National Model Program Uses Federal Funds for Permanent Modifications
CHICAGO, IL – July 18, 2011 – (RealEstateRama) — Governor Pat Quinn today announced the creation of the Mortgage Resolution Fund (MRF) using $100 million of the state’s $445.7 million in Hardest Hit Fund dollars to purchase notes in the Chicago area. The Illinois Housing Development Authority (IHDA) board today approved the new program, which will enable these loans to be permanently modified to affordable levels.
“Illinois is committed to addressing the foreclosure crisis with strategic financial solutions,” said Governor Quinn. “With this unique coalition of housing leaders, we are able to stretch this federal resource further with the involvement of private partners and help more people stay in their homes.”
Under the new MRF program, federal Hardest Hit Fund monies will be used to purchase delinquent loans from lending institutions and capital markets trading desks at net present value. Each qualifying mortgage debt will be brought into alignment with current home values. Operating as a not-for-profit, the fund will seek permanent private disposition and recycle the funds after mortgage performance is restored. This income can then be reinvested toward the purchase of more delinquent mortgages.
“The Hardest Hit Fund helps Illinois and other states that were most affected by the housing market downturn by providing the funds to implement innovative ideas to help struggling homeowners” said Treasury Assistant Secretary for Financial Stability Tim Massad. “I am glad to see that Illinois is developing a creative program to assist homeowners with underwater mortgages.”
Treasury Department officials approved the plan on June 30. Today’s action by the state’s housing finance entity moves the program into the final planning phase. The new program will target the Chicago area, where foreclosures have had a devastating effect on neighborhoods, with an aim toward maximizing the federal funding and generating the private investment necessary to sustain the program. The MRF program may be expanded to other areas of the state upon successful piloting in Chicago.
The new Mortgage Resolution Program is the result of a public-private partnership featuring organizations that have been leaders in foreclosure prevention, including Mercy Portfolio Services and Mercy Housing, Inc., Enterprise Community Partners, Inc., the Housing Partnership Network and the National Community Stabilization Trust.
“We thank Governor Quinn for positioning Illinois as a national leader, and we are proud to spearhead operations for this important public-private effort that addresses the problem of distressed mortgages,” said William Goldsmith, president, Mortgage Resolution Fund.
“The program’s financial strategy elevates it to something that can become a model for other states,” said Robert Grossinger, vice president, National Community Foreclosure Response Initiative, Enterprise Community Partners, Inc.