MORTGAGE FORECLOSURES & PREDATORY LENDING IN ST. CLAIR COUNTY Assistant Professor Lynne Dearborn East St. Louis Action Research Project University of Illinois at Urbana-Champaign

Study Questions How prevalent is predatory lending in St. Clair County? Are there specific areas or populations within the county that are particularly vulnerable?

Data Collected Circuit Clerk’s Foreclosure Files Assessments and Sales Prices Tax Stamps and Document Records

Estimated 5-Year Totals Foreclosure Complaints = 2170 Judgements to Foreclose = 1460

8 Indicators of Abusive Lending 1. Single Premium Credit Insurance 2. Mandatory Arbitration Clause 3. Prepayment Penalties 4. Balloon Payments 5. Interest Rate Spread 6. Adjustable Rate 7. Sale Price Difference 8. High Loan to Value Ratio

Estimated 5-Year Totals Suspect Predatory Loans = 1120 High Loan to Value Loans = 1105

Number of Judgements Increases ARMs Increase as Percentage of Judgements

ARMs are More Likely in Judgements and Suspect Predatory Loans

Average Difference between Mortgage Interest Rate and T-Bill Rate Increases from 2.14% to 3.43% During a Time Period when Interest Rates were Generally Declining

Among Judgements, the Percentage of ARMs with Interest Rates More than 6% over the T-Bill Rate is Significantly Greater than the Percentage of Fixed Mortgage Rates at more than 6% over the T-Bill Rate

1. Close to 2/3 of census block-groups in the county (172 out of 263) have seen foreclosure complaints. 2. Just over 1/2 the census block groups in the county (145 out of 263) have seen judgments to foreclose. 3. Close to 1/2 the census block groups in county (128 out of 263) have seen suspect loans made. 4. Close to 1/2 the census block groups in the county (124 out of 263) have seen loans with high loan-to- value ratios. General Statistics Relating to Census Block-Groups

Geographical Analysis - Complaints Map of Foreclosure Complaints by Census Block Group

Geographical Analysis - Judgements Map of Judgements to Foreclose by Census Block Group

Geographical Analysis - Suspect Loans Map of Suspect Predatory Loans by Census Block Group

Geographical Analysis - High LTV Loans Map of High LTV Loans by Census Block Group

Geographical Analysis - Comparing Municipalities Map of Suspect Loans by Municipality

Geographical Analysis - Comparing Municipalities Map of High LTV Loans by Municipality

Summary Racial, income, and in some cases age group concentrations figure prominently in the geographic distribution of loans with both predatory characteristics and high LTV ratios. Individual demographic characteristics highlighted in interviews with individuals who have experienced foreclosure suggest low- income single-mothers are particularly vulnerable to predatory tactics.

Recommendations Provide alternative sources of sub-prime lending. Increase the use of available enforcement tools. Employ caution in the use of Adjustable Rate Mortgages. A more comprehensive description of the study will be available soon at