The Home Borrowers' Progress

By one measure after another, the housing market stuttered back to life in 2012. Home sales sped up, prices rose, new construction re-started, giving the drywall industry a boost. For New Year’s, Trulia’s chief economist observed the glut of unsold homes dropped through 2012, and predicted the question for 2013 will be at what point inventories will hit bottom, so the rebuilding can start in earnest.

Nationwide, a share of those inventories are being sopped up by investors. Frustrated by low interest rates and poor returns on other kinds of investments, they have been buying up foreclosed properties in bulk, at discount, and renting them out. That’s probably good for owners who want to sell, but less good for small buyers with less easy access to financing, and it’s not so great for the neighborhood either.

In the 1970s, financing was so scarce in urban neighborhoods, especially low income and minority ones, that Congress passed the Home Mortgage Disclosure Act, requiring banks to report where they were lending, and to whom, in detail. The numbers take awhile to assemble, regulators make them public in fall of the subsequent year, which is too late to show the latest ticks in the housing market. But it still shows how banks impact neighborhoods over time.

The activity of big investment firms won’t show up there – where they buy whole portfolios of foreclosed properties from banks, they aren’t taking out home mortgages to do it. But the HMDA reports show that investors have been buying up individual properties too. In Chicago, loans to non-occupants started to pick up in 2010; they continued their increase through 2011, even as overall mortgage lending continued to decline.

In Greater Bridgeport, the Home Mortgage Disclosures show the impact of lending practices that look like redlining in reverse. The neighborhoods south and west of Bridgeport enjoyed an abundance of loans during the boom. These tracts, spreading through Brighton Park and Back of the Yards, have lower incomes and more minorities than many tracts in the eastern part of the map. They were also the neighborhoods where loans dropped most sharply during the bust.

Of course, lending reached new heights, then plunged, almost everywhere. In the Chicago area, the boom was fueled as much by existing homeowners repositioning themselves, and sometimes cashing out new value from their homes in the process, as by actual property sales.

But after the bust, refinances were still available. They were made less frequently than at the height of the boom, but they did not drop off so sharply as home purchase loans. And they surged in 2009, the year federal, state and county programs to avert foreclosures came on line. Foreclosures mounted anyway, but the ability to refinance probably helped slow foreclosures from mounting faster. Refinances have kept far ahead of foreclosure filings across the region as a whole.

That hasn’t been true everywhere. Among the neighborhoods that surround Bridgeport, New City, the community area that combines Canaryville and Back of the Yards, makes a striking example. New City topped the chart of loans made in the area in 2005. Then it fell to the bottom of the chart.

A closer look at loans made in New City shows that refinances dropped off less sharply than home purchases, but they did less to cushion the crash than elsewhere -- the refinance revival of 2009 didn’t show up in New City at all. Foreclosures overtook home purchases quickly, they peaked in ’08 and were declining by ‘09, but they still surpass home purchase and refinance activity combined.

Something similar happened in Brighton Park – a neighborhood that rivaled New City for loans during the boom. That might make the subsequent abundance of foreclosure look like a natural outcome of excess activity during the boom.

But compare Brighton Park to the progress of the South Loop – whose high-rises stand testament to an hour of fabulous optimism. The Near South Side captures the South Loop south of Roosevelt Road. The Census shows most of its housing units were built after 2000. Home Mortgage Disclosures shows home purchases fell abruptly after 2006, but refinances lurched into the gap. Foreclosures have been on the rise in the South Loop , but they gathered steam slowly, refinances still far surpass them, they have yet to catch up with new home purchase loans.

In comparison, the Lower West Side, which captures Pilsen, south of 18th Street, was a study in moderation. Other indicators may show gentrification, but loans in the Lower West Side were made on a more modest scale than anywhere else in the Bridgeport area. Tracts in the Lower West Side share median incomes and minority populations in line with those of Back of the Yards and Brighton Park. They also share a similar pattern, if not volume, of loans: refinances dried up along with home purchase loans; foreclosures surpass them both.

Access to refinance can help avert foreclosures, so it seems unfair that borrowers in neighborhoods like Back of the Yards and Pilsen are getting fewer of them than borrowers in the South Loop. If a borrower is uncredit worthy, a refinance won’t fix that, but many loans must fall in a gray area, where banks weigh the cost of re-writing a more realistic loan against the cost of holding a foreclosed property as it deteriorates. And you would think investors would prefer to own a passel of properties in the South Loop.

