Chuck Feldman of the Proviso Herald reports on foreclosures in Proviso Township. According to Feldman, a few communities in Proviso Township had some of the highest rates of new foreclosure cases in the Chicago area in 2007, according to the National Training and Information Center.
NTIC, a Chicago non-profit group that has been working to reduce foreclosures since 1998, released a list in March of the foreclosure rates of 263 Chicagoland communities. The rankings are based on the number of new foreclosure cases per square mile in each community for 2007.
Although its increase in new foreclosure cases between 2006 and 2007 was 7.7 percent, compared to 251 percent in 2007 from 233 percent in 2006, Maywood ranked first for 2007 with 93 new foreclosure cases per square mile.
Maywood Mayor Henderson Yarbrough said he is unsure why the village heads the list.
"I don't know -- unless our community has been targeted because we're a majority minority community," he said. "Maywood is not really a really poor community; our median income is around $38,000. We've tried to educate our residents (about foreclosures) where we can with forums, but often that's after the horses have gotten out of the barn."
High rates of new foreclosures are common throughout the region, and Yarbrough said he believes that's often because those seeking a first-time mortgage or refinancing a home are misled by financial lenders.
"A lot of people get into these deals based on whatever the lender tells them," he said. "Once you get to the closing table, it's hard to get up and walk away. People can be very vulnerable in these situations, and they often are taken advantage of."
In Hillside, foreclosure cases have not been a big problem, Village Administrator Russ Wajda said. Hillside had 38 new foreclosure cases in 2006 and 52 new cases in 2007, according to NTIC.
One reason Hillside has not been hit as hard as other communities is its older population, Wajda said.
"Perhaps most of the homes are paid off," he said. "If there's no mortgage, there's no foreclosure."
In Melrose Park, Mayor Ron Serpico isn't overly concerned that foreclosures in the village increased from 75 in 2006 to 136 in 2007.
"It's a trying time, but we haven't found it to be a tremendous problem for us," Serpico said, adding that Melrose Park may be faring better than some communities because of a low number of home sales.
"There is little the village can do to address foreclosures, he said. "It's up to the state and federal government. That's not part of what we do. Can you imagine if we had any funds, how many people could we save? It's a virtual impossibility."
While the federal government has been concerned with foreclosures, its focus has not been on homeowners, Andrea Frye, NTIC spokeswoman, said.
"Up 'til now, it has to do with how we fix the financial markets and help Wall Street," she said. "We've been screaming for a long time that homeowners need relief."
One of the reasons foreclosures have increased is structural. Mortgage brokers work on commission and get paid up front. The mortgages are then sold to investment companies, and the brokers have no more responsibility.
"Because the commitment to that loan was very short term, what we found was that people were placed into loans that were not going to be permanently affordable," Frye said.
An example is adjustable rate loans. A mortgage with a 30-year payback, for example, would start off with a lower or "teaser" interest rate for the first two years. The loan then increases to the full interest rate. For homeowners who are barely making their loan payments at the lower rate, an increase can be deadly.
Jim Shilling, a professor of finance at DePaul University's Center for Real Estate Research, said a number of economic factors have exacerbated the problem.
First, housing prices are down. If housing prices were rising, a homeowner at risk of foreclosure could merely sell their property. In a sinking market, selling would leave the homeowner still owing money.
Second, employment is down, especially higher-paid manufacturing jobs. At the same time, the cost of gasoline is at a record high, leaving homeowners with less money to pay their mortgage.
No one wins when a property is foreclosed upon, Shilling said. The homeowner loses their home and has their credit rating damaged. The neighborhood or community is disrupted.
Also, while foreclosures have been occurring more with lower end homes, the overall real estate market is negatively impacted. It's a bit like climbing a ladder, Shilling said.
"Purchasers of starter homes hope for significant property value gains," he said. "They then trade up to the next rung on the ladder. That increases housing prices. The middle (of the market) trades up, too. If the lower end experiences capital losses, it means less demand for the middle and the high."