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The Home Ownership Preservation Initiative in Chicago (HOPI): Reducing Foreclosures through Strategic Partnerships. Bruce Gottschall, Executive Director Neighborhood Housing Services of Chicago. Neighborhood Housing Services of Chicago .

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The Home Ownership Preservation Initiative in Chicago (HOPI):Reducing Foreclosures through Strategic Partnerships

Bruce Gottschall, Executive Director

Neighborhood Housing Services of Chicago


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Neighborhood Housing Services of Chicago (HOPI):

  • Who is NHS – The mission of NHS is to help neighborhoods stay strong – by helping people buy, fix or stay in their homes. We are a not for profit community organization that has been working in Chicago neighborhoods for 30 years. We have 8 local offices that serve 9 targeted neighborhoods:

    • Auburn Gresham/Englewood West Englewood – 60620 & 60636

    • Back of the Yards/Garfield Boulevard – 60609 & 60621

    • Chicago Lawn/Gage Park - 60629, 60632 & 60652

    • North Lawndale – 60623 & 60612

    • West Humboldt – 60624 & 60651

    • Roseland – 60628

    • South Chicago – 60617

    • Central Office – Provides City-Wide programs

  • We Serve 1-4 unit homeowner occupants


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Foreclosures Threatened (HOPI):Chicago’s Neighborhoods


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Fast Foreclosures in NHS Targeted Areas (HOPI):Half of Loans Start Foreclosures within 3 years of OriginationDramatic increase Since 1993

52% of all loans starting foreclosure in 2001 were originated after 1998

72% of loans which were priced 300 basis points over 30 year Treasury and starting foreclosure in 2001,were originated after 1998



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Chicago’s Home Ownership Preservation Initiative (HOPI) (HOPI):Model

Partnership Between:

NHS

City of Chicago, Department of Housing

Federal Reserve Bank of Chicago

Major Lenders/Servicers


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Chicago’s HOPI Approach (HOPI):

  • Quality homeowner education to prevent current and future delinquencies.

  • Direct Interventions to assist homeowners at risk of foreclosure.

  • Reclaim foreclosed homes for owner-occupants

  • Study mortgage and servicing impacts on neighborhoods to develop best practices as a “laboratory” for training and replication



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HOPI Approach (HOPI):

  • Borrower Access/Entry to Counseling and Support System

  • Appropriate and Escalating Forms of Counseling and Support

  • Comprehensive Loss Mitigation Effort and Resources

  • REO Disposition

  • Community Partnership and Neighborhood Engagement

  • “Laboratory Role”


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Survey Findings of NHS Counseled Families (HOPI):

  • Demographics of HOPI Clients

  • 73% Women

  • 81% African American

  • 15% Hispanic

  • Length of time lived in Home

  • Mean 10 years

  • Median 7 years

  • Income

  • Mean $27,000 (38% of AMI)

  • 1/3 below $18,000 (25% of AMI)

  • Average delinquency was 5.4 months when contacted by NHS

Source: NHS Chicago – Survey, 2005 (800 clients)


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Profile of Respondents (HOPI):

  • 69% First-time Buyers

  • 55% First-time Refinancers

  • 52% First-time Defaulters

  • Median Purchase Time: 5 years ago

  • Median Mortgage Balance: $87,500

  • 62% have filed for Bankruptcy at some point

  • Average Delinquency: 4.6 Months (up to 3 years)

Source: NHS Chicago-Defaulted Borrowers Survey, 2005 (289 respondants)


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72% of Defaulted Loans are Refinances (HOPI):

Source: NHS of Chicago-Defaulted Borrowers Survey, 2005 (183/289 respondents)


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Why, if Behind, Did not Contact Lender? (HOPI):

Source: NHS Chicago-311 Survey, 2005 (56/289 respondents)


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NHS of Chicago Resources: (HOPI):

  • Intensive Foreclosure Counseling

  • Foreclosure Intervention Program

    • Below-market rate loans to reinstate a mortgage

  • Homeownership Preservation Initiative Refinance

    And Refinance/Rehab Loans


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Public-Private Partnerships Maximize Impacts (HOPI):

  • State Housing Agency

  • Referral networks

  • Payment assistance

  • Emergency loans

  • Training for counselors

  • Financial support for nonprofits

  • Credit Counselors

  • Phone counseling

  • Manage hotlines

  • Budgeting

  • Debt management plans

  • Lenders / Servicers

  • Forbearance

  • Loan modification

  • Counseling referrals

  • Support for collaborations

  • Nonprofit Housing Counselors

  • In-person counseling

  • Borrower education

  • Housing issues

  • Facilitate workouts

  • Administer grants/loan

  • City / State Government

  • Hotlines

  • Public awareness

  • Facilitating collaboration


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Connecting Distressed Borrowers to Services (HOPI):

Distressed Borrower

3

1

Contact Lender / Servicer

2

Contact Community-based Organization

(3rd party will increase trust, information or change behavior)

Call Hotline to Credit Counseling

Refer to Community-based Organization

Improve Budgeting

Connect with Lender/Servicer

(50% of delinquent borrowers not in contact)

REO

Disposition

Home resold to mortgage ready borrower

Increase Timely Payments

(20-30% of borrowers only need budget management)

Property Services

Home preserved for resale or continued ownership

Emergency Loan or Grant

Forbearance or Workout

Preserves: BorrowerHouseNeighborhood


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HOPI – Three Year Goals (HOPI):

  • Homeownership Preservation

    • Help 1,500 families avid foreclosure

      Property Preservation

    • Reclaim 300 foreclosed properties as community assets

      Community Development

    • Cultivate community development best practices


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HOPI Results: April 2003 – March 2005 (HOPI):

  • 2,770 homeowners completed counseling

    • 530 through workshops in community

    • 800 through 311; 56% paid for by participating

      lenders

    • Estimated 37% of 311 callers cured problem or sold

      home within a year of receiving services

  • 940 Foreclosures prevented

  • 175 Buildings reclaimed from foreclosure

Source: The Chicago Hone Ownership Preservation Initiative: A Learning Laboratory,

Neighborhood Housing Services of Chicago, Inc. June 2006



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Emerging Trends (HOPI):

  • Mortgage Rescue

  • Distressed property consultants and

  • Distressed property purchasers

    • “Flip and Default”

    • “No Doc”

    • “Fee for Service”

    • “Buy Lease Back”


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