At any rate, a single investor-owned property can wreak havoc on the neighborhood fabric, whether it’s vacant, or leased to tenants whose landlord can’t be reached. That has become clear in Bridgeport, where the tenants of absentee landlords have proved to be a tenacious problem on blocks of Carpenter, Lituanica, Union and Wallace.

And Bridgeport has stayed a moderate course during the boom and bust. Home purchase loans dropped after 2006, but refinances recovered. Foreclosure filings rose, they eventually reached the same rate as those in the Lower West Side, but they’ve done it gradually and then dropped off. A property in Bridgeport is still more likely to be purchased than foreclosed.

Armour Square, Bridgeport’s eastern neighbor, enjoys a similar pattern with even fewer foreclosures. McKinley Park falls somewhere between Bridgeport and Brighton Park: refinances showed some resilience, but foreclosures surpassed home purchases in 2009, and continued to do so through last year.

By 2011, residential lenders clearly favored Bridgeport. Armour Square’s loans were mostly made in Chinatown. Loans were made at a more moderate rate through Canaryville, and out the Archer corridor through McKinley Park and Brighton Park.

But overall, lending activity was still dropping in 2011. There were fewer loans in most places and in most categories than in 2010. The exception is loans to non-occupants -- those have been on the rise across the metro area for 2 years.

In the Bridgeport area, loans to non-occupants are concentrated in a few clusters, including Chinatown, and Bridgeport’s Northwest quadrant. But they are most concentrated in the census tract that falls west of Halsted Street, between 32nd Place and 35th Street -- the heart of Bridgeport’s small landlord district, it has historically had high concentrations of small apartment buildings whose owners live in the building.

Citimortgage and JPMorgan Chase are the community’s top lenders, a position they held on the eve of the financial collapse. Citimortgage made 65 loans in Bridgeport in 2011, JPMorgan Chase made 81. For comparison, locally owned Pacific Global, a Community Development Financial Institution that has ranked among Bridgeport’s top lenders throughout the boom and bust, made 30 loans in Bridgeport in 2011, less than half the volume made by each of the big banks.

They were also making different kinds of loans. The big banks were mostly refinancing loans for existing owners. All but 4 of the loans JPMorgan Chase made in Bridgeport were refinances, for instance, and a quarter of them were made to non-occupants. In fact 10 of Chase’s loans to non-occupants were concentrated in the small landlord tract west of Halsted, between 32nd and 35th. Pacific Global’s 30 loans were all loans for home purchase, they were scattered throughout the neighborhood, and only 3 of them were made to investors who wouldn’t occupy the homes.

Pulaski Savings Bank and the Original Fair Lending Model

Pulaski Savings Bank was founded in 1890, just three years before the first savings and loan crisis. Its name has changed, it first opened as Pulaski Loan and Building Association of the 6th Ward. So has its address and its storefront. But behind the 1950s remodel, it continues to thrive, doing the same kind of lending it has always done.

Jane Rogocki, Executive Vice President and Operations Officer, started working at Pulaski Savings when she was 16. When she was a child, and her mother, a widow, tried to buy a home on May Street, a local commercial bank turned her down. “They didn’t lend to widows living on social security income,” Jane says. Pulaski Savings Bank gave her the loan to buy the house.

Savings banks have a heritage of making loans like that. Thrifts got their start in the early 19th Century, when bankers provided services for wealthy people. The building & loan association was devised as a lever for the working man to build wealth for himself.

David Mason, author of From Buildings & Loans to Bailouts, a history of the movement, gives a succinct account of how it worked in an article linked on the sidebar.

You’d buy shares on installment payments – when you’d paid them off, you could take out a loan for the face value of the shares. You’d keep making the monthly payments – they’d be applied to principle and interest. That was a novelty. 19th century mortgages were short term, interest only loans – if you couldn’t pay off the loan, or refinance it, at the end of the term, you’d forfeit the house.

Furthermore, the interest you paid at a bank went to profits for the bank’s owners. Building and loans were mutually owned by the depositors themselves. Profits from the loans were distributed back to members’ share balances.

