[1]The Federal Housing Finance Agency [2], through Fannie Mae [3] and Freddie Mac [4], Wednesday announced the launch of a pilot program designed to stabilize neighborhoods around Chicago that have been hardest hit by the housing downturn.
The Neighborhood Stabilization Initiative is a set of strategies that aim to help delinquent borrowers avoid foreclosure and create a more efficient disposition path for foreclosed properties that will first be introduced in Cook County, Illinois. The housing market in the county, which contains Chicago, took a precipitous dive [5] at the end of 2008 that took four years to reverse, according to data from DePaul University [6].
Chicago Business [7] frequently reported on the many neighborhoods that became saddled with abandoned homes as the recession deepened and the Chicago’s program to raze [8] thousands of properties within the city alone.
Fannie Mae and Freddie Mac established a partnership with the National Community Stabilization Trust [9] that will leverage ties to community organizations and local nonprofits to develop and implement strategies for homeowners before and after a foreclosure, according to the FHFA. In pre-foreclosure strategies, the MyCity Modification program will offer services county residents who are delinquent on their Fannie Mae or Freddie Mac-back mortgages (valued at $250,000 or less) and facing foreclosure. Borrowers who are 90 days or more delinquent on their mortgage are eligible for the MyCity Modification Trial Payment Plan, which seeks to reduce a borrower's monthly mortgage payments by up to 60 percent.
Mortgage servicers must add any accrued and unpaid interest and any amount paid by the to other parties on the borrower's behalf, such as taxes or insurance, to the existing mortgage balance; lower the current interest rate on the mortgage in one-eighth percentage increments to as much as 2 percent, fixed; extend the term of the loan in one-month increments up to 480 months; and defer repayment of a portion of the unpaid principal balance. Borrowers who are less than 90 days delinquent may also be eligible.
For single-family properties that already have gone through foreclosure and become REOs, eligible NCST buyers will be given the opportunity to buy under NSI’s Enhanced First Look program. The final sales price for each property would reflect discounts for marketing, upkeep, utilities, and taxes that Fannie and Freddie accrue in readying the properties, FHFA said.
Fannie Mae and Freddie Mac may also contribute funds for rehabilitation or for the demolition of properties they do not have to do themselves.
Future listings also will be offered through the Enhanced First Look process before being listed on the Cook County MLS.