Illinois tries taking bite out of housing crunch

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By Kurt Allemeier | Thursday, April 17, 2008 |

Caught off-guard by their adjustable rate mortgage, an already-strapped Rock Island couple found themselves struggling to pay bills and make their house payment.

Peggy and Dennis Wilson — she a data-entry clerk and he a warehouse supervisor — turned to Rock Island County Economic Growth Corp. for financial counseling after their house payment jumped from $633 to $744. They cut things out of their budget and tightened their purse strings to make their house payments.

Peggy Wilson described their plight Wednesday at the Rock Island Township Hall at an announcement for increased financial assistance for troubled Illinois homeowners.

“It was a very stressful year for us,” she said. “You think you are going to lose your dream. You have to keep pushing.”

DeShana Forney, executive director of the Illinois Housing Development Authority, announced Wednesday that the Illinois Homeowner Assistance Initiative has a pool of $310 million, up from $200 million when the program was created in February.

“I’m on a tour of the state to let people know state resources are available,” Forney said. Response to the program announcements around the state has been positive.

The assistance initiative offers refinancing loans through eight lenders in the state. The loans, guaranteed by the Federal Housing Administration, range in interest rates from 5.75 to

9 percent. The participating lenders agree to limit loan fees to $1,000.

Homeowners can be referred through a hotline to a mortgage lender. IHDA is seeking more lenders to add to the pool of refinancing money. Rock Island Economic Growth is hoping local lenders will get involved. Representatives from area several banks attended Wednesday’s announcement.

Legislation has been put forward in the General Assembly that would require lenders to let mortgage holders know they’re at risk of losing their homes. The bill would also require a 60-day grace period for the borrower to work out refinancing before a lender moves to foreclosure.

In Illinois, foreclosures are up by 25 percent, according to IHDA. In Rock Island County, foreclosures jumped from 52 in 2006 to 141 in 2007.

Rock Island Economic Growth has had 10 homeowners seeking assistance since the start of April, said Kristi Ramirez, housing director of Rock Island Economic Growth Corp. She helped the Wilsons. Peggy Wilson called her an angel.

“I’ve been able to give them some breathing room,” she said.

Banks try to help if you ask for it, Ramirez said, explaining that banks don’t want any more foreclosed homes.

Through budgeting, the Wilsons weathered their financial storm and are considering refinancing. When they signed the documents at closing, they didn’t know they were getting into an adjustable rate mortgage. They went to a bank that offered mortgages with only $500 down. The couple was approved in an hour. Now, she knows they need to ask more questions.

Kurt Allemeier can be contacted at (563) 383-2360 or kallemeier@qctimes.com.