Sheriff's moratorium stops foreclosure evictions by three Wall Street banks

Foreclosure crisis

10/27/2010 10:00 PM

Contributing Reporter

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A new report shows that foreclosures continue to skyrocket in the South Loop and Monday Cook County Sheriff Tom Dart placed a moratorium on foreclosure evictions if the lender in possession of the property is Bank of America, J.P. Morgan Chase or the lender formerly known as GMAC.

All three Wall Street firms have admitted to having employees sign off on thousands of foreclosures without satisfactorily checking their paperwork.

Dart’s moratorium comes amid fresh data claiming that foreclosure filings in Cook County have increased dramatically – 25 percent between third-quarter of 2009 and third-quarter 2010, according to the Woodstock Institute – a research and advocacy organization that City Hall relies on for foreclosure data.

And the neighborhoods with the greatest increase are the Loop, South Loop, and West Loop. Foreclosures in the Near South Side neighborhood area skyrocketed 70 percent in the last year, according to Woodstock numbers.

A moratorium could provide temporary relief to more than a thousand Chicago residents. But the “robo-signing” scandal and resulting moratorium indirectly confronts the South Loop real estate market’s long-term troubles of foreclosed condos, vacated properties and a neighborhood in flux. “What Dart is saying is, ‘Let’s slow down,’ says Brian White, executive director of the Lakeside Community Development Corporation. “I don’t see it having a systemic impact.”

Bank of America, J.P. Morgan Chase, and the former GMAC – now Ally Financial, all admitted last month that employees signed off on thousands of documents that legally authorized foreclosures without knowing the facts behind each foreclosure or having the proper loan information. Such “robo-signings” briefly lead to these servicers halting foreclosures, but now foreclosures have resumed – despite a joint investigation by 49 state attorneys general into fraudulent foreclosure affidavits.

Dart has said that the moratorium is due to a lack of “assurance that we aren’t evicting families based on fraudulent behavior by the banks.” It will impact about 1/3 of the 3,700 annual eviction orders filed in Cook County – sparing roughly 1,250 homeowners and renters whose landlord has entered foreclosure from being kicked to the curb. Moreover, Dart could expand the moratorium’s reach after the results of an investigation by Illinois Attorney General Lisa Madigan into 23 mortgage servicers, according to George Vournazos, a legal adviser to the Cook Country sheriff.

The consensus, though, is that any kind of eviction moratorium is, in the words of Chris Foltz, spokesman for 2nd Ward Ald. Robert Fioretti – whose Ward includes the South Loop, a “temporary solution.”

According to the Woodstock data, the Loop, the Near South Side, and the Near West Side are the three Chicago communities that have had easily the most dramatic increase in foreclosures from third-quarter 2009 to third-quarter 2010. Foreclosure filings shot up 77 percent in the Loop, 70 percent on the Near South Side, and 64 percent on the Near South Side. So far in 2010 there have been 226 foreclosures in the Near South Side.

Geoff Smith, executive director of the Woodstock Institute, says that these neighborhoods are the hub of the second wave of Chicago’s foreclosure crisis. “It started in African-American communities targeted by subprime loans and over the last year or so we’ve seen a transition to around downtown with a growth in foreclosures tied to a lot of condos,” Smith says. “It is tied to the investors and speculators who bought higher end condos to flip them in the future with the goal of making a profit.”

These investors, says Smith, have now been put in limbo as the housing market has stalled over the last years. And since they intended to sell or “flip” these properties instead of live in them, many South Loop units are now vacant.

One result is that investors have stopped looking as aggressively for a buyer – and now just want someone to lease the property.

Foltz says that many 2nd Ward homeowners have entered foreclosures because “they could not find suitable renters.” Indeed, a walk across the South Loop turns up as many “now leasing” signs as “for sale” postings.

Chris Chisholm, a 31 year-old property owner in the sprawling River City complex on 800 S. Wells St., says the biggest problem he’s noticed is vacated properties. “A lot of people here bought properties hoping to quickly sell them,” he says. “And now they have trouble finding folks who will rent.”

“The vacant properties,” Chisholm adds, “have brought down the value of my place.” Based on what neighboring properties are going for, he estimates that the one-bedroom condo he bought in 2004 for $150,000 is worth $30,000-$50,000 less today.

South Loop investors who see their vacant properties enter foreclosure aren’t whom Sheriff Dart has in mind when he talks about distressed families.

But where the “robo-signing” scandal does tie into the South Loop’s web of foreclosure problems is a growing awareness of what homeowners, including these investors, and renters can do to fight foreclosures, evictions and neighborhood deterioration.

Foltz points out that every first and third Tuesday Ald. Fioretti holds a night where constituents can get free legal advice on foreclosure issues.

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By WestLooper from West Loop
Posted: 11/01/2010 3:54 PM

Foreclosures are not complicated. Are you paying your mortgage? If you can't pay the debt on your house, the bank has the right to foreclose. Too bad if you took on more house than you could afford, too bad if you lost your job. Not the bank's problem. Caveat emptor.

By dennis gala from Ann Arbor,Mi.
Posted: 10/29/2010 10:16 PM

Chase bank is screwing me royally. They absolutely do not know what their right hand is doing from their left hand. They continue to send conflicting letters. Illegally have foreclosed on me. Refuse to work with me. Told me if I would go on forbearance on 3 rentals that I qualified for mods. . Now 20 months have passed and I only have gotten one, which they have told me slipped through the cracks. My credit score was 797 before I went on the forbearance they told me I had to go on. Please help!

By Fred Smith
Posted: 10/28/2010 1:27 PM

Nobody has brought up the distinct possibility that the loan servicers may well have bundled and sold each of these loans MORE THAN ONCE to differernt investors via the securitization process. THIS COULD BE THE REAL REASON THAT THERE IS NO DOCUMENTATION / PAPER TRAIL. The non-existent documentation and accounting is entirely consistent with this scenario. This means that the entire plan was a true Ponzi scheme in the worst sense. In other words, rather than selling the loan once to investors, as we have all naively been assuming, there is no reason to believe that they did not double-dip or quintuple-dip and sell the exact same loan to completely new buyers. THIS IS A LEVEL OF FRAUD THAT THE AMERICAN PUBLIC HAS NOT YET CONTEMPLATED. There are no new laws that are necessary. All that is necessary is for the states to FOLLOW THE EXISITING LAWS which have been around much longer than any of us, or any of the banks themselves. These laws were devised to deal with all property frauds, including the current foreclosure frauds. No more bailouts. Let the chips fall where they may.