Durbin Discusses Next Steps to Address Foreclosure Crisis

[ELGIN, IL] – U.S. Senator Dick Durbin (D-IL) today met with residents and Neighborhood Housing Services representatives to discuss the state of the foreclosure crisis in Elgin.

Durbin said he plans to introduce legislation in the coming weeks designed to improve the Obama Administration’s foreclosure prevention program.  The bill would help homeowners who owe more than their home is worth, by reducing the principal owed to the current market value after the homeowner has consistently paid a modified mortgage payment for a period of time.  It will help homeowners who lose their jobs to continue to pay their mortgage while they look hard for new work, at least for a while.  And it will help ensure that banks can’t rush to foreclose without trying to help families save their homes first.

The Obama Administration announced its plan last week to help the unemployed and the “underwater”, even without new legislation.  “It’s a good step,” said Durbin.  “But they need new authority to push the banks further to help more families.  And that takes a new law.”

According to an analysis released earlier this month by the Woodstock Institute, 41 percent more homes were lost to foreclosure in Kane County in 2009 than in 2008.  The number of foreclosures over the last two years in Kane County has increased by 111 percent.  In Elgin, 1,146 homes were in some stage of foreclosure last year.  That’s a 24 percent increase from the previous year and an 84 percent increase from two years ago.

While the worst lending abuses that fed the boom and bust tended to take place in lower income neighborhoods, this is no longer a problem concentrated in the inner cities.  Foreclosures are no longer being driven primarily by predatory lending, or by bad underwriting.  Most of those homes, sadly, are already gone.  The crisis has now morphed into an “underwater” problem and an unemployment problem, Durbin said.

“With the unemployment rate now above 11 percent in Illinois, many families are finding that they can’t make the mortgage payments as easily as they used to.  Yet they’re stuck, because they often can’t pay of the mortgage even by selling the house.  Often, foreclosure is the only option left.  It’s a problem in Elgin, just as it is in Chicago and, sadly, we still haven’t seen the worst of it.”

“The current recession started in America’s housing market and it is not going to end until America’s housing market is stabilized,” said Durbin.