MacArthur Foundation to Invest $68 Million to Stem Foreclosures in Chicago

Nov. 11, 2008

by LISC/Chicago

To help combat the growing lending crisis and the rise of foreclosures in Chicago, the John D. and Catherine T. MacArthur Foundation is investing $68 million in grants and low-interest loans in foreclosure prevention and mitigation efforts in local neighborhoods.

The Foundation expects its investment to leverage more than $500 million in capital and to assist 10,000 households, including counseling to 6,000 borrowers and prevention of 2,700 foreclosures by 2010. MacArthur’s initiative represents the largest effort in the United States by a private foundation to address the foreclosure crisis.

“The scale of the foreclosure crisis threatens to disrupt hard-won gains in many of Chicago’s lowest-income neighborhoods,” said MacArthur President Jonathan Fanton.

“Since MacArthur’s inception 30 years ago, we have supported efforts to make cities better places and to help low-income neighborhoods build their assets and their potential,” he said. “Nowhere is this work more urgent, and nowhere is it more important to us than in the city we call home.”

MacArthur grants are supporting prevention efforts, including extensive outreach and counseling for homeowners and legal assistance for victims of fraud or other valid claims.

Program-related investments, which are typically low-cost loans, will help make new mortgage refinancing products available to help owners keep their homes. Legal assistance will help renters facing eviction to keep their homes or gain more time to find alternate rental housing.

The Foundation’s investment also will help stabilize neighborhoods hard hit by vacancy and foreclosure. The City of Chicago expects to collaborate with Mercy Housing Inc., to develop the capacity to acquire for resale, rental, rent-to-own and redevelopment as many as 3,500 properties in Chicago’s hardest hit communities. The redevelopment work will be done in collaboration with numerous developers and community partners.

Recent analyses by the Woodstock Institute indicate that nearly 35 percent of foreclosure filings in 2007 occurred in two-to-six unit, multi-family properties. Therefore, many renters are losing their homes as a result of foreclosures.

With the time it takes for properties to go through the foreclosure process, rental units are lost from the affordable inventory, at least for a time. MacArthur’s project funds outreach to and legal representation for renters in foreclosed buildings to help them stay in their homes and limit the loss of affordable housing in the city.

MacArthur’s board and staff began planning this initiative in 2007 and the foundation started awarding grants earlier this year. Approximately two-thirds of the funding will be provided in 2008, with the rest to come in 2009.

MacArthur has deep roots in Chicago, where it has its headquarters, and where John D. and Catherine T. MacArthur lived. Over the past 30 years, the Chicago region has received the largest share of MacArthur’s philanthropy: nearly $720 million to 860 organizations and individuals.