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Published by the Consumer and Community Affairs Division

December 2009

Regional Home Ownership Preservation Initiative, “RHOPI”:
Chicago Federal Reserve Bank, The Chicago Community Trust, Neighborhood
Housing Services of Chicago, and Dozens of Regional Institutions Forge Solutions
to the Foreclosure Crisis in the Chicago Metro Area

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INTRODUCTION

December 2009
In this edition of Profitwise News and Views, we feature perspectives on the Regional Home Ownership Preservation
Initiative (RHOPI). RHOPI is one of many Chicago Fed programs aimed at addressing and mitigating the foreclosure crisis in
the Seventh Federal Reserve District, and involves approximately 100 individuals representing 70 organizations that want to
stem foreclosures and their impacts. They worked together to reach actionable recommendations for addressing the crisis in
the Chicago Metropolitan Area. RHOPI was cosponsored and initiated by the Federal Reserve Bank of Chicago, The Chicago
Community Trust, and Neighborhood Housing Services of Chicago (NHS). Aside from the initial sponsoring organizations, lead
RHOPI partners include Housing Action Illinois, the Woodstock Institute, the Chicago Metropolitan Agency for Planning,
Chicago Metropolis 2020, and the Metropolitan Mayors’ Caucus.

Visit the RHOPI Web page at www.regionalhopi.org.
Also in this edition is an article by Michael Collins, assistant professor in the School of Human Ecology at the University of
Wisconsin, Madison. Collins takes a critical look at the role of home buyer counseling based on data gathered during the first
six years of the groundbreaking NHS led (in partnership with the city of Chicago and the Chicago Fed) Home Ownership
Preservation Initiative, of which RHOPI is a geographical, organizational, and programmatic expansion.

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December 2009

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COMMUNITY DEVELOPMENT

RHOPI Perspectives: The Federal Reserve Bank of Chicago
by Michael Berry

Background
The Chicago Fed and the Federal
Reserve System have a longstanding
interest in the causes and ramifications
of unstable housing markets and high
foreclosure rates. The Federal Reserve
System helped to establish what is now
known as NeighborWorks® America, the
umbrella organization for a national
nonprofit housing enterprise with 250
offices, of which Neighborhood Housing
Services of Chicago (NHS) is an affiliate,
one that is nationally recognized for its
work in revitalizing neighborhoods, and
more recently, stemming foreclosures. A
member of the Federal Reserve Board
of Governors, currently Elizabeth Duke,
has a permanent seat on the board of
directors of NeighborWorks® America.
For many years, the Chicago Fed has
worked with NHS and the city
government to bring greater support to
NHS efforts in the most impacted
neighborhoods, with the hope of
promoting stability in local housing
markets. The Home Ownership
Preservation Initiative, widely known as
“HOPI,” launched by NHS in partnership
with the city and the Chicago Fed in
2003, is now a national model for
localized foreclosure intervention and
abatement efforts. HOPI partners
include many of the nation’s largest
lenders and servicers, and in the pilot
years of 2003 to 2006, HOPI impacted

2

citywide foreclosures significantly,
reducing the overall rate by over 10
percent by focusing in the city’s most
at-risk communities.
Chicago Mayor Richard Daley
recognized very early the urgent need to
address the high foreclosure rates in city
neighborhoods, but a number of suburban
communities, particularly the near south
and near west suburbs, also had high
foreclosure rates relative to more affluent
areas, and like the city, long before the
current crisis, but not the individual budgets
to delegate foreclosure mitigation to an
outside entity.
Notwithstanding the systemic financial
crisis, the reason for the Fed’s concern in
addressing high foreclosure rates may not
be readily apparent. The Fed’s interest
relates directly to its broader mission:
unstable housing markets lead to unstable
local economies, undercutting the Fed’s
dual goals of price stability and sustainable
economic growth. The Fed is limited by
statute from engaging in policy and political
activities, but has a longstanding and
robust capacity to convene concerned
actors, including policymakers, on a variety
of matters connected with the Federal
Reserve System’s broader objectives. The
Fed has worked over many years to foment
networks across the financial, advocacy,
and policy communities to address a variety
of housing issues, including foreclosures.

2 Profitwise Profitwise
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2009

The housing and financial crisis: a
”Perfect Storm”
The current crisis gained momentum
in the early months of 2007, with the
confluence of falling home values,
tightening credit, and mass numbers of
subprime defaults eventually culminating
in the most significant financial market
collapse since the Great Depression. By
that summer, it was clear that the upshot
of years of irresponsible mortgage
lending was going to be very serious,
and that the Chicago region was going
to experience its fair share of pain. The
Chicago metropolitan area followed the
national foreclosure trend with
approximately a 100 percent increase in
foreclosure starts from 2006 to 2008 in
the city, Cook County, and the sixcounty region. Data for the first three
quarters of 2009 show the rate of
foreclosure filings in the region is still on
the ascent.
While the current crisis has placed a
bright spotlight on foreclosures and their
destabilizing effects, high foreclosure
rates have impacted some of the
Chicago region’s city neighborhoods
and suburbs for literally decades. In the
fairly recent past, it was easier to
downplay the overall impact of
foreclosures, as it was isolated to a
relatively few communities and
neighborhoods. The primary reason for
this phenomenon was a bifurcated

COMMUNITY DEVELOPMENT
mortgage credit market that provided
high-cost, sometimes poorly
underwritten loans of various types to
the poorest areas, and conventional,
competitively priced credit to most other
areas of the region.
Beginning in about 2003, much
broader and more aggressive marketing
of subprime and exotic mortgages such
as option ARMS1, helped to fuel the
eventual crisis, as many of the same
shoddy underwriting practices and lax
quality control were applied to the more
mainstream and geographically broader
mortgage market. Opponents of CRA
have attempted to link these practices,
and by extension the financial crisis, to
the Community Reinvestment Act, but
there is no factual or scientific basis that
indicates a cause and effect relationship
between the two. Research conducted
at the Board of Governors on subprime
loans originated between 2004 and
2008 showed no significant difference
in default rates between CRA-qualified
lending areas and more affluent
communities. 2 Long before that period,
responsibly underwritten subprime
mortgages were extended by the
hundreds of thousands, if not millions, to
households with limited or blemished
credit histories, without higher than
expected defaults. 3 One among many
items of misinformation related to the
crisis, its origins, and Fed and Treasury
responses, the misleading proposition
that CRA lies at the root of the crisis
can and should be laid to rest.

