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Communities try to help as suburban foreclosure crisis grows
By Kim Mikus | Daily Herald Staff

Many towns, including Elgin and Aurora, have been using federal money to buy up foreclosed homes.

 

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Published: 11/4/2009 12:16 AM

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Elgin is using federal money to help rehab foreclosed homes.

Lake County intends to use stimulus funds to acquire, fix up and resell abandoned or foreclosed properties.

Prosperous towns like Geneva, Schaumburg, Wheaton and Naperville are looking for ways to direct desperate homeowners to community resources.

All over the suburbs, towns continue to wrestle with the fallout of a crisis that has been deepening for years and, despite a steady stream of improving economic signs, shows few signs of improving soon. Figures released recently by the Woodstock Institute, a Chicago-based nonprofit agency that among other goals promotes affordable housing, show that new foreclosure filings in the Chicago area spiked 18 percent in the third quarter compared to the same time a year ago, with some larger towns seeing hundreds more homes foreclosed during the 2009 period compared to 2008.

And, there may still be more to come.

"We're not done for a while," says bankruptcy attorney David Leibowitz. "We're going to continue to see high foreclosure filings until at least 2011."

Indeed, an Oklahoma City-based agency that tracks bankruptcies, Jupiter ESources LLC, reported Tuesday that individual bankruptcy filings have risen 25 percent nationwide compared to 2008. The 1.2 million bankruptcies filed through October have already surpassed last year's total of 1.1 million, Jupiter said. "Despite the recovery, several sectors remain in crisis," Kurt M. Carlson, a bankruptcy lawyer at Chicago-based Much Shelist Denenberg Ament & Rubenstein P.C., said in an e-mail. "The real estate markets haven't improved. Vacancy rates continue to climb. Those in manufacturing are cutting costs."

Experts see some hope in the possible expansion of the first-time homebuyer credit and efforts under way at the local government level.

Evan Geiselhart of HomeTrust Mortgage in Schaumburg sees that "purchase activity is up significantly" and Tom Kruiser, while acknowledging he thinks we're not out of the woods yet, points to low interest rates and stimulus packages that are spurring home sales.

Some local governments are attempting to push forward with their own efforts to provide relief to the desperate homeowner.

Elgin plans to use a $2.1 million grant from the U.S. Department of Housing and Urban Development to buy, rehab and resell foreclosed homes to low-and moderate-income buyers.

The city hopes to buy 12 homes this winter and begin work in the spring. A quarter of the homes must be marketed toward low-income buyers, so the city is working with Habitat for Humanity to rehab them at lower cost. The city will equip the homes with tankless water heaters, energy-efficient furnaces and other features to increase marketability.

Aurora received $3.1 million in federal funds to assist in purchasing and rehabilitating foreclosed homes in the city's hardest-hit areas. Mayor Tom Weisner said the money will go immediately toward purchasing foreclosed homes that have been unoccupied for at least 90 days.

Lake County is a month or two away from distributing $4.6 million in federal stimulus funds to acquire abandoned and foreclosed homes in Waukegan, North Chicago and other communities. But Vern Witkowski, director of the county's community development division, says that won't make a huge difference.

"It's a drop in the bucket," he said. "We're talking about doing 15 to 20 homes with these monies."

The hope is that as the homes are rehabbed and sold, the funds will recycle and produce a greater impact over time. Competition for the funding is tough. Under the county's program, a family of four making up to 120 percent of the median income, or $90,500 would be eligible to purchase a rehabbed home.

Several communities are frustrated with the lack of resources available.

Carpentersville Village President Ed Ritter said that despite the village's efforts to stem the tide of foreclosures, leaders have had little luck finding appropriate programs to help homeowners stay in their homes or sell vacated homes.

"Fighting these foreclosures is a top priority, but we are finding there is not a lot of help out there," Ritter said. "This is not something we can do ourselves as a village. We have so many financial obligations already, and I don't know where we would come up with the money to help homeowners."

A partnership between the village and some local business owners has failed to get off the ground, Ritter says, because of a lack of funding from all levels of government, coupled with the uncertainty of potential developers.

Geneva, which recorded one of the highest foreclosure jumps in the suburbs, is also finding it difficult to assist homeowners in financial trouble. The number of foreclosures, rising by almost 170 percent, came as no surprise to Mayor Kevin Burns.

"Geneva, like any other community, is not immune to the impact this economy has had on homeowners of every socioeconomic level," Burns said.

Other communities, including Naperville, don't have designated funds to stop foreclosures but have programs that could help indirectly. The Community Development Block Grant program encourages home maintenance and rehab through home improvement grants. Some money also goes to a weatherization program for income-qualifying residents to improve homes' energy value.

Naperville also has two social workers in the police department to help residents with a wide range of requests, including getting in touch with community groups that may be able to provide additional assistance.

Experts point to unemployment as the main reason homeowners are falling into trouble. The unemployment rate - now at a 26-year high of 9.8 percent - isn't expected to peak until the middle of next year.

Wheaton Mayor Michael Gresk reacted to his town's 106 percent jump in foreclosures by saying it illustrates that the community isn't immune to the country's economic struggles.

"We're not existing on an island," Gresk said. "We are part of the national economy. When you hear about companies nationwide that are laying off X numbers of people, those people could very well be your neighbor. They live in your town."

Reporters Larissa Chinwah, Harry Hitzeman, Melissa Jenco, Justin Kmitch, Jameel Naqvi, Robert Sanchez, Mick Zawislak, and Bloomberg News Service contributed to this report.