Some of the funds from the recently enacted $3.9 billion Housing and Economic Recovery Act of 2008 could find their way to Evanston, City staff said on Aug. 11.
The legislation, said interim Community Development Director Dennis Marino, “corrects a lot of problems and recapitalizes Fannie Mae and Freddie Mac,” the principal holder of residential loans.
Donna Spicuzza of the City’s Community Development Department told aldermen at the Planning and Development Committee meeting it is “very likely that the City of Evanston will get [some of this money], based on the number of sub-prime loans and the number of foreclosures here.”
Figures from Interfaith Housing of the Northern Suburbs that in 2007 there were 179 filings for foreclosures in Evanston. According to data provided to the RoundTable by RealtyTrac, Inc., there were 143 foreclosure filings in Evanston in the first six months of 2008.
Ms. Spicuzza said, “It has been requested that 70 percent of the funds go to local governments, and 30 percent to the state. … We want to be ready with ideas about ways to spend it wisely.” She said City staff felt they had “about 60 days” to come up with ways to spend the money and 18 months to spend it.
Some Relief Likely
At present the options available for persons at risk of losing their homes through foreclosure are selling the home outright – on their own or through a bank-enforced sale – or finding a way to refinance the home at a rate the owner can afford.
The $3.9 billion in federal funding, said Ms. Spicuzza, is designated “just for purchase, rehab and resale of buildings.” Mr. Marino said the legislation will provide incentives to lenders to refinance their loans
An additional $180 million has been allocated for foreclosure mitigation activities, according to a memo from Ms. Spicuzza and Mr. Marino. About $30 million of that will go to the Neighborhood Reinvestment Corporation for grants to HUD-approved counseling agencies to hire attorneys to assist homeowners with legal issues related to foreclosure, delinquency or short sale, according to the memo.
Efforts are also underway to create affordable rental housing, Ms. Spicuzza said. “The National Affordable Housing Trust Fund is working on legislation to develop rental housing for extremely low-income people.”
Evanston’s Foreclosure Task Force met recently to try to come up with ways to help Evanston families in trouble, said 1st Ward Alderman Cheryl Wollin, a member of the task force. Alderman Delores Holmes, 5th Ward, another member of the task force, said one suggestion was that not-for-profits now having difficulty selling their affordable units offer them as rental units instead. “We told [Keith] Banks of Evanston Community Development Association and other community housing development organizations [CHDOs] to consider renting the units or renting them with an option to buy.”
Alderman Ann Rainey, 8th Ward, said she would be “thrilled” if the two affordable condominium developments – one by Reba Place and one by EDCA – in the Eighth Ward would be offered for rent, since only about half of them have been purchased. David Jansen, recording secretary for ECDA and executive director of Reba Place, said “Turning the property into rental units may solve some short-range problems, but we’d have to get permission from our lenders, and we’re not looking to do that.”
Betty Ester, president of the Citizens
Lighthouse Community Land Trust, said her group had told the task force they would like to work with lenders and with homeowners at risk of foreclosure to work out an option under which the land trust would purchase only the land and the homeowner could refinance only the home, which would substantially reduce the homeowner’s mortgage.
Alternatively, she said, “We could buy the house pre-foreclosure and then rent it back to the [former owner], who would then get to remain in the house.” She said the task force told her and others to “think outside the box, but we’re about as far outside the box as you can get.”