Formation of a regionally focused
foreclosure initiative
By mid-2007, the Chicago Fed’s
Consumer and Community Affairs group
was meeting with organizations
interested in pursuing a regionally
focused strategy. It was clear that HOPI,
a city-focused initiative, offered many
valuable lessons and best practices, but
was already losing ground to mounting
foreclosures. By late that year, it was
clear the HOPI infrastructure was not
able to fully address what had become a

broad-based, metropolitan problem
requiring cross-jurisdictional
cooperation. Building on lessons learned
and the HOPI brand, Regional HOPI
(RHOPI) was convened by The Chicago
Community Trust, NHS, and the Chicago
Fed to develop recommendations and
action plans to address foreclosures
across the metropolitan area. The work
was divided into four categories: home
owner counseling, refinancing and loan
modifications, vacant property
abatement, and research.
RHOPI formally began with a set of
nine facilitated meetings through August
and September of 2008: a preliminary
and secondary meeting of the groups
discussing each of the subject areas,
and a plenary session in late October
2008 to report findings and
recommendations from each group.4
With the release of the RHOPI Action
Plan on April 27, 2009, the focus of
activity officially moved away from
formulating recommendations to
implementing them, though in reality
implementation efforts were already
under way. A few (of many) highlights of
implementation efforts appear on page
7. We at the Chicago Fed continue to be
optimistic about the prospects for
RHOPI and, more specifically, its
committed partners to have significant
impact on the regional foreclosure crisis.
We are privileged to work with such a
committed group of organizations. 5 We
remain committed as an institution to
alleviating the crisis in our region and
our five-state district, and to sharing
valuable lessons and information with
concerned groups nationwide.

Notes
1 Option Adjustable Rate Mortgages –
Option ARMs – allow a borrower to select
a monthly payment that can range from a
fully amortized payment (or more, if
principal is added to the payment) to less
than the interest due in a given month, in
which case the unpaid interest is added to
the principal balance. Generally, these
contracts carry onerous provisions

(including a substantial rate increase) that
take effect after the principal balance
reaches a proscribed level.
2 An article summarizing the research is
available on the Minneapolis Fed’s Web
site at www.minneapolisfed.org/
publications_papers/pub_display.
cfm?id=4136.
3 For a no-nonsense synopsis/discussion of
the CRA and mortgage crisis, see “Don’t
Blame Subprime Mortgage Crisis or
Financial Meltdown on CRA” at www.
stablecommunities.org/node/472.
4 Read the report detailing the findings and
recommendations of the RHOPI task
forces at www.chicagofed.org/
community_development/RHOPI_
FULLnosig_web_final.pdf.
5 Please see the RHOPI Charter at www.
woodstockinst.org/RHOPIcharter.pdf; for
a complete list of partner organizations,
visit www.regionalhopi.org/content/rhopipartners; and see the RHOPI Action Plan
at www.chicagofed.org/community_
development/files/RHOPI_paper_nosig_
final.pdf.

Biography
Michael Berry joined the Federal
Reserve Bank of Chicago’s
Consumer and Community Affairs
Division in December 1995. He
manages the division’s Emerging
Issues unit, and serves as managing
editor of the division’s publication
Profitwise News and Views. Mr.
Berry holds a BA in political science
from Susquehanna University and
an MBA from the Kellstadt
Graduate School of Business at
DePaul University.

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December 2009

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RHOPI Perspectives: The Chicago Community Trust
by Roberto Requejo
Starting in the second half of 2007,
the foreclosure crisis spread quickly
across the Chicago area, seriously
affecting communities of color and
vulnerable populations. Although some
public, private, and nonprofit responses
to the growing foreclosure crisis in the
Chicago area had started to develop in
mid-2008, most of these responses
seemed to be concentrated in the city
of Chicago and a few nearby suburbs.
The Chicago Community Trust (Trust),
in collaboration with the MacArthur
Foundation, commissioned the first
region-wide report to catalogue those
responses. Unsurprisingly, the study
showed that large parts of Cook and
other collar counties around Chicago
lacked housing counseling and legal
aid resources, had little access to
sustainable financial products to
refinance or modify troubled loans, and
did not have strategies to deal with an
ever-growing number of foreclosed
vacant properties.
Experts agreed that there was a
need to create a forum for groups
across metropolitan Chicago engaged
in addressing the foreclosure crisis to
bring a more coordinated regional
response, and leverage resources in
ways that individual organizations
generally cannot. Thus, understanding
that the scope and depth of the
foreclosure crisis required responses
different from “business as usual,” in
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Profitwise News and Views

the fall of 2008, The Trust, the Federal
Reserve Bank of Chicago, and
Neighborhood Housing Services of
Chicago (NHS) co-sponsored the
Regional Home Ownership Preservation
Initiative (RHOPI).

Developing a regional plan to
address foreclosures in the
Chicago metropolitan area
This metro-wide effort convened
over 100 experts and practitioners in
several task forces focused on
developing coordinated priorities and
action plans around (1) home buyer and
home owner counseling and legal aid,
(2) refinancing and financial products,
and (3) foreclosed vacant properties. A
separate group of experts developed a
research agenda. Each task force was
co-chaired by two experts and
addressed key aspects of the crisis.
After several meetings, each Task Force
generated three main priorities which, in
turn, informed the development of
specific action steps to address the
foreclosure crisis.
As these priorities were developed,
the Obama administration was ramping
up its response to the housing and
credit crisis by launching the Making
Home Affordable (MHA) Program and
the American Recovery and
Reinvestment Act (ARRA). RHOPI
participants recalibrated their priorities

December 2009

to reflect these new developments.
Shortly after the inception of the ARRA,
RHOPI partners released the RHOPI
Action Plan (Plan), on April 27, 2009, at
a special meeting. At this meeting,
panels of public, private, and nonprofit
sector leaders introduced the different
priorities and efforts to implement them,
and the task forces met once again to
update and refine different sections of
the Plan, which was and is intended as a
living document. The Plan and its
priorities turned into a dynamic roadmap
that could adapt to the new
developments that ARRA brought with
it. And task force co-chairs passed the
baton to a group of lead nonprofit
organizations that would be carrying
forward the Plan by bringing resources
and partners to the table. The final
RHOPI Charter formalizes the
commitment of all participants to
advance the Plan, and reflects the
following objectives:

Home Ownership Counseling and Legal Aid
Task Force identified as main priorities:

• Enhance borrower and renter
outreach

• Increase access to counseling and
legal aid resources

• Improve counseling/legal aid
networks

COMMUNITY DEVELOPMENT
The Refinancing and Financial Products Task
Force decided that the main priorities were:

approach to (our) grant-making and mission-aligned investments, using the Plan as a
guide.

