Homeowners facing possible foreclosure will be able to apply to refinance their mortgages at stable, affordable rates under a program to be announced Thursday by Gov. Rod Blagojevich.
The Homeowners Assistance Initiative program, funded with $200 million from four mortgage lenders, is aimed at trying to ease the rising tide of home foreclosures.
The program will offer 30-year fixed-rate mortgages guaranteed by the Federal Housing Administration. The interest rate will not exceed 8 percent for loans capped at $417,000, with no prepayment penalties and no income requirement for borrowers.
To qualify, borrowers must undergo mortgage counseling and have a credit score of at least 580, lower than the rating required for prime loans. Those unable to meet the criteria may be offered loans at different terms.
“By making good loans and sound advice available to Illinois families, we can turn the mortgage crisis around and save homeowners from foreclosure,” Blagojevich said in a statement. He expects 70,000 state homeowners to face foreclosure this year.
“We profit when people buy homes, and would like to see more of that,” said Ken Perlmutter, chief executive of Perl Mortgage Inc., one of the lenders that provided mortgage pool funding.
Other lenders involved are Guaranteed Rate Inc., Chicago Bancorp and Professional Mortgage Inc. In his statement, the governor invited more lenders to join the program.
“A significant amount of borrowers probably weren’t put into the right mortgage programs in the past,” said Victor Ciardelli, CEO of Guaranteed Rate. Ciardelli organized the lender group at Blagojevich’s request.
Lynette Briggs, a housing counselor with the DuPage Home Ownership Center in Wheaton, a non-profit agency certified by the Department of Housing and Urban Development, said the program is a step in the right direction but “isn’t a magic wand.”
Carl Tannenbaum, a Chicago economist, said, “The number of borrowers in our state caught in the web of rising mortgage payments and falling property values is so vast that it cries out for a more aggressive resolution.”
Last year, foreclosures rose 79 percent nationwide, to 2.2 million. In the Chicago region, foreclosures jumped 50.2 percent, to 73,469, according to a study released Wednesday by RealtyTrac, an online foreclosure-tracking firm.
Suburbs with the highest number of defaults include Aurora, with 2,054; Bolingbrook, 840; Carpentersville, 595; Elgin, 1,239; Joliet, 1,225; Naperville, 550; Plainfield, 937; Round Lake, 845; and Waukegan, 870, according to RealtyTrac (this sentence as published has been corrected in this text).
The housing initiative also consists of a statewide network of 15 consumer counseling services. They will determine eligibility for refinancing and provide loan-option advice. Neighborhood counselors also can refer consumers who suspect lending fraud to the state mortgage fraud task force.
Homeowners seeking help can call 888-995-4673, a national toll-free hot line, to receive counseling by phone and be referred to the Illinois network set up by Neighborhood Housing Services of Chicago Inc.
Lenders involved expect the program to enhance their public image and to help them gain market share, said Perlmutter.
“We’re interested in doing business with a larger proportion of the region’s homeowner market,” said Ciardelli.
———-
sdiesenhouse@tribune.com
– – –
Rescue available, but with conditions
The Homeowners Assistance Initiative will offer some homeowners 30-year fixed-rate mortgages guaranteed by the Federal Housing Administration. Here are details of the program:
Interest rate: Will not exceed 8 percent for loans capped at $417,000
To qualify: Borrowers must undergo mortgage counseling and have a credit score of at least 580
For information: Call 888-995-HOPE (4673)