The savings and loan model took off at the end of the 19th century, as the urban working class multiplied. Its success inspired a for-profit variation. Bankers and industrialists hired agents to organize local chapters and drum up deposits, which were sent on to the central office and used to make loans. The national building and loans paid higher interest rates to attract deposits, and generous salaries to their officers. They could afford to be generous as long as their membership kept growing. An economic downturn in 1893 stalled membership growth, and the national B&Ls collapsed in a wave.

The savings industry came out more organized. State regulations were passed, and a national trade association was created, promoting uniform practices in accounting, appraisals and loans.

By 1930, the first year of the Great Depression, there were over 900 building and loans in Illinois, according to the US Building and Loan League’s Blue Book for that year. (The movement would begin to promote themselves as Savings and Loans in the 1930s.) Collectively, they had $470 million in assets. That was up $22 million from 1929.

Some thrifts lost on loans in the depression, but not as quickly or dramatically as other banks. Partly because their model restricted withdrawals. Mason reports that between 1931 and 1932, almost 20% of US banks failed. Compared to 2% of its savings and loans.

There were 11 Building & Loans listed with Bridgeport addresses. Three of them have survived in some form. Aside from Pulaski Savings of the 6th Ward at 3156 S. Morgan, there was Washington Polish S&L at 2845 South Archer (Washington Federal is at 2869 S. Archer today). The Silver Crown Building and Loan and the Rovnost Homestead Association shared an address at 555 West 31st Street, which now belongs to the Southwest Chapter Credit Union.

There were another 40 B&Ls in Pilsen, but Pulaski Savings on Morgan Street, with $3 million in assets, was by far the largest. Between Pilsen and Bridgeport, 4 other associations had just over $1 million in assets each. The average size for B&Ls in Illinois, as listed by the Blue Book, was $500,000 in assets.

Roger Budny by the Vault

Roger Budny is Pulaski Savings Bank’s current President and Chairman. His father started working at Pulaski Savings Bank in 1939. Roger grew up in a Bridgeport built, at least partly, by the mutualist model of the savings and loan.

Roger describes the Bridgeport of his youth as having “a European philosophy of community.” People didn’t have cars or fancy houses but “everyone was working, everyone was doing well.” They worked at the stockyards or the Johnson pipe works. They shopped at stores within blocks of their homes.

He has a program St. Mary’s published when they built a gymnasium in 1941. The advertisements illustrate the community structure he remembers – mostly between Morgan Street and Racine. There were 4 different delis on Morgan itself and more “fancy meats” on Aberdeen. Katzman’s sold dry goods, Kaplan’s sold liquor, the Eagle Tavern on Racine sold White Eagle Beer (brewed in Bridgeport) and promised “tables for ladies.” There were multiple candy shops and paint stores; Roger remembers a small manufacturer of venetian blinds where the Pulaski Savings’ parking lot is now.

It all thrived on a different kind of credit. People didn’t have plastic in their pocket, they had an account at the local store. The owner of the currency exchange on 31st Street west of Halsted did loans on the side. “He probably did them out of his pocket,” Roger says. “He trusted you. You’d sign a piece of paper that would say ‘I owe you.’”

It’s impossible to do that kind of lending now. “It’s killing some of the businesses on Halsted Street,” Jane says. Local lenders would make loans based on undocumented income if they knew the borrower was good for the cash. “You can’t do that anymore,” she says. “You can’t explain to a regulator ‘they come in and pay cash every week.’”

Relationship lending is probably easier to manage when a neighborhood is highly local. Jane and Roger remember Bridgeport being so local that people could do business in their own fragment of it. People east of Halsted went to their own lenders, like the Southwest Chapter Credit Union on 31st, Street. “A lot of them probably didn’t know we were here,” Jane recalls. “We didn’t advertise.”

Roger still talks warmly of “fraternalism and trust,” the old virtues of a savings and loan movement organized for social uplift. He likes to say Pulaski’s lending isn’t based on “who you know,” but it’s not based on credit scores either. “We don’t allow them in the building.” They look at the whole person. They run a full credit report to catch anything the borrower hasn’t told them. But if problems show up in the credit report, that doesn’t mean they can’t make a loan. “We look at what may have happened to cause the problem,” Roger says.

Pulaski’s whole person underwriting appears to work. Pulaski has had only 1 foreclosure during the crisis, “and our delinquencies are miniscule compared to everyone else,” Roger boasts. (Accurately, according to reports filed with the FDIC.)

Vault Detail


This isn’t the first crisis Pulaski Savings has weathered in Roger’s career.