• Standardize systems used to analyze

Since the Plan was released earlier this year, The Trust has committed over $1.5
million in grants to nonprofits addressing the foreclosure crisis. In close collaboration
with the organizations mentioned above, more than 20 counseling agencies, legal aid
providers, advocates, organizers, and housing developers funded by The Trust are
working hard to stop the effects of the current crisis and avoid a recurrence. Most
grants have been awarded under the community development program area of The
Trust, and several have been made possible through the Unity Challenge, another
initiative led by The Trust to address the economic crisis in the Chicago region, which
leveraged every dollar contributed by private donors and institutions with two dollars
from The Trust, creating a $4 million pool. Grants addressing the foreclosure crisis
are being organized around three major areas:

loans and borrowers

• Improve financial products and/or
expand its geographical scope

• Promote and facilitate sustainable

loan modifications, in the context of
the MHA Program

The Foreclosed and Vacant Property Task
Force established as priorities:

• Create an information clearinghouse
• Develop best practices for
Direct provision of
services for families
and individuals,
including

Assistance and
resources for
nonprofits and
municipalities dealing
with the foreclosure
crisis
Systemic change

• Outreach efforts
• Housing counseling
• Legal aid
• Assistance with loan

• Technical Assistance
• Training
• Capacity building
• Financing

redevelopment

• Identify entities for implementation
of redevelopment strategies in the
context of the Neighborhood
Stabilization Program

The value of Regional HOPI
What started as initiative to learn
more about facts, trends and responses
to the region’s foreclosure crisis,
coordinate actions, and establish
priorities has developed into an
unprecedented partnership of
governmental, nonprofit, and private
sector organizations. The RHOPI process
has brought people and organizations
together and broken silos among sectors
and jurisdictions. The flexible network
created by RHOPI is now acting as a
platform to make the most of the federal
programs activated by ARRA and
develop immediate solutions to some of
the most pressing problems that the
foreclosure crisis had brought to our
region, namely: tens of thousands of
families losing their homes; and
abandoned properties driving down
home values, tax revenues, and
community stability in our neighborhoods.
For The Trust, the experience
strengthened the relationships among
foundation and grantees, opened the
door to partnerships with governmental
agencies and private sector, and, more
importantly, helped develop a strategic

modifications

• Policy change
• Advocacy & organizing
• Research & evaluation
• Strategies to maximize

• Relocation
• Housing development
• Referrals to other

stimulus funding

agencies

RHOPI has also opened the door to leverage Trust dollars in unprecedented
ways. For example, thanks to the partnerships set in place, a recent $25,000
investment of Trust dollars in an outreach event leveraged approximately $30,000
in in-kind support from municipalities, the state, banks, and volunteers serving over
300 families. The investment in staff capacity in suburban communities has
crystallized into multi-million dollar applications for ARRA funding that otherwise
wouldn’t have been submitted. Finally, the most recent applications for
Neighborhood Stabilization Program dollars have brought over $14 million to the
two collaborative efforts funded by The Trust and other foundations in West and
South Cook County.

Regional HOPI as a model for further cooperation
As the collaborative model around housing triggered by RHOPI starts to take
shape and receive national attention, the groups involved are exploring its
suitability to organize around its structures and principles other sources of funding
beyond the housing dollars provided by ARRA. The Trust, the Grand Victoria
Foundation, and CMAP recently co-convened a number of agencies involved in
RHOPI (i.e., Housing Action Illinois, Metropolitan Planning Council, Metropolitan

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COMMUNITY DEVELOPMENT
Mayors Caucus, and Chicago Metropolis
2020) to work in collaboration with
other organizations closely engaged in
allocating and administering ARRA
dollars for energy and weatherization,
such as the Center for Neighborhood
Technology or the Community Economic
Development Association (CEDA). The
group has also included experts in
ARRA dollars connected to workforce
development, such as the Chicago Jobs
Council.
The group is building on the RHOPI
spirit of regional cross-sector
collaboration and its geographic “hot
spots” (the South and West Cook
clusters) to find ways to:

Biography
Roberto Requejo is a program officer at The Chicago Community Trust. Mr.
Requejo manages several cross-programmatic and regional initiatives. He is
also part of the team coordinating two projects launched in partnership with
the Chicago Metropolitan Agency for Planning (CMAP): the development of a
comprehensive 2040 plan for the region, and the ARRA Coordinating Council,
established to maximize the impact of the Recovery Act (“stimulus”) dollars in
the Chicago metropolitan area. Mr. Requejo’s grant making responsibilities
include, among other areas, affordable housing, legal aid, homeless and
hunger prevention, and LGBT issues. He is a board member of affordable
housing developer Heartland Housing, Inc., and a member of the Urban Land
Institute.

• Better connect ARRA housing,

energy, and workforce development
programs to make the most of the
dollars associated with these
streams of funding.

• Promote collaboration – not only

among municipalities, but also among
different levels of government
receiving and administering ARRA
dollars, including county governments,
the state of Illinois, the Illinois
Housing Development Authority,
public housing authorities, and the
federal agencies engaged in ARRA.

• Engage the private sector into

recovery strategies by leveraging
private capital and attracting
developers, financial institutions,
contractors, and businesses.

This effort tries to take advantage of
ARRA to develop new, more creative ways
of working with public dollars, as a
response to one of the challenges of
ARRA programs highlighted by Brookings
Institution in a recent report: the use of old
(and frequently silo-like) channels and
formulas to respond to new challenges
that require a more open, cross-issue, and
multi-jurisdictional approach.

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December 2009

COMMUNITY DEVELOPMENT

Implementation of the Regional HOPI Action Plan
Funded by The Chicago Community Trust (Trust), a group of nonprofits has stepped forward to make sure
that the spirit and the priorities in the Regional HOPI Action Plan (Plan) move from planning phase into
implementation, and have started to work on specific solutions. Below are some examples. These agencies
have developed a charter that has been signed by Regional HOPI (RHOPI) participants:

• Metropolitan Planning Council (MPC), Metropolitan Mayors Caucus (MMC), and Chicago Metropolis 2020

(CM2020) are supporting inter-jurisdictional coordination in South and West Cook counties (see www.
metroplanning.org/news-events/article/3529), some of the areas hardest hit by foreclosures. The South
Cook cluster includes Blue Island, Dolton, Harvey, Olympia Fields, Park Forest, and other nearby
municipalities. The West Cook cluster includes Bellwood, Berwyn, Broadview, Forest Park, Maywood, and
Oak Park. As a result of this effort, The Trust approved a grant to support housing coordinator positions for
the South and West Cook clusters of municipalities. The two coordinators, working for the South Suburban
Mayors and Managers Association and IFF, will optimize deployment of Neighborhood Stabilization
Program (NSP) 1 and 2 funds for best impact by connecting with other housing programs (i.e., Community
Development Block Grant and Making Home Affordable) with counseling dollars, and by deploying funds
near transit and jobs. In November 2009, the collaboratives were awarded a combined amount of $14
million from Cook County to start the redevelopment of foreclosed properties and counsel prospective
home buyers.

