New Law Will Responsibly Fast Track Foreclosures; Invest $120 Million in Foreclosure Prevention and Abandoned Property Maintenance
CHICAGO, IL – February 8, 2013 – (RealEstateRama) — Governor Pat Quinn today signed a landmark law that will strengthen communities across Illinois by responsibly fast tracking the foreclosure process and investing more than $120 million to help more families keep their homes. The law will help restore neighborhoods and property values by significantly shortening the foreclosure process to a few months, down from what now takes nearly two years. Today’s signing is the latest action by Governor Quinn to help working families stay in their homes, which will stabilize and grow the Illinois housing market.
“A home is the foundation of our families and our communities,” Governor Quinn said. “This law will help restore neighborhoods and property values while fighting crime and blight by decreasing the time a home sits empty and getting it back on the market quickly. It also allows us to make major investments to keep families in their homes by preventing foreclosures in the first place.”
Senate Bill 16, sponsored by Sen. Jacqueline Collins (D-Chicago), Sen. John Mulroe (D-Chicago) and former Reps. Karen Yarbrough (D-Chicago) and Joe Lyons (D-Chicago), is the result of almost two years of discussions led by the Governor’s office with the General Assembly and stakeholders including lending institutions, the Illinois Housing Development Authority (IHDA), the Illinois Department of Financial and Professional Regulation, municipalities including the city of Chicago and housing advocates across the state. It will allow single-family homes and multifamily buildings that are not legally occupied to be eligible for an expedited foreclosure process that could be completed in as little as 90 days. Previous Illinois law saw the foreclosure of some properties drag on for almost two years, which allowed them to fall into disrepair, damage local property values and become bases for crime.
“Abandoned homes bring down property values, function as safe-houses for criminals and discourage the economic growth our communities need to recover,” Sen. Collins said. “This legislation, which addresses the problem of abandoned properties while protecting the rights of legitimate residents, will help break the foreclosure logjam and empower communities to act.”
“We all recognize that there is a foreclosure crisis in Illinois. Abandoned homes magnify the crisis because they decrease the value of everyone’s homes,” Sen. Mulroe said. “The governor signing this bill into law will accelerate the foreclosure process for abandoned homes and provide much needed resources to the communities that are forced to care for abandoned homes.”
“For too long our broken foreclosure system has burdened communities with abandoned homes and been a drag on our economy, but now we can get to work turning these properties from problems into solutions,” Karen Yarbrough, Cook County Recorder of Deeds and original House sponsor for Senate Bill 16 said. “The provisions in this law to help families avoid foreclosure will also play a big role in the housing recovery, and I’m proud to see it signed into law.”
“This legislation will be an enormous help to communities across our state and it would not have been possible without the hard work and dedication of so many staff members and advocates over the past two years,” former Rep. Joe Lyons said. “These unsung heroes behind the scenes have done and continue to do great good on behalf of the people of Illinois.”
Senate Bill 16 allows a lender to file a motion with a judge requesting a foreclosure be expedited. If the lender complies with applicable notice requirements and a judge certifies that a property is abandoned, a foreclosure trial can immediately proceed. This process currently takes approximately 600 days and under this new law, could be reduced to 90-180 days depending on the property.
This legislation will help working families who are at risk of foreclosure from losing their homes by directing filing fees paid by mortgage-issuers into two funds maintained by the IHDA: the Foreclosure Prevention Program Fund, and the Abandoned Property Municipality Relief Program. Through the end of 2017, banks and other lending institutions will pay fees on a sliding scale depending on how many foreclosures they file each year. An institution that files more than 175 foreclosures will pay $500 per foreclosure, while one with between 50 and 175 will pay $250 per foreclosure, and those with less than 50 foreclosures a year will pay $50 per filing. The law is expected to generate more than $120 million over the next three years.
Those fees are expected to provide an estimated $28 million annually to local governments to maintain and secure abandoned residential properties to get them back into productive use. It will also provide an estimated $13 million annually for housing counseling assistance, which will help provide support to an additional 18,000 households struggling to keep their homes. This law takes effect June 1.
“By fostering collaborations with public-private partners, we are able to build a stronger statewide network of assistance in every corner of the state to help more homeowners and revitalize communities across Illinois,” Mary R. Kenney, IHDA Executive Director said. “The new funding will further the work of Governor Quinn’s Illinois Foreclosure Prevention Network (IFPN) to link homeowners to counseling and other trusted assistance so they can access critical resources available statewide to protect their home from foreclosure.”
Returning properties to productive use benefits communities by creating jobs and increasing local revenue from property taxes and real estate taxes. Communities also benefit from increased consumer spending by contractors, as well as residents furnishing their new homes. The increase in affordable housing stock helps families starting out or starting again, and promotes economic growth. Abandoned properties burden communities by creating blight, attracting crime and reducing the tax rolls. On average, the value of homes on the same block as a foreclosed property can drop $8,000 to $10,000.
Governor Quinn announced recently that following his launch of the Illinois Foreclosure Prevention Network one year ago, nearly 600,000 people have been connected to free foreclosure help:
479,000 homeowners have accessed the IFPN website or the Illinois Hardest Hit program website.
More than 60,700 people have called IFPN help hotlines.
More than 48,000 homeowners have received homeownership counseling.
More than 3,400 people have attended a series of IFPN workshops across the state.
Nearly 6,500 homeowners have received mortgage payment assistance with $146.8 million in funds approved through the Illinois Hardest Hit program.
Families are urged to reach out today to access the free resources that have helped so many other homeowners across Illinois. All of the services are available by visiting www.keepyourhomeillinois.org, calling the toll-free hotline (1-855-KEEP-411), or visiting 80 counseling agencies throughout the state.