Neighborhood Housing Services of Chicago estimated that, in the year 2000, more than one-half of its 1,200 intakes for foreclosure prevention intervention were be due to predatory lending. In the Chicago area, foreclosures by subprime lenders are conservatively measured at more than 5,000 in 1999, up from less than 150 in 1993. Foreclosures have also increased dramatically in communities such as Kankakee, Springfield, Normal, Danville, Rockford, and Effingham. Woodstock research shows, for example, that foreclosures in Morgan County, Illinois, in West Central Illinois, increased by almost four times from 1995 to 2000. A substantial portion of this increase is due to subprime lenders.
Foreclosures tell only part of the story.
For every loan that goes into foreclosure, there are many more abusive loans where the borrower has paid exorbitant fees, but has managed to keep the home out of foreclosure through cutting their spending on other essential goods and services. Many homeowners are seeing the equity in their homes stripped out by exorbitant up-front fees and repeated refinancings. And FHA is a program whose foreclosures have devastated many lower-income neighborhoods. It is important to recognize that foreclosure is not a private event. It often results in a vacant and later abandoned property, which in-turn leads to blight and crime.