An Illinois bill designed to curtail the foreclosure-timeline process for abandoned properties is heading towards the Illinois governor's desk after passing the state legislature this week.
The legislation, which could have a significant impact on foreclosure timelines for vacant homes, comes at a time when Illinois is one of five state's fighting off a Federal Housing Finance Agency proposal to raise guarantee fees on Fannie Mae and Freddie Mac loans in states where foreclosures are taking longer and costing more. The bill also is lauded by community advocates for addressing the foreclosure blight issues that have been facing certain Illinois neighborhoods.
Illinois State Sen. Jacqueline Collins sponsored Senate Bill 16, a comprehensive bill to streamline foreclosures, which passed both the Illinois Senate and Assembly. Collins told HousingWire, over time she went from having community banker's support to eventually having the support of larger banks. The Senator says community bankers, some of which are active in offering loan modifications, showed enormous support for the bill all along.
The bill, if approved by the governor, will reduce the length of the foreclosure process on 'proven' abandoned properties from roughly 500 days to 100 days, according to Collins' office.
The legislation also would provide housing counseling to tens of thousands of homeowners while raising $28 million to clean up vacant homes and lots.
The legislation proposes an added fee on foreclosure filings to raise revenue that will eventually cover the cost of assisting struggling homeowners and providing support to governments burdened by expenses associated with the handling of abandoned properties.
About $13 million in grants will be provided for housing counselors.
The bill passed after receiving support from both the Illinois financial services community and neighborhood advocates.
"What these parties had in common was a desire to break up the logjam of foreclosures currently clogging our court system and delaying the full recovery of our housing market," said Sen. Collins said in a statement. "With strong homeowner protections in place, everyone benefits from expedited foreclosures of truly abandoned properties."
The increased filing fees paid to cover the program's expenses will last through Jan. 1, 2018 if the bill passes.
Collins says banks that filed the most foreclosure proceedings (more than 175 in the previous year) would be forced to pay an additional $500 fee when the foreclosure action is filed.
The proceeds will be funneled to a Foreclosure Prevention Program Fund and an Abandoned Residential Property Municipality Relief Fund.
Lenders that file between 50 and 174 foreclosure complaints will pay about $250 extra and those with fewer than 50 filings will pay about $50 more.
Sen. Collins says the bill also is designed to get these abandoned properties through the process to aid homeowners living in hardest-hit areas. The bill contains a strong definition of what constitutes a vacancy.
"If you have a large proportion of vacancies and abandoned homes in your neighborhood, now you're stuck in a quaqmire where you cannot get the value of the equity out of your house," Sen. Collins told HousingWire. The Senator has been working 8 years to deal with foreclosure-related issues in the South and West side of Chicago.