Banks were in the hot seat at a hearing sponsored by Chicago Congressmen Luis Gutierrez and Mike Quigley on the city's foreclosure crisis Monday. Three major lenders, including Bank of America and JP Morgan Chase, have halted foreclosures due to major errors on documents.
A representative from Bank of America who attended the hearing said his bank is not halting foreclosures, but is delaying them until all the documents are reviewed.
The banks say they are doing everything they can to keep families in their homes, but many Chicagoans disagree.
Mariela and Rosendo Arteaga have lived in the Albany Park neighborhood for 30 years. For the past 13, they have rented a three-bedroom apartment in a building. They did not know the two-flat was in foreclosure until they received a note on their door from a real estate company telling the couple to call the bank.
"They offered me $3,000 to move out. I told them we did not have a place to move. We have a lot of years here," said Rosendo Arteaga.
Besides offering cash for the keys, the Arteagas say the bank told them the sheriff would evict them if they didn't move out. "I thought I had to do what they say because I don't know my rights," said Arteaga.
Their rights include a federal law that allows renters to stay through the remainder of their lease. The foreclosure crisis has hit Chicago renters hard with a rising number of multi-family buildings in foreclosure. What the banks are doing or not doing was the subject of an informal congressional hearing in Chicago.
"The banks at the front end of the crisis lent people money who couldn't pay it back. And on the back end, they're not doing their jobs in some neighborhoods to foreclose on the institutions and bring them back so that the people can have the same neighborhood," said Congressman Gutierrez.
Banks at the hearing denied that they allowed buildings to remain vacant rather than letting renters stay or selling the property. "They don't want to sell a property for what it is really worth," said Alderman Dick Mell, 33rd Ward.
And to add insult to injury, some banks including Bank of America are now delaying foreclosures in 23 states -- including Illinois-- as they examine whether they rushed the foreclosure process for thousands of homeowners because documents were not read.
"We examined the process by which we filed the documents with the courts and have redone that process to allow it to go forward on a basis to meet the full extent of the law," said Dave Funlin, Bank of America.
A representative from Wells Fargo Bank was also at Monday's hearing. He says his bank has reviewed its foreclosure procedures and concludes that the law was followed.
Meanwhile, Congressman Gutierrez will be inviting everyone back for a formal hearing on Capitol Hill.
Gutierrez says Chicago has lost an incredible amount of money in property tax and water bill revenue because of the foreclosure crisis.