• Housing Action Illinois and the Woodstock Institute have partnered to collect data and map the demand

and supply of counseling agencies throughout the Chicago region. The first report, “On the Foreclosure
Frontlines” (see www.housingactionil.org/downloads/ontheforeclosurefrontline_ july2009_hai-woodstock.
pdf), was produced in early July 2009; the report finds that agencies are often unable to take new clients
due to working at full capacity, and recommends increasing various resources to counseling agencies.

• NHS and the Spanish Coalition for Housing are working with the RHOPI lead organizations, municipalities

and others to replicate, in the suburbs, successful loan modification events like the ones held in the city of
Chicago that have resulted in over 500 applications for the Obama administration’s new Making Home
Affordable initiative. Events are being planned for the south and west suburbs. The first suburban event
took place in the western suburb of Cicero on August 29, 2009, serving close to 300 families. Another
event took place on November 21, 2009.

• The Woodstock Institute and The Trust worked together to design and launch a Regional HOPI Web site,

www.regionalhopi.org, which has been created to share information and assist in coordination for all partners.

More recently, also building on RHOPI outcomes, the Chicago Metropolitan Agency for Planning has
created a region-wide consortium to apply for $75 million in NSP 2 funds (see www.cmap.illinois.gov/policy/
housing.aspx), including the cities of Aurora, Berwyn, Cicero, Elgin, and Joliet; the counties of Cook, DuPage,
Kendall, Lake, and Will; and the Illinois Housing Development Authority. The consortium includes NHS as a
nonprofit member.

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Neighborhood Housing Services
of Chicago, INC.

RHOPI Perspectives:
Neighborhood Housing Services of Chicago
by Christen Wiggins
Over seven years ago, Neighborhood
Housing Services of Chicago (NHS)
increased substantially its focus on
working to help victims of predatory
lending avoid foreclosure. Well before
the “foreclosure crisis” was a national
phenomenon, home owners, mostly in
lower-income communities, were facing
foreclosure at an increased rate due to
the predatory practices of mortgage
brokers peddling subprime loans with
high interest rates. NHS identified this
issue through its network of
neighborhood offices, neighborhood
staff, and advisory councils, and
initiated the Home Ownership
Preservation Initiative (HOPI) formally in
2003. The idea behind the effort was to
engage the new players in the
mortgage market, including subprime
lenders and servicers, who were playing
an increasingly significant role as
foreclosure rates grew, to help stem the
rise in foreclosures.
Over the next several years, HOPI
meetings and programmatic elements
focused on Chicago’s low- and
moderate-income (LMI) communities,
which have been disproportionately
impacted by foreclosures. HOPI was,
and still is, a forum for servicers,
lenders, investors, housing counselors,
and community representatives to
exchange ideas about preventing
foreclosures and mitigating the impact
of foreclosure on Chicago’s LMI
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Profitwise News and Views

neighborhoods. As an NHS program, it
has been focused on providing practical
solutions and services to families in
foreclosure and sharing those lessons
with industry and policy leaders to affect
change in the overall system. While
foreclosures have continued to increase
in the city of Chicago, HOPI has meant a
critical head start for the city in dealing
with these issues and adapting existing
solutions.
About two years ago, it became clear
that the foreclosure crisis was no longer
confined to Chicago’s lower-income
communities. In fact, it was no longer just
an urban issue at all; foreclosures were
increasing at record pace in the suburban
communities surrounding the city and
stretching into the six-county collar
region of the Chicago metropolitan area.
Communities that had seen record
growth in population and home values as
a result of easy credit began to see
significant increases in foreclosure
starts.
NHS’s home ownership department
began to receive increased numbers of
calls and requests for help from
suburban home owners for foreclosure
intervention. Overwhelmed by the volume,
NHS could not help all these clients.
Furthermore, NHS did not have access to
the resources necessary to build a
sustainable program to provide outreach
and services to these communities.

December 2009

Therefore, NHS committed to geographic
expansion beyond the boundaries of the
city of Chicago in 2008.
NHS learned that suburban
communities faced disadvantages to
finding and implementing solutions. They
did not experience the “warm up” that the
city had faced with foreclosure, which led
to valuable relationships and learning in
Chicago. In addition, there was not a preexisting nonprofit network in the suburbs
as there had been in the city. Finally, the
suburbs did not to have the level of public
financial resources or direct control over
federal funds from which the city of
Chicago benefits.
To address these obstacles and
understand the full range of potential
barriers to assisting suburban
communities, NHS teamed up with The
Chicago Community Trust and the
Federal Reserve Bank of Chicago to host
a series of working sessions in the fall of
2008. The purpose of these meetings
was to look at the issue of foreclosure
regionally (with a special emphasis on the
suburbs), and to start identifying
solutions. The idea was to take the
existing lessons and relationships of the
current HOPI partnership and see how
and where they could be applied or
adapted to a suburban setting. Given the
complexity of the environment – a
diverse and segmented suburban area –
the groups were also looking to prevent
duplicative efforts.

COMMUNITY DEVELOPMENT
The workshops were divided into four
sections to allow participants with
particular interests to take a deeper dive:
Refinancing and Financial Products,
Home Ownership Counseling, Vacant
Properties, and Foreclosure Related
Research. Each group was comprised of
representatives from multiple sectors
engaged in the foreclosure problem,
including lenders, advocacy groups,
nonprofits, and regulators. Each group
developed a list of actionable priorities
they felt would help combat foreclosures
in the region. Staff from various areas of
NHS participated in the four working
groups. NHS staff participated but did
not lead the groups so that additional
ideas could surface outside of the NHS
HOPI experience, and also to support
emerging and established suburban
leaders.

time progressed, the group began to
serve as a place to bounce ideas off
other sector leaders, identify new
possible partners for the various ongoing
efforts, and work through some of the
issues and obstacles that were facing the
groups. The leadership group was formed
of representatives from the spheres of
research, urban planning, service, and
advocacy; thus, each participant’s
perspective added depth to the
conversation.
In this role, NHS has also been able to
harness the momentum behind the HOPI
Program to continually inform the
regional efforts. HOPI has a unique

Today, loan modification, in
particular the president’s
“Making Home Affordable
Program” (MHA), has taken
the lead as the primary
“financing” tool for helping
families avoid foreclosure. In
the city of Chicago, nearly
three quarters of the
successful foreclosure
interventions that NHS
counselors secure for their
clients are achieved through
a loan modification.

