistance needed and the minimum mortgage payment that may be contributed by the borrower. Eligible homeowners close on a zero percent interest rate subordinate loan similar to a home equity line of credit. The loan term is for ten years, and the loan will be forgiven at a rate of 20 percent per year over the final five years. To date, 188 mortgage servicers have agreed to participate in the Illinois Hardest-Hit Fund programs. Illinois homeowners who believe they may be eligible for these programs should visit www.illinoishardesthit.org. Additionally, homeowners seeking additional assistance with their mortgage can visit the website of the Illinois Foreclosure Prevention Network at www.keepyourhomeillinois.org. IHDA is also offering assistance through the Mortgage Resolution Fund (MRF), which uses funds from the Hardest Hit Fund to purchase delinquent loans in the Chicago area and modify those loans to affordable levels. The MRF is operated by Mercy Portfolio Services, a subsidiary of the national nonprofit organization Mercy Housing, in partnership with Enterprise Community Partners, the Housing Partnership Network and the National Community Stabilization Trust. This program does not take applications, and homeowners whose mortgages qualify for MRF will be contacted by IHDA or the partners listed above. Spotlight on Chicago MSA | Page 5