In the three-month period that ended in September, mortgage foreclosure activity in Illinois rose 31 percent from its year-earlier level, jeopardizing homeowners, tenants and neighborhoods.
The trouble that communities face was most recently exemplified by the more than 700 families attending a state-sponsored workshop in South Holland earlier this month.
But where most feel sorry about other people's misfortunes, some see opportunity to benefit financially from them.
Reports of foreclosure rescue scams rose during the first half of the year, the Financial Crimes Enforcement Network, part of the Treasury Department, said earlier this month.
Nationally, if the reports of suspicious activity continue at their first-half pace, the total for 2012 could be as much as 70 percent greater than in 2011.
Some, but not all, of the increase is attributable to more awareness of potential scams, as authorities try to educate the public and direct them to legitimate resources. That has led to greater reporting, the federal network said. Still, it conceded that it is likely that scams are on the rise as well.
"Given some recent trends in the residential housing markets (like) underwater mortgages, lower turnover of existing homes and less new home construction, there may simply be more opportunity for fraudsters to develop schemes related to existing mortgages in distress, as opposed to schemes related to new loan origination," the report said.
Local groups concur with the report's findings.
"There's just so many mortgage brokers and real estate brokers who are out of work and doing anything they can to survive and that's how these businesses spring up," said Michael Dickman, an attorney at the Legal Aid Society of Metropolitan Family Services, Chicago. "Some are run by people with high integrity and some are not."
Debra Olson, executive director of the DuPage Homeownership Center, thinks there are plenty of incidents of scams that are never reported.
"People are embarrassed," she said.
She also believes there are people who've been taken advantage of who don't even know it, people who've paid several thousand dollars to someone who promised to help them save their homes. It's not until homeowners realize they're never getting that phone call that their home has been saved that they understand they've been duped.
"By the time people come to us, more than likely they've been the victim of the fraud," Olson said. "The sad thing is by the time they come to us, they're so much farther in arrearage."
For some, the housing market might be starting to show signs of recovery, but helping homeowners and tenants affected by foreclosure still remains a challenge.
As part of the $25 billion national mortgage settlement, the Illinois attorney general's office this year has awarded grants totaling more than $15 million to various groups that offer legal assistance to Illinois consumers affected by the housing crisis.
"It's truly like we're standing behind a dike and we have 10 fingers and there's 100 holes in the dike," said Dickman, who estimates he is working on 150 cases.
The Legal Aid Society recently received a three-year grant of almost $650,000 from the state to help it provide legal services to help more families avoid foreclosure, primarily on Chicago's South Side and south suburbs.
The state also has filed lawsuits against individuals, charging them with operating foreclosure rescue scams.
But while authorities might be able to shut down bogus companies and order them to pay fines and restitution, it is often too late for victims.
The Illinois Foreclosure Prevention Network offers free resources to consumers from state agencies and nonprofit groups.
More information is available at keepyourhomeillinois.org.
Confident contractors: For the sixth consecutive month, an index of new-home builder confidence has edged up.
As of this month, it's at its strongest level since June 2006, according to the National Association of Home Builders/Wells Fargo Housing Market Index released last week. However the homebuilders' group said tight credit conditions continue to strain sales.
mepodmolik@tribune.com
Twitter @mepodmolik