The recommendations ranged from
national policy changes to the need for
local resources. Out of each workshop, a
group of leaders emerged to move the
priority recommendations forward. There
was a sense among the leaders that
continued coordination would be
valuable. While the foreclosure problem
might be easily divided into four working
groups, the solutions that were identified
were intertwined with other efforts. For
example, the vacant properties group,
which was primarily dealing with the
implementation of the federal
Neighborhood Stabilization Program,
needed support and input from the
counseling and finance groups as they
thought about how to sell the single
family housing units the program would
produce. Likewise, the research group
wanted feedback on the data necessary
to help the emerging programs and
efforts develop and make their cases to
potential funders.

space in the foreclosure conversation
that uses local, on the ground
experiences to inform national policy and
industry leaders. Now, not only are the
set of experiences being generated by
NHS’s city of Chicago programs, but also
the partner leaders of the RHOPI effort
throughout the suburbs.

To keep the momentum moving, NHS
offered to serve as the convener of the
new leadership group that had emerged
from the four working groups. These
monthly meetings began informally, with
updates on progress towards the goals
developed in the working sessions. As

NHS eventually emerged as the
leader of the Refinance and Financial
Products task group. During the fall
meetings, participants repeatedly
suggested that a loan pool like the one
NHS has would be a valuable tool to
helping suburban families fight

foreclosure. At first, we thought that
would mean extending the refinance
product that NHS currently provides in
the city on a pilot basis into the suburbs.
While that is still a possibility, the
market has changed substantially since
last fall, and refinancing is no longer a
primary tool to help borrowers avoid
foreclosure.
Today, loan modification, in particular
the president’s “Making Home
Affordable Program” (MHA), has taken
the lead as the primary “financing” tool
for helping families avoid foreclosure. In
the city of Chicago, nearly three
quarters of the successful foreclosure
interventions that NHS counselors
secure for their clients are achieved
through a loan modification. In order to
help the maximum number of borrowers
qualify for the plan, NHS pioneered the
first-in-the-country loan modification
outreach event on May 2, 2009.
Approximately 25 percent of the
attendees were from the suburbs, some
of whom drove nearly two hours to get
advice and assistance. In the role as
leader of the RHOPI Financial Products
group, NHS worked with several of the
other RHOPI leaders to host a similar
event targeting home owners in West
Cook County on August 29, 2009, that
was hosted in Cicero, Illinois.
Through three 2009 events, NHS
helped 980 home owners submit
applications for an MHA loan
modification. Many applications are still
being processed, but already over 141
loan modifications have now been
confirmed—47 from suburban
attendees. An analysis of data collected
at these events showed that 82 percent
of attendees had contacted their lender
previously; 48 percent had spoken to
their lender at least four times; and 56
percent had attempted to apply for a
loan modification before attending the
event. These findings suggest that
home owners have difficulty in
obtaining needed assistance on their
own.

Profitwise News and Views

December 2009

9

COMMUNITY DEVELOPMENT
NHS is also looking beyond just the
tools needed to help families currently
facing foreclosure to what financial
products will be necessary to repair the
neighborhoods and houses that have
been affected by foreclosure. As part of
a regional application for the second
round of Neighborhood Stabilization
Program (NSP) funds, NHS has
proposed to offer second mortgages to
families purchasing NSP properties in
the suburbs in order to ensure that there
is adequate credit available to potential
buyers. NHS is also exploring new
potential partnerships that would help
existing home owners gain access to
credit to make home repairs, even when
the value of their home has dropped so
significantly that they no longer have the
necessary equity for a conventional loan.

Biography
Christen Wiggins joined NHS of Chicago in 2004 as the director of
innovation, evaluation, and public policy. In this capacity she manages
special projects and new initiatives for the organization, including the
Homeownership Preservation Initiative, outreach to immigrant communities
using ITIN lending, suburban expansion, program evaluation and
government relations. Ms. Wiggins holds a BA from the University of
Virginia, where she majored in political and social thought, and a master of
public policy from the University of Chicago Irving B. Harris Graduate
School of Public Policy.

Forecasts project that foreclosures
may begin to level off in 2010, but the
neighborhoods and communities that
have been affected will feel the effects
for much longer. RHOPI and HOPI in the
city are important components to
developing solutions to this ongoing and
ever-changing challenge.

10

Profitwise News and Views

December 2009

COMMUNITY DEVELOPMENT

RHOPI Partners
Over 100 individuals representing more than 70 organizations assisted in defining the strategic priorities of Regional
HOPI in the fall of 2008. These partners, along with others, continue to be involved in developing solutions to the
foreclosure crisis for the Chicago metro area via on-the-ground solutions and cross-sector and inter-jurisdictional
coordination.
Affordable Housing Corporation of Lake County
Allstate Bank
Bank of America
Bethel New Life
Brighton Park Neighborhood Council
Business and Professional People for the
Public Interest
Chase Bank
Chicago Community Loan Fund
Chicago Housing Authority
Chicago Metropolis 2020
Chicago Metropolitan Agency for Planning
Chicago Metropolitan Housing Development
Corporation
Chicago Rehab Network
Chicago Volunteer Legal Services Foundation
Community and Economic Development Association
Community Investment Corporation
Community Savings Bank
Chicago Metropolitan Housing Development
Corporation
Comptroller of the Currency
Community Investment Corporation
Cook County Department of Planning
DePaul University, Institute for Housing Studies
Diversity Inc.
DuPage Homeownership Center
Federal Deposit Insurance Corporation
Federal Reserve Bank of Chicago
First American Bank
Genesis Housing Development Corporation
Goss Advisory Services LLC
Harris N.A.
Heartland Housing Inc.
Housing Action Illinois
IFF
Illinois Housing and Development Authority
Institute for Consumer Credit Education
Interfaith Housing Center of the Northern Suburbs
Joseph Corporation
Kelly Clarke Consulting
Klibanow Strategic Consulting Services LLC

Latin United Community Housing Association
Legal Assistance Foundation of Metropolitan
Chicago
MB Financial Community Development Corporation
Metro Chicago Information Center
Metropolitan Mayors Caucus
Metropolitan Planning Council
National City Mortgage
National Community Investment Fund
National Training and Information Center
Neighborhood Housing Services of Chicago
Nobel Neighbors
Northern Trust Company
Northwest Side Housing Center
Office of the Comptroller of the Currency
Park Bank Initiatives
Policy Lab Consulting Group LLC
Polk Bros. Foundation
Prairie State Legal Services, Inc.
Rockford Area Affordable Housing Coalition
Rogers Park Community Development Corporation
ShoreBank
South Suburban Mayors and Managers Association
Southwest Development Association
Spanish Coalition for Housing
State Treasurer’s Office
The Chicago Bar Foundation
The Chicago Community Trust
The Chicago Urban League
The Resurrection Project
United Way of Metropolitan Chicago
Urban Land Institute Chicago
U.S. Department of Housing and Urban
Development – Chicago Regional Office
Vasys Consulting Ltd
Village of Cicero
Village of Oak Park
Village of Riverdale
Village of Tinley Park
Wilbur Wright College
Woodstock Institute

