The study showed that 33 percent of all single family homes foreclosed in the past 3 years remained unsold as of December last year, leaving a lot of vacant properties in multicultural neighborhoods.

Whenever some of the foreclosed properties are sold, they are sold 30 percent below their home loan amounts, indicating that lenders have been accepting bargain prices to cut their loan losses.

The researchers also found that single-family foreclosures have been occurring mostly in Chicago’s African-American communities.

During the first quarter of this year, a total of 2,099 single-family houses in Chicago were foreclosed by banks and nearly 50 percent of these foreclosures occurred in neighborhoods where more than 80 percent of all residents are African Americans. In these areas, most foreclosure properties have also remained unsold for over 18 months.

Woodstock vice president Geoff Smith said he is concerned about the rising inventory of bank foreclosed house for sale not being purchased and the soaring number of abandoned foreclosures.

One multicultural working class neighborhood that illustrates the level of foreclosure problem in culturally diverse Chicago neighborhoods is Chicago Lawn. In one block at South Rockwell, half of all single-family homes and multifamily properties are boarded up while the rest are bank-foreclosed and vacant.

Based on the Woodstock study, the number of days to sell a foreclosure property in Chicago Lawn in 2007 was 274 days, a significant rise from 180 in 2005.

Almost all buyers of the properties were investors who planned to keep the properties vacant and just recoup their investments when property values go up again. Other properties were held by banks which have not decided to sell them.

Analysts said that it would take two years for Chicago Lawn to sell its current inventory of vacant homes, assuming that the number of new foreclosures is negligible.

However, based on foreclosure filings in Chicago from January 2008 to June this year, current foreclosure inventory will soar. Over 1,800 housing units in the zip code that covers Chicago Lawn went into foreclosure over the 18-month period ended June.

Recently, Bank of America agreed to work with community nonprofits to reduce the number of bank foreclosed house for sale in Chicago Lawn. The bank apparently realized it can cut its loan losses through aggressive loan modifications.

Bank Foreclosed House for Sale in Multicultural Chicago is a post from: Bank Foreclosures Information

The nonprofit organization proposes to buy and redevelop repo homes in Kane County communities severely affected by the foreclosure problem. These are Aurora, Carpentersville, Elgin and St. Charles.

Under the proposal presented by Mercy Housing to federal housing administrators and Kane County officials, it would invest about $16.7 million to buy and redevelop 72 multi-family REO properties for sale in St. Charles.

The nonprofit also plans to buy and redevelop about 95 single-family houses in Aurora and 60 single-family houses each in Elgin and Carpentersville. Mercy Housing also proposes to build 95 multi-family homes in Aurora and 60 multi-family homes each in Elgin and Carpentersville.

All in all, Mercy Housing’s plan to buy and redevelop REO properties for sale would entail it to spent $99.5 million in the area.

However, the implementation of the plan hinges on the nonprofit organization’s capacity to obtain $74 million in federal funds earmarked specifically to help public and private non-profit organizations to buy vacant, blighted and foreclosed houses in communities severely affected by the foreclosure problem.

The federal program, Neighborhood Stabilization Program 2 (NSP2) has released nearly $2 billion and made it available to non-profit organizations to purchase repossessed homes in order to stabilize market values and strengthen the housing market while providing affordable housing in communities affected by the foreclosure crisis.

The initial version of the NSP allocates about $5 billion to local governments to allow them to buy and redevelop foreclosure homes in troubled neighborhoods.

Mercy Housing Lakefront’s real estate development senior vice president Scott Fergus said that the organization has applied for federal funding and is expecting to hear from the U.S. Department of Housing and Urban development (HUD) before the end of this year.

Other sources of funds include debt financing and $16 million in private activity bonds issued by the Kane County Board.

Fergus explained that the bonds would not require taxpayers’ money and would not put Kane County at financial risk. He added that for two years, Mercy Housing has been seeking to expand its rehabilitation activities from the city of Chicago to the Fox Valley area.

Furthermore, he said that Mercy Housing chose the four communities because they accounted for more than half of the total REO properties for sale in the county.

Nonprofit to Buy and Redevelop REO Properties for Sale is a post from: Bank Foreclosures Information