A spiral of inflation and high interest rates in the 1980s made business hard for thrifts, whose assets were locked into long term loans, which paid in at fixed rate of interest, while rates paid out on deposits spiked.

Since the Depression, when competition for deposits may have helped banks fail, regulators had maintained caps on rates banks could pay out. Initially, thrifts were exempt from limits on the grounds they weren’t in direct competition with banks; after 1966, they were allowed to offer rates a quarter percent higher than commercial banks, to compensate for other restrictions (they weren’t allowed to offer checking accounts, or commercial loans). In 1980, Congress passed a round of deregulation that phased out those caps.

In 1982, they lifted restrictions on the types of loans S&L’s might make, freeing them to pursue more lucrative loans to pay for deposits. Deregulation opened the door into markets where they had little expertise, and occasionally into outright fraud. Nationally, assets held by savings and loans multiplied in the 1980s (from $604 billion in 1980 to $1.187 trillion in 1989), but almost 1,400 of them disappeared during the same period.

The Woodstock Institute, a fair lending advocate, gives an idea of how these trends played out in Bridgeport. In 1985, the first year Woodstock published its Community Lending Fact Book, there were 309 residential loans reported in Bridgeport. Pulaski made 18 of them. District National, which later became Chicago Community Bank, made 45. In fact, loans by value that year were heavily concentrated in District National’s census tract. But most of the loans made in Bridgeport were made by banks and S&Ls, only 43 were made by independent mortgage bankers.

By 1995, there were 429 loans made in Bridgeport, a 39% increase, and they were worth 3 times as much. They were also more geographically diffuse. But only 74 of them were made by banks or S&Ls, the rest were made by independent mortgage bankers. Chicago Community Bank’s lending was down to 26 loans that year. Pulaski Savings’ was up to 24.

Independent mortgage bankers, and brokers, sold loans to government agencies, or private investors, as soon as they made them, then used the capital to make new loans. “That’s where our problems started,” Roger observes today. “They have no skin in the game.”

The federal government created a resale market for loans intentionally during the Great Depression. Fannie Mae would buy home loans, so banks would be more willing to extend long term mortgages (since they weren’t stuck holding the loans). A secondary market also helped distribute capital from rich areas to poorer ones, since banks in low-capital areas could sell their loans, and reinvest the proceeds.

Innovations in the 1970s and 80s made secondary market even more liquid. First, Ginnie Mae began pooling loans and selling slices as mortgage backed securities. Fannie Mae had been selling who loans, a more cumbersome process. Later, collateralized debt obligations divided up a pool of loans into slices with specific risk and payment characteristics.

These were also the years when shareholder capitalists were critical of traditional savings and loans for drawing “uninformed” depositors, and being run by managers with no incentive to maximize returns. Meanwhile, the new instruments added layers of transactions between home buyers and the investors who ended up holding their loans.

The S&Ls themselves responded to new pressures and opportunities in different ways. Some began to act more like mortgage bankers, selling their loans to make more loans faster. Others closed down their loan departments altogether and put their capital in securities for safe keeping.

By 2005, there were 1,051 residential loans made in Bridgeport, worth $226 million. Big banks and mortgage companies were moving to the top of Woodstock’s Bridgeport lender’s list. For 3 years between 2006 and 2008, Wells Fargo, Citimortgage, Countrywide and JP Morgan Chase were Bridgeport’s top residential lenders. But by 2009, they had disappeared.

The Easter Bunny, and Reflections of Morgan Street in the Window

Through decades of excitement, Pulaski Savings Bank steered a middle ground. In 1995, at the tail end of the Savings and Loan crisis, more than half its portfolio was squirreled away in securities. But it was still making loans. In fact, it made 30% more loans in Bridgeport that year than it had in 1985. Today, Pulaski reports $48.5 million in assets (their 1930 assets would be worth $38 million today) and they still maintain a careful portion in reserve – almost 30% as of 2011 – but they’ve moved 58% of their assets into portfolio mortgage loans.

Roger says under the direction of Pulaski's board, they’ve stuck close to their roots. They now offer checking accounts and ATM services, and they have 1 commercial loan, but they never embraced commercial lending like some of their peers did. “We’re here to help people save, and to buy homes.”

They also never bought loans from brokers, or financed investors who were buying to flip. Pulaski holds its loans on its books. So more turnover just makes more paperwork. They also require 20% down payments, and scrutinize their loans closely.

