Public-private plan to help IL homeowners refinance

Gov. Rod Blagojevich spread some Valentine's Day cheer on Thursday to distressed homeowners facing possible foreclosure.

The governor unveiled the Homeowner's Assistance Initiative, a public-private partnership that will help Illinois homeowners refinance their home loans at stable, fixed rates and provide free counseling services through a national hotline.

Four Illinois mortgage lenders pledged $200 million total to fund 30-year fixed rate mortgages guaranteed by the Federal Housing Administration. The loans, capped at $417,000, will carry interest rates between 5.575 percent and 8 percent. The lenders have reduced fees to no more than $1,000 and there are no income requirements, but borrowers must undergo mortgage counseling and have a minimum credit score of 580 to qualify.

According to a study released Wednesday by RealtyTrac, an online foreclosure-tracking firm, the Chicago metropolitan area ranked 30th nationwide in foreclosures, with 73,469, in 2007, up 50 percent over 2006.

In a press conference at the Milwaukee Avenue headquarters of Neighborhood Housing Services, a not-for-profit housing developer and rehabber, Gov. Blagojevich said the initiative is the first step in tackling foreclosure problems in the state.

"The mortgage foreclosure crisis is a crisis that is sweeping the country. It's like a cancer," he said. "A lot of what we're trying to do is stop the spread of that cancer."

By providing counseling and education before foreclosure becomes a reality, the program's overseers hope to prevent further foreclosures.

The lenders participating in the program are Chicago Bancorp Inc., Guaranteed Rate Inc., Perl Mortgage Inc. and Professional Mortgage Inc.

Ken Perlmutter, founder and president of Perl Mortgage, said at the press conference that the four lenders typically compete for business, but have come together to show that Illinois businesses can help Illinois citizens. But he acknowledged that the initiative is just the start of a larger effort.

"Hopefully it will be a tremendous success," he said. "If we need to commit more, we're happy to do that."

Gov. Blagojevich encouraged other lenders to join the program by sending letters encouraging them to "be part of the solution."

First Ward Ald. Manny Flores urged homeowners to take action before their mortgage situation becomes dire.

"There is hope," Ald. Flores said. "There are opportunities. There is a way out of this mess."

Also participating in the press conference, Gage Park resident Sherida Pedro-Randolph recalled that in 2006 she began receiving threatening notes from her lender regarding the mortgage on her Southside home she had bought with her husband in 1994. After he died in 1999, she became ill, lost her job, and was having trouble with her payments. A trip to the library and a subsequent conversation with a counselor from Neighborhood Housing Services has put Pedro-Randolph back on track.

"If you're in a position like this, don't stop, don't give up. If you want to keep your home, keep your home," she said. "Someone is there to assist you."

An Illinois counseling network has been funded by a $370,000 grant from the Illinois Housing Development Authority. Homeowners who call the national hotline will be referred to a local counseling agency for further one-on-one assistance.

Gov. Blagojevich's program comes on the heels of a national initiative set forth by Treasury Secretary Henry Paulson urging home lenders to convert rising-rate loans to more manageable fixed-rate loans.

Gov. Blagojevich said he hopes the efforts of the four lenders will provide an example to other lenders in Illinois and nationwide.

"I think what's really good about what we're trying to do here is the solution is provided more within the private sector than from government," he said.

For more information about the program, visit: http://www.illinois.gov/homeowner

To contact local counseling services, call the Homeownership Preservation Foundation hotline at: 1-888-995-HOPE (4673). The hotline will direct callers to local counseling agencies.