Two key reforms proposed by Housing Committee Chair Karen Yarbrough that would empower communities to better address the foreclosure crisis are coming up for consideration in the Illinois House of Representatives Housing Committee this tomorrow, April 7. We need your support to make sure that communities have enough resources to keep families in their homes and keep vacant foreclosed homes from destabilizing neighborhoods.
HB1810 levies a $500 "Mortgage Foreclosure Prevention Fee" on purchasers of foreclosed homes. The fee would create a new fund to pay for foreclosure mitigation activities, like housing counseling, legal services, and administering foreclosure mediation programs in the courts. Recent research conducted by Woodstock Institute and Housing Action Illinois found that much of South Suburban Cook County, McHenry County, and parts of Northwest Will County have gaps in foreclosure counseling services. Even in areas where several agencies actively provide foreclosure prevention counseling, four out of every five new foreclosure cases in 2008 did not access counseling services. A recent report by The Urban Institute shows that a homeowner who works with a housing counselor is almost twice as likely to avoid foreclosure than a homeowner who doesn’t receive such counseling. The bill is sponsored by Reps. Yarbrough, Colvin, Chapa LaVia, and Will Davis.
HB 1109 adds language to the Illinois Municipal Code about vacant properties located in home rule municipalities. The bill explicitly allows municipalities to create rules and regulations for vacant properties, such as imposing registration fees and fines on property owners and previous owners that failed to comply with existing regulations, trusts, and mortgagees.
This would allow the City to hold servicers that have filed a foreclosure on the vacant property, but have not yet acquired the title in a judicial sale, accountable to register, maintain, and secure the property and abide by the vacant property ordinance. It would also address the problem of possible walkaways, where servicer puts off filing a foreclosure on a vacant property even though the mortgage may be seriously delinquent. In these situations, the property is often not maintained by the title owner or the mortgagee; the proposed ordinance would require that the mortgagee who declines to foreclose abide by the vacant property ordinance and register, maintain, and secure the vacant property. According to recent Woodstock Institute research, there are nearly 1,900 of these properties in the City of Chicago. Administrative costs of dealing with these properties in building court, securing the properties, responding to criminal activity, and potentially demolishing these properties will cost the City of Chicago an estimated $36 million.
The proposal would explicitly authorize home rule municipalities such as Chicago to pass servicer accountability ordinances, such as the one proposed recently by Ald. Pat Dowell that would expand the City’s ability to ensure that property owners are maintaining and securing their vacant properties, and make it easier for the City to get reimbursed if owners do not pay fees and fines or adequately maintain the property. The bill is sponsored by Reps. Yarbrough, Colvin, Chapa LaVia, and Will Davis.