But ultimately, that’s an advantage to the customer, Roger observes. If a customer accidentally overdraws his account, he gets a phone call; if a borrower has a problem, “he doesn’t have to figure out where his loan is.”

“When he signs the papers, we tell them right up front, if you’re beginning to feel a squeeze or a problem, call. We can help you one way or another.”

Pulaski Savings Bank is a mutual, it is owned by its depositors and mortgage holders, and its managers haven’t forgotten that. “I want them to be successful,” Roger says. “We want the community to be viable.”

Variations on the Boom and Bust

Last March, I speculated that Bridgeport had been insulated against the housing bust. That the market here had been less inflated by speculation in the first place, and that when the bubble burst, there was less fallout. Foreclosures haven’t been as frequent, lending didn’t drop off as much. People are still buying houses and banks are still giving them loans to do it.

Then I went around talking to property owners, and some of them are less optimistic.

One acquaintance bought his home in 2002, a new construction single family house on Aberdeen, near where he grew up. By 2006, it had doubled in value; by 2011, it had lost what it gained. And a little bit more than it had gained, he said. Now he finds himself obsessively checking Zillow for comparable sales. He’s not looking to sell, he just wants to know.

I had informal conversations with some small landlords. Some of them fit my ideal description of the good steward, defending the stability of Bridgeport’s housing stock into the future, but not all of them did.

One of them rents to the high end of the rental market. He’s lost a few tenants as they’ve lost jobs, or their circumstances changed, and they’ve left for cheaper apartments. He had a few vacancies when I spoke to him last spring, but he planned to keep his units open until he found tenants who would pay his rents. He acquired his buildings gradually, renovated them down to the bricks, managed the work himself. He didn’t have to rent right away.

One on them targets the lower end of the market. He says it’s more complicated renting to yuppies, they are more demanding, and the building inspectors follow them in. “The money is in slum housing,” he says. It’s easier renting to “murderers and rapists,” if they’ve got a leak, he says “here’s a bucket.”

Or so he claimed anyway, I think he was exaggerating a little to impress. His porches were bright with fresh paint and beds of flowers, and he was sitting outside supervising workers making improvements. He bought his first building 40 years ago, he says he enjoyed doing the work himself. But he’s older now, he wishes he’d sold during the boom when he was getting crazy offers.

He’s still getting offers, he says they never stopped. But they’re crazy low offers. “They’re looking for someone who doesn’t know” (what their building is really worth). Or someone like his neighbor. The building inspectors recently came in and told her she has to make $40,000 in improvements.

“She has the money,” he says, but it rankles with her, because the repairs will cost more than she paid for the building, decades ago.

I met at least one investor on the lookout for owners who don’t know what their building is really worth, or who are getting restless to sell. He lives in the neighborhood, and works in the construction trades, he’s always kept his eye out for opportunities.

He’d just heard that an owner who rejected his offer for a storefront on Halsted a few years ago recently sold it to someone else for a third the price. He’d just made a successful bid for a 6-flat in Bridgeport, and he’d been venturing east into Bronzeville, looking at properties for a few tens of thousands of dollars.

Now he squabbles with the bank though. They want him to spend more of his own money on the purchase. They say “You have the money,” and he says “I know I have the money, but I don’t want to spend it, I want to borrow it.”

Reading Into the Loan Data:
At the end of September, new residential loan data came out for 2010. Theoretically, numbers are an objective check for the stories you hear people tell. There is an actual number for residential loans made in Bridgeport in 2010 for instance. You can compare it to the number of loans made in 2005, or to the number made in other neighborhoods.

But what do you make of that count, once you know what it is? The comparisons invite interpretation.

The portion of residential loans that were made for home purchases, as opposed to loans made to refinance existing loans, proves that property is actually changing hands, which must happen more in hot markets. But loans made to non-occupants in particular seem to measure more speculative investment.

Then again, so might a loan refinance. During the boom it wasn’t unusual for a home buyer to close on his home loan, then refinance it multiple times within a few years. Hopefully, he was trading in for better terms. But some of his friends were sucking equity out from their houses to fuel other kinds of spending – they were speculating on their own property in a sense.

The same loans took on different connotations when the context changed. In the bust, loan refinances suggest the correction of past excess. Or at least the persistence of opportunity to make corrections.

