$68 Million To Be Donated By MacArthur Foundation To Help Reduce Foreclosures in Chicago

October 17th, 2008

The John D. and Catherine T. MacArthur Foundation has pledged $68 million in local grants and subsidized interest rate loans to combat the rising scourge of foreclosures in Chicago. Though they began this initiative in March, it was announced only on Wednesday, 15th October 2008. It aims to help more than 10,000 homes in Chicago, including the prevention of around 2,700 homes by 2010, and providing counseling services to more than 6,000 home owners.

Some of these funds will also be used buy and remodel more than 3,500 properties particularly in neighborhoods where foreclosures have had a very damaging effect. This project will be done in collaboration with the city of Chicago and Mercy Housing Inc.

There has been a 85% rise in the number of foreclosures from 2005 to 2007. Some of the neighborhoods worst affected by the onslaught of foreclosures are Englewood, Woodlawn, Humboldt Park, Lawndale, Auburn Gresham and Grand Boulevard, but most of these are now seeing a turnaround in their fortunes, according to the president of the foundation – Jonathan Fanton. He said “As families lose their homes, neighborhoods suffer. A wave of foreclosures is threatening to flush away all that progress.”

Around 2/3 of the funds will be dispersed in the current fiscal, while the rest of the funds will be disbursed in 2009. Of these, over $4.5 million will be disbursed in grants that will be provided to the Neighborhood Housing Services of Chicago, the Spanish Coalition for Housing, the Local Initiative Support Group, and the Greater Southwest Development Corp.

“More than 100 people a week are calling us,” says the executive director of Neighborhood Housing Services Bruce Gottschall. He adds that they have needed to double their counseling staff and hopes to be able to guide more than 800 families in a year to help prevent foreclosures.

Further, a $400,000 grant is to be provided to the Legal Assistance Foundation to offer legal advice to borrowing homeowners, and another $400,000 is to be given to the Lawyers’ Committee for Better Housing to help those people who are living as tenants in homes which are facing foreclosure.

Importantly, a larger part of $15 million will also be deposited into the ShoreBank’s $100 million Rescue Loan and Prevention Program to provide help to over 600 or more borrowers every year, while $36 million will be pumped into additional program related investments along with $750,000 in grants to help make other efforts to buy, resell and repair existing foreclosed properties.

ShoreBank’s senior vice president of mortgage lending, Michelle Collins said “We’re having about a 70 percent success rate in saving people we reach”