A Pilsen neighborhood group has partnered with a North Carolina-based federal credit union to acquire almost 1,100 Chicago-area mortgage loans, with the goal of preserving homeownership in several largely Hispanic communities.
Self-Help Federal Credit Union paid the Federal Deposit Insurance Corp. $59.9 million for the home mortgages that have a face value of $141 million and will partner with the Resurrection Project to service the loans. Most of the homes are in Chicago's Little Village, Back of the Yards and Brighton Park neighborhoods and in Cicero.
The loans were originally owned by Second Federal Savings & Loan Association of Chicago, which was put into receivership by the FDIC in July. The FDIC sold the deposits of the failed bank to Hinsdale Bank & Trust Co., a subsidiary of Wintrust Financial Corp., but Wintrust did not purchase the mortgage portfolio. The FDIC auctioned the mortgage pool Oct. 30 and received three bids. The sale to Resurrection and Self-Help closed Friday and was confirmed by the FDIC on Tuesday.
"We didn't want hedge fund managers or equity investors to take these loans through the sausage grinder and make money off these loans and put them into foreclosure," said Raul Raymundo, CEO of the Resurrection Project, a Chicago group that has worked on community development in Hispanic neighborhoods since 1990.
As part of the deal, the credit union will notify mortgage customers within two weeks that it has taken over ownership of the loans. Customers still will be able to make their mortgage payments at Hinsdale Bank's branches in Little Village, Brighton Park and Cicero. The credit union will process the payments and work to see how many in-house modifications it can negotiate with the 20 percent of the loans that are delinquent. The FDIC stayed all foreclosure actions in July.
"We want to review every loan in that 20 percent group in particular and see is there an alternative strategy for that family," said Randy Chambers, Self-Help's chief financial officer. "We're not going to turn the foreclosures back on today."
Self-Help operates 27 branches in North Carolina and California and services $1.5 billion of single-family mortgages. Its long-term plan is to operate branches here too, Chambers said.
"It's a double victory," Raymundo said. "It's assisting the families and preventing further deterioration in the community from foreclosures."
Distributed by MCT Information Services
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