In 2005, at the height of the boom, residential loans in the Chicago metropolitan area were evenly split between single family home purchase loans, and loan refinances, with each representing 47% of residential loans. (The remainder was made up of multi-family and home improvement loans.)

In 2006, residential lending stumbled, and was still falling through 2010. The balance among loans also changed. Home purchase loans, and loans to non-occupants, fell furthest. Refinances dropped the least. By 2010, refinances accounted for 3 in 4 loans made across the MSA. Though in some neighborhoods, loan refinances evaporated too.

Then in 2009, the number of refinances lurched upwards. The lurch was strong enough to make up for the year’s drop in home purchase loans, and to lift the count of residential loans across the metro area by 22%.



Not incidentally, 2009 was the year the federal government’s Making Home Affordable programs went into effect. They were designed to help borrowers who were current on their mortgages refinance loans that were underwater at more favorable terms. Or to help those who’d fallen behind negotiate modifications of their existing loans to avoid foreclosure. The state of Illinois and Cook County both took measures to give borrowers more time and leverage to use those programs.

Many have been frustrated by what the government interventions actually accomplished. By year end 2009, foreclosure filings in the Chicago metro area actually rose to 70,000 from less than 60,000 the year before. The Woodstock Institute, a fair lending advocate, concluded that the government interventions only delayed foreclosures. They clearly hadn’t reduced them.

But the surge in refinances suggests foreclosure filings would have been worse if those programs were not in effect. In some neighborhoods, refinances did not seem to slow foreclosures from increasing, but in others, they may have done just that.

By 2010, loans were dropping again, in the Chicago metro area as a whole. But there was a modest surge in loans to non-occupants – investors were apparently venturing out to pick up bargains. No neighborhood needs more absentee investors. But non-occupants aren’t necessarily absentee owners. And if nothing else, they take up some of the slack in the housing market. Their perking interest might give the homeowner watching Zillow a reason to hope his situation is beginning to improve.

Variations in Lending:
Looking at loans, Bridgeport didn’t escape speculation during the boom and it hasn’t escaped the bust either. But it still looks pretty good in contrast with the metro area.

It also stands out among its neighbors. Communities whose housing stock is similar in age (pre-war) and composition (single family and small apartments), whose populations are similar in occupation (growing numbers of white collar professionals, but persistently high numbers of blue collar trades) and in origin (large numbers of the foreign born, small but growing numbers of blacks).



For all the things they have in common, the neighborhoods in the larger Bridgeport area looked very different from one another in the boom and bust. In general, you might expect the ones that saw high rates of speculative fervor would be the ones that saw a sharp decline in loans, and particularly high rates of foreclosure, in later years. Though the connections aren’t always consistent.

The South Loop seemed a case study in excess a few years ago, but it exhibits at least one measure of resilience now.

Almost half the neighborhood’s housing stock was constructed in the 2000s. In 2005, the neighborhood was boiling with loans. In the Near South Side, which includes the South Loop from Roosevelt to Cermak, there were 19 loans made for every 100 housing units that year alone.

Neighborhoods like Lincoln Park and Logan Square saw 10 and 11 loans per 100 housing units in 2005.



Furthermore, 2 in 3 of the loans in the Near South Side represented property changing hands, which makes sense in a neighborhood so newly constructed, but which stands out in the metro area where home purchase loans were balanced with loan refinances. And a lot more of the Near South loans were made to non-occupants investors.

Considering the speculative fervor, it’s a little surprising to see that loan activity actually held up better in the South Loop than it did everywhere else. The weight of it shifted from home purchase, to refinance, as it did across the metro area. But across the metro area, loan refinances slowed down, they just didn’t slow as much as other kinds of loans. In the Near South Side, loan refinances increased 92%. Even home purchase loans dropped more slowly than they did other places. The South Loop's location advantage hasn't been overwhelmed.



Still, liquidity alone has not been enough to correct for prices the bubble brought, and foreclosure filings have been exceptionally high in the Near South Side. In 2009 there were filings per mortgageable property were almost 1 in 10. And by 2010, as filings have been dropping in some of the hardest hit neighborhoods, filings in the Near South Side were up another 50%.



By contrast, in the Bridgeport area, the neighborhoods where lenders and borrowers were busiest in 2005 saw the sharpest drop in loans in the 5 years to 2010.

