MacArthur Foundation Devotes $68-Million to Foreclosure Fix

By Suzanne Perry

The John D. and Catherine T. MacArthur Foundation has announced that it plans to spend $68-million in grants and low-interest loans through 2009 to help prevent Chicago neighborhoods from being devastated by the national foreclosure crisis.

The Chicago grant maker, saying its project would help 10,000 households, called it the largest effort in the United States by a private foundation to address the impact of the mortgage problems that are forcing many people from their homes.

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

Mortgage Help

The foundation said the bulk of the money, about $60-million, would be in the form of “program-related investments.” These would help provide new mortgage products to struggling homeowners and help the city acquire vacant properties that it could sell or rent to low-income families.

MacArthur, which began spending the money in March, will also provide more than $5.3-million in grants to help local groups offer counseling to homeowners and legal assistance to victims of fraud and renters who are facing eviction from foreclosed properties.

It said nearly 35 percent of foreclosure filings in 2007 involved multi-family properties, thus depriving renters of low-cost homes.

Mr. Fanton told reporters that foreclosure filings in Chicago had increased by 85 percent from 2005 to 2007, coming disproportionately from Hispanic and black neighborhoods. He said the figure would probably grow as more homeowners with adjustable-rate mortgages are hit with rising interest rates.

The foundation says it has spent $150-million since 2002 on the New Communities Program, which seeks to create jobs and wealth in 26 Chicago neighborhoods where low-income people live, Mr. Fanton said. At the end of 2006, housing prices and business growth were up in all of those neighborhoods, he added. “A wave of foreclosures is threatening to wash away all that progress,” he said.