Listed organizations subscribe to the strategic priorities of Regional HOPI, but do not necessarily endorse every
individual initiative or effort spurred by Regional HOPI. To become a member, e-mail Kelly Clarke at kmclarke@
sbcglobal.net

Profitwise News and Views

December 2009

11

RESEARCH REVIEW

Examining the Role of Foreclosure Counseling in
the Foreclosure Crisis
by J. “Michael” Collins
Over the past decade, the “American
Dream” of home ownership was
extended to persons and groups for
whom this dream had been elusive in
previous decades. Innovations in the
credit market, a relaxation of lending
standards, and booming housing values
spurred record numbers of home sales in
almost every region. But as housing
values decreased and employment
markets slackened in 2007, the
“American Dream” turned sour.
According to the Mortgage Bankers
Association’s National Delinquency
Survey (NDS), the share of single-family,
owner-occupied, first-lien mortgages
starting foreclosure reached a new
record in the second quarter of 2009.
The NDS data show approximately 3.6
million mortgages were seriously
delinquent out of 44.7 million loans
outstanding, and 1.9 million loans were
in the formal foreclosure process.
As the housing crisis has escalated in
the late 2000s, one strategy that has
been promoted for addressing the
problem of mounting foreclosures is the
provision of mortgage default counseling
for consumers. There are several
rationales for the provision of counseling
as a means of preventing foreclosure,
especially for mortgage borrowers
unfamiliar with the mortgage market or
facing severe resource constraints.
Counseling has the potential to connect
borrowers to public services as well as to
lender-provided alternatives to
foreclosure, of which consumers may be
unaware. Counselors can assist home
owners in navigating the bureaucratic
requirements of the various programs to
assist distressed home owners.
12

Profitwise News and Views

Counseling also may provide an external
review of a consumer’s budget to aid in
the development of cash flow for
servicing mortgage debt.

Why offer counseling?
There is a range of roles and
rationales for offering publically-funded
default counseling. A common policy
rationale for providing default counseling
is that mortgages are complicated
financial contracts, and many consumers
may struggle to comprehend their rights
and obligations. Some consumers,
particularly those with little experience or
knowledge of dealing with financial
issues, may not know what steps to take
when facing mortgage default and
therefore need help before moving
forward. To the extent counseling is
targeted to these populations, and is
then effective in improving decision
making, default counseling may play an
important role providing technical
explanations and advice.
A second rationale for default
counseling is that consumers in distress
may not know what public programs and
supports are available to them. The
counselor has repeated experiences with
clients and expertise on an array of
programs available. Given that these
loans in default are being negotiated by
private lenders with individual borrowers,
there certainly could be challenges for
historically underserved borrowers –
lower-income and minority borrowers in
particular – who lack experience and
knowledge of dealing with a lending
institution. Many likely received their loan
from a third-party mortgage broker and

December 2009

have no direct connection to a lender.
This lack of knowledge may result in a
failure to seek alternatives to foreclosure.
Thus, default counseling may help
people overcome information failures in
order to access programs designed to
assist people with financial problems.
A third rationale for default counseling
is to aid people at a time of intense
emotional distress. Mortgage borrowers
facing financial distress often exhibit
anxiety from not being able to pay bills,
as well as the trigger event causing the
disruption in payments (job loss, health
emergency, etc.). Such a psychological
state creates a tendency to focus on
immediate issues and ignore other
information. Focus groups conducted
with low- and moderate-income
borrowers in default in Chicago provide
illustrations of this phenomenon.
Borrowers described no longer
answering phone calls, avoiding
answering the door and “sticking all my
mail (unopened) in the couch.” Borrowers
described being “paralyzed” and simply
“waiting to be kicked out.” They either did
not notice attempts by their lender to
make contact, or became so anxious
about what might happen that all contact
was avoided. If the borrower can connect
to a default counselor, the counselor can
relay the importance of paying attention
to the situation and taking action. Thus
counseling can help connect borrowers
to their lender and begin to implement a
strategy for repayment or another
alternative to simply waiting for the
foreclosure auction.
A final rationale for default counseling
policies is that the counselor may play an

RESEARCH REVIEW
important role as a trusted advisor at a
time when the borrower is unsure of who
to trust. Particularly in the case of a
nonprofit, third-party counseling agency, the
consumer may view the counselor as more
objective and trustworthy than a lender or
other entity. The borrower may be more
willing to divulge information to a counselor
about his economic situation than he would
to a lender. Counselors may be able to
explore more sources of income, as well as
a wider range of spending reductions
available compared to a lender. This
process could result in borrowers being
able to free up more cash flow for
repayment. For borrowers for whom
repayment is unlikely, the counselor may
provide an unbiased assessment, as well as
guidance on trying to sell the home. In
interviews, counselors frequently mentioned
that an important question in every session
is, “do you really want to keep this house?”
As opposed to a lender or real estate
professional who may benefit depending on
the borrower’s next steps, the counselor
could be viewed as an unbiased source
regarding the decision to repay, sell,
foreclose, or seek another alternative.
One leading provider of default
counseling is Neighborhood Housing
Services (NHS) of Chicago. This agency
has provided housing counseling for over
two decades, and has been a leader on
default counseling and mortgage
foreclosure mitigation since 2003.
Drawing upon its years of experience
providing counseling services and home
ownership preparation workshops, NHS
has been at the forefront of The Home
Ownership Preservation Initiative (HOPI)
with the city of Chicago, Federal Reserve
Bank of Chicago, and financial
institutions. HOPI has led to a number of
innovations and insights for housing
counseling and loss mitigation programs.
In 2009, the agency collected public
records for a random sample of clients
who attended counseling services from
January 2008 through March 2009, as
well as clients who had properties with
recorded subprime mortgages at risk of
default, but did not contact NHS for help.
The data gathered on clients and the
comparison group included information

Figure 1: Loan Status

35%
30%
25%
20%
15%
10%
5%
0%

Source: NHS of Chicago Inc., RealInfo Sample July 2009, n=817.
from RealInfo, LLC—a Chicago area
provider of on-line real estate
information. The RealInfo data contained
detailed information on the client’s
mortgage, and any legal action on the
property, such as a lis pendens (suit/
legal action pending) or foreclosure, as of
July 2009. The combined data set, after
the elimination of observation with
missing data, contained a sample of 695
home owners, of whom just over twothirds received mortgage default
counseling.