New City and Brighton Park are two of those neighborhoods. In 2005, they were the 2 most active residential loan markets in the Bridgeport area, with 13 loans per 100 housing units. Bridgeport, by comparison had 7 loans for every 100 housing units.



They are geographically adjacent, but historically different – they began to resemble each other more over the course of the 2000s.

New City includes Canaryville and the Back of the Yards neighborhoods. It’s traditionally been working class, and dominated by renters. In 2000, Brighton Park had higher incomes, and more homeowners. It started out as an extension of Bridgeport and McKinley Park – families would move down the Archer corridor as they moved up in the world.

In 2005, loans associated with home sales in New City slightly outpaced loan refinances, and almost a quarter of all residential loans were made to non-occupant investors. Brighton Park saw fewer home sales and less speculation of the non-occupant variety, and more homeowners grappling for terms, or for cash.

Both neighborhoods saw some of the steepest drops in loan activity in subsequent years. And the highest rates of foreclosure. Foreclosure filings in New City peaked in 2008, and have been falling since. But there were still 461 of them in 2009, or 57 per 1,000 mortgageable property. And they have contributed to a growing stock of vacant buildings. In 2009, only 3 Chicago neighborhoods -- Austin, Roseland and Englewood -- had more.

Foreclosure filings in Brighton Park have lagged behind New City’s, but there were still more of them, proportionate to mortgageable properties, than in other neighborhoods in the area. And the cycle has corresponded with changing incomes, and home values, that have brought the neighborhood more in line with New City than its old Archer Avenue peers.



The Lower West Side also stands out for its steep drop in loan activity after 2005. But foreclosure filings have remained relatively modest there, maybe because loan activity before 2005 was less intense. Despite rumors of gentrification progressing through Pilsen, loans south of 18th Street remained modest in volume, and also in the portion that involved actual property sales. It is true the Lower West Side is dominated by rental apartments, but no more so than New City, where property sales, and foreclosures, spiked.

The other neighborhood that looked comparably quiet in 2005 was Armour Square. In 2005, both Armour Square and the Lower West Side saw just 5 loans for every 100 housing units. But in Armour Square, that loan activity didn’t disappear. Loans of all kinds were fewer in number by 2010, but they hadn’t dropped off at the same rates they did for the metro area, or for other neighborhoods in greater Bridgeport for that matter.



As in the South Loop, loan refinances in particular were resilient. They were down slightly in 2008 from 2005 (down 13%) but by 2009 there were more than there had been in 2005 (112 vs 107), and in 2010, they were still increasing (to 124). And unlike the South Loop, foreclosure filings have been all but non-existent in Armour Square. There were 4 filings per 1,000 mortgageable properties in 2009.



If there is a single neighborhood in the area that shows where moderation in the housing market helped guard against disaster later on, Armour Square is the one.

But Bridgeport looks a lot like it. Bridgeport wasn’t immune to speculation, at least it attracted a fairly large share of non-occupant investors in 2005. But it saw less lending overall than several of its neighbors, and more of those loans were to existing owners, adjusting their position, rather than property changing hands.

Lending dropped off more in Bridgeport than it did in Armour Square, but it didn’t drop off as much it did in the MSA, or as in most of its neighbors. Foreclosures have been on the rise, but they remain modest as a portion of mortgageable properties.

In a map that shows change in overall lending between 2005 and 2010, Bridgeport stands out, together with Armour Square and the South Loop. But a map of loans made in 2010 shows that actual optimism may be more diffuse.



The South Loop remains particularly rich in loans – of course it also particularly rich in foreclosure filings. Meanwhile, lending activity continues down the Archer Corridor, and into Canaryville, and parts of Back of the Yards. New loans suffuse neighborhoods where other measures have not looked so good. There are lots of loans made in Bridgeport west of Halsted Street, and there’s a cluster of lending between 35th Street and Pershing Road that extends from Normal Avenue to Western.



That cluster shows up again in a map showing where non-occupant loans stepped up between 2009 and 2010. The spurt of non-occupant investment penetrates pockets of New City and Brighton Park.



In fact, Brighton Park, the neighborhood that may have lost the most in the decade of the boom and bust, saw the best news by another measure: in 2010, it is the only community in the area that saw a spurt of new home purchase loans. Some of them may have been loans to non-occupant investors. But since the former outnumber the latter, most of them were not.