Hearing on home foreclosures held in Chicago

December 4, 2008 3:03:00 PM PST
More than 90,000 homes are going into foreclosure in Illinois this year, according to the Illinois Attorney General's Office. The number of foreclosures is growing not only in Illinois, but across the nation. Now, the U.S. Treasury Department is considering options to help end the trend.

There are many schools of thought on the best solution. Democrats believe the focus should be on the homeowners, but the treasury department is focused on the banks.

In zip code 60629, there is at least one home in foreclosure on every block. At a Congressional Hearing in Chicago, Sen. Dick Durbin said it is only going to get worse.

"There's a cancer or blight that goes house-to-house, neighborhood-to-neighborhood that I think really threatens us if we don't deal with it aggressively and quickly," said Sen. Durbin.

Washington has been talking about moving quickly for months, but foreclosures continue to skyrocket. A plan being floated by the Treasury Department to stimulate the housing market would dramatically force down mortgage rates. The plan, according to Sen. Durbin, does not go far enough.

"It's focused on a new purchases, not refinancing," said Sen. Durbin.

Durbin says the focus must be keeping homeowners in their homes that are in foreclosure or about to be in foreclosure. Finding solutions was the focus of a hearing that llanos senator held in Chicago. Illinois Attorney General Lisa Madigan says the answer is aggressive loan modification programs.

"Loan modifications remedy this wrong doing by taking an unaffordable loan and making it affordable. Not at the expense of the taxpayer," said Lisa Madigan, IL attorney general

But the problem some owners are facing is they can't even get a hold of a lender or bank to talk top about making their loan more affordable

"There need to be more people with the lenders and banks and housing counselors as well who can help people get what they need in terms of a modification to stay in their home," said Madigan.

An executive from Chase bank testified today. She said JPMorgan Chase is opening 24 counseling centers around the country to help those in foreclosure. She also said it makes more financial sense for banks to help homeowners modify their loans than go into foreclosure.

Foreclosures can cost on an average $50,000.

Treasury Secretary Henry Paulson has concerns about modification programs. He says it rewards borrowers who bought homes they could not afford.


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