What are the effects of
counseling?
Establishing a causal link between
counseling and mortgage outcomes is
difficult. Those consumers who seek
counseling have historically been the
most disadvantaged borrowers, with the
least ability to cure their mortgage
delinquency. Moreover, many consumers
do not seek counseling until well into the
foreclosure process, limiting the ability of
counselors to improve outcomes. Figure
1 compares the rate of properties in the
RealInfo data moving from no foreclosure
action to a foreclosure filing, or from a
filing to a completed foreclosure. It
includes outcomes for NHS-counseled
and noncounseled borrowers who were

offered counseling. Loans that have
achieved a worsened status are those
that have gone from no filing to a lis
pendens or from a lis pendens to a
foreclosure. The data suggests
counseled borrowers are less likely to
see their status worsen from January
2008 until June 2009. This is
suggestive of a positive impact of
counseling on slowing or even
reversing the foreclosure process for
borrowers in default. More careful
analysis controlling for borrower types
and neighborhood factors suggests
counseling may indeed be associated
with loans avoiding foreclosure at least
within an 18 month period.

Understanding borrower
circumstances
In June and July 2009, NHS mailed
a two-page survey to 880 households,
eliciting 235 completed survey forms (a
27 percent response rate). This built on
a similar survey conducted by NHS in
2005. These survey responses provide
further evidence of the circumstances
and needs of borrowers in the current
environment. In 2005, 51 percent of
clients who came to NHS had never
talked to their mortgage servicer. In
contrast, in 2009, 86 percent of

Profitwise News and Views

December 2009

13

RESEARCH REVIEW
Figure 2: Loan Status
Often

50%

Almost Never

Loan modification counseling

40%
30%
20%
10%
0%

Source: NHS of Chicago Inc., RealInfo Sample July 2009, n=817.

borrowers reported contacting their
servicer before coming to NHS for help.
Media attention, outreach efforts by
lenders and servicers, and programs
such as HOPI all likely have contributed
to higher levels of communications
between borrowers and loan servicers.
This suggests borrower need
counseling less as a way to make

Figure 3: “Very” willing to do to
avoid foreclosure
Take a second job

61%

Take in border (tenant)

26%

File for bankruptcy

25%

Cash out retirement funds

24%

Sell belongings

21%

Sell my home

18%

Borrow from friends/family

17%

Source: NHS of Chicago Inc.,
2009 Client Survey, n=211 (June/
July 2009).

14

alternatives to foreclosure may include
selling the home. Exiting from home
ownership without the damage to credit
history stemming from a foreclosure may
make selling the home a better option.

Profitwise News and Views

contact with their lender than to take
actions to avoid foreclosure.
An important factor counselors may
need to address is the level of stress
borrowers face. The NHS survey included
four questions about how often
borrowers experienced physical
symptoms of stress such as headaches,
insomnia, fatigue, and backaches. Figure
2 shows the majority responded that they
experienced these manifestations of
stress at least sometimes. Contrasting
borrowers’ sense that they will avoid
foreclosure with stress indicators shows
that borrowers with the least hope also
show the most stress symptoms.
Overcoming stress can be a major
obstacle to taking action for borrowers;
counselors may help people make tough
choices under duress.
The survey also asked clients to
indicate how willing they would be to try
different options in order to avoid
foreclosure. Figure 3 shows that most
borrowers are very reluctant to sell their
home. The most preferred option by far
was to take a second job. Of course, in
the current labor market, this option may
be the least available to borrowers. One
role of counseling may be to connect
borrowers to additional services. Another
may be to help borrowers understand

December 2009

With the advent of the Making Home
Affordable (MHA) Program in March
2009, NHS has developed new
approaches to default counseling. The
MHA Program does not require
counseling except for borrowers with
high total debt payment to income ratios
(55 percent of income or more). But the
opt-in nature of the program means that
borrowers must apply for a loan
modification to their lender. Navigating
the application process is time
consuming and often complex. Otherwise
distressed borrowers have initially been
slow to apply to the program. In this
context, nonprofits have begun to focus
on encouraging borrowers with a
documented hardship to apply for the
program. The “Fix Your Mortgage”
Program provided one-day events for
home owners in the summer and fall of
2009. A point of service survey
conducted at one loan modification event
held June 6, 2009, provides an
illustration of these events. Clients were
offered the survey form during waiting
times; out of 369 clients attending the
event, 141 completed a survey (38
percent). The event was advertised city
wide as an opportunity to receive help
from volunteer real estate professionals
to apply for a loan modification under the
federal MHA Program. Clients called to
register for the event and were instructed
as to what documents were required. The
goal of the event was to screen clients
for eligibility for the program and to
submit applications to lenders for
qualified borrowers.
Figure 4 shows that about a third (34
percent) of respondents to the survey
were current on their mortgage – the
remainder were behind, and 18 percent
were in foreclosure. Notably 82 percent
of respondents had been in contact with
their lender prior to the event; 48 percent

RESEARCH REVIEW
Default counseling going forward

Figure 4: Loan Modification Survey Summary Statistics
Loan Status

n (excluding
% of responders
missing)

Behind on payments

67

47.9%

Current

48

34.3%

Foreclosure started

25

17.9%

112

82%

4+ contacts

54

48%

Attempted to apply for modification

75

56%

Contact with Lender
Contacted lender

Rating of Lender Helpfulness if Contacted
Low

63

55%

Fair

29

25%

Good

16

14%

High

7

6%

Source: NHS Chicago 2009 “Fix Your Mortgage” Survey
have attempted to work with their lender
four or more times. Just over 56 percent
had attempted to complete a loan
modification application before coming to
the event. This suggests these borrowers
may have been frustrated by the loan
modification process and needed
technical help to complete the required
paperwork. Indeed, 55 percent of those
respondents who had tried to work with
their lender prior to the event rated their
lender’s helpfulness as “low” and 25
percent as “fair.” Only 20 percent
suggested ratings of “good” or better.
This suggests borrowers in distress may
need more than to make contact with
their lender, but actually need assistance
in navigating the loan modification
application process.
New forms of volunteer counseling
focused on a single action, such as having
submitted a loan modification, may also
help push borrowers into pursuing
alternatives to foreclosure. One day faceto-face events offer the opportunity to
organize documents (physically) and
complete paperwork for submission.
These events may serve as a complement

to borrowers engaged in ongoing
counseling, or simply provide an important
step to encourage borrowers to take
preventive actions. The mode and format
of the counseling can be increasingly
calibrated to the needs of clients, and
intensive work, especially if it involves
preparing and organizing documents, can
be completed in person. Meanwhile
general advice and an explanation of
technical terms and processes may be
best delivered on the telephone.
When dealing with loan-by-loan
modifications, counseling may become
more of a mechanism for borrowers to
understand and accurately complete
documents for lenders in order to seek
and maintain a formal mortgage
modification. This might necessitate
greater outreach efforts to seek borrowers
not in contact with lenders or counselors,
as well as forms of face-to-face services,
which include less intensive education and
advising, and more intensive document
review and preparation.

Although it has existed since the
1960s, default counseling has grown and
changed rapidly in just the last three
years. An influx of federal subsidies to
address a boom in foreclosure filings has
stimulated the supply of counseling, at a
time when a growing group of consumers
may benefit from counseling. There are
several compelling rationales for the
provision of counseling to overcome
information barriers and to potentially
avoid negative externalities of foreclosure.
The impact of counseling must be
kept in perspective; no amount of advice
can overcome an inability to earn enough
income to repay a loan. Nevertheless,
existing studies and data collected
among counseled borrowers suggest at
least modest short run positive impacts
on loan performance, and borrowers
receiving counseling perceive it has been
generally helpful.

Biography
J. “Michael” Collins is an assistant
professor in the School of Human
Ecology at the University of
Wisconsin, Madison. He is the faculty
director of the Center for Financial
Security, a faculty affiliate of the
Institute for Research on Poverty and
of the La Follette School of Public
Affairs. He is a family finance
specialist with Wisconsin Cooperative
Extension. Dr. Collins studies
consumer decision making in the
financial marketplace. He also studies
financial education and financial
coaching provided to low-income
clients in a variety of social service
settings, funded by the Annie E.
Casey Foundation. He holds a master
of public policy from the John F.
Kennedy School of Government, a
PhD in policy analysis and
management from Cornell University,
and a BS in education from Miami
University (Ohio).

Profitwise News and Views

December 2009

15

AROUND THE DISTRICT

Around the District
ILLINOIS

Study reports Peoria is a resurgent city
At a recent Peoria area community
economic development roundtable forum,
local banking, housing, economic,
governmental, regulatory, nonprofit, and
for-profit organizations met to discuss their
respective financial programs, products,
services, and institutional needs.
Rick Mattoon, a Federal Reserve Bank
of Chicago senior economist and
economic advisor, delivered the keynote
address, “An Outlook on the U.S., the
Midwest, and Peoria.” Mattoon cited a
study from the Boston Fed entitled,
“Reinvigorating Springfield’s Economy:
Lessons from Resurgent Cities.” The
report classified Peoria as one of ten
resurgent U.S. cities from which the city of
Springfield, Massachusetts, could draw
valuable lessons. The report stated that
across the ten cities, industry mix,
demographics, and geography were not
the dominant factors in their renewal.
Rather, the principal factor is social capital
– leadership from government, nonprofit,
and business sectors.

INDIANA

Foreclosure prevention workshop
As part of the Federal Reserve Bank
of Chicago’s Indiana Money Smart
Week, on October 21, 2009, the Bank’s

16

Profitwise News and Views

Community Affairs division participated
in a foreclosure prevention workshop,
which was hosted by the Indiana
Foreclosure Prevention Network. The
event, held in Indianapolis, provided
participants with an opportunity to meet
face to face with their lenders in an
effort to find alternatives to possible
foreclosure proceedings. In addition,
participants waiting to meet with lenders
were provided with presentations
throughout the day on topics including:
the Role of the Federal Reserve’s
Community Affairs Division, Money
Smart Week, Strategies for Rebuilding
your Credit, and the Rights of
Consumers Facing Foreclosure.

that enhance the quality of life in Iowa.”
The news release further states that,
under the program called Community
Attraction and Tourism (CAT), the fund
has already provided 322 grants for over
$120 million to leverage local and
private funds. Iowa’s governor, Chet
Culver, announced that a $96,000
Vision Iowa grant will go to the city of
Belle Plaine for construction of a new
recreational aquatic center. The total
project will cost over $2.5 million and is
expected to be completed by next
summer. For more information, see
www.iowalifechanging.com, or contact
Troy Price, Governor’s Office, at (515)
725-3085 or troyprice@iowa.gov.

IOWA

MICHIGAN

Iowa continues to support tourism as
economic development engine
As we reported in April of this year,
Iowa continues to attract tourists in
significant numbers, fueling economic
development as a result.
One of the vehicles Iowa uses to
support tourism is a state fund called
the Vision Iowa Program. This program,
according to a news release of
September 9, 2009, by the Office of the
Governor, “…provides financial
incentives to communities for the
construction of recreational, cultural,
educational or entertainment facilities

December 2009

New foreclosure Web site
The Detroit Office of Foreclosure
Prevention and Response (FPR) has
created a new Web site to help
residents learn about intervention,
counseling, and mortgage modification
and refinance options, and to encourage
them to take action. Every day, hundreds
of Detroit families face imminent
foreclosure, and the challenge of finding
an affordable means to hold onto their
family home. Unprecedented home price
declines and the overwhelmingly negative
economic climate in Detroit have led many
families to simply walk away.

AROUND THE DISTRICT
The purpose of this Web site is to
help families keep and stay in their
homes by connecting people to one
centralized location with free information
and resources. The foreclosure Web site
will provide the facts about the
foreclosure process: what to do if help is
needed, how to work with lenders,
locate free housing counselors, and
avoid foreclosure rescue scams.

For a complete list of participating
lenders by and the total number of ARC
loans made by state, visit www.sba.gov/
idc/groups/public/documents/sba_
homepage/sba_recovery_arc_lenders.pdf.

According to the Detroit Office of
Foreclosure Prevention and Response
(FPR) Web site, it is “an independent
public/private model serving as a
centralized clearinghouse to share tools,
resources, and recommendations to
leverage and enhance the work of our
dedicated partners throughout the city
of Detroit to reduce the effects of the
foreclosure crisis on families and
neighborhoods.”
FPR does not provide direct service
to individuals. To view the Web site, go
to www.foreclosuredetroit.org.

WISCONSIN

SBA ARC Loans more popular in Wisconsin
The U.S. Small Business
Administration (SBA) recently released
data showing a higher level of
participation in Wisconsin, by both
lenders and borrowers, in the SBA’s
America’s Recovery Capital (ARC)
Program. With 220 loans made by 68
different lenders, Wisconsin is the
second highest user of the program
behind Minnesota.
The ARC Loan Program was created
in the American Recovery and
Reinvestment Act of 2009. ARC loans
are interest-free loans of up to $35,000,
with principal payment deferred for up to
12 months and 100 percent guaranteed
by the SBA. The loans are intended to
help eligible small businesses weather
economic trouble by helping to make
payments on existing loans.

Profitwise News and Views

December 2009

17

Consumer and Community Affairs Division
P.O. BOX 834
CHICAGO, IL 60690-0834

RETURN SERVICE REQUESTED

Attention:
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Profitwise News and Views is published by the
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Federal Reserve Bank of Chicago
230 S. LaSalle Street
Chicago, IL 60604-1413

PRESORTED
STANDARD
U.S. POSTAGE PAID
CHICAGO, IL
PERMIT NO. 1942