Illinois launches public-private partnership to buy NPLs
The Illinois Housing Development Authority approved a $100 million program Friday to buy delinquent loans in the Chicago area and modify them. The money will be pulled from the $445.7 million in Hardest Hit Fund dollars the state received from the Treasury Department last year and put into the Mortgage Resolution Fund. The fund will buy loans from banks and trading desks at net-present value. Each mortgage will then be brought into alignment with current home values, bringing underwater borrowers toward positive equity. Once the mortgage is performing again, the fund will then resell the loan and reinvest the income toward the purchase of other delinquent loans. "Illinois is committed to addressing the foreclosure crisis with strategic financial solutions," said Gov. Pat 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." The program will start in Chicago with possible expansion to the rest of the state. Robert Gossinger, vice president for the investor and community activist firm Enterprise Community Partners, said the program's strategy could become a model for other states. The Treasury approved the program on June 30. "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 homeownersm" said Tim Massad, assistant secretary for financial stability at the Treasury. "I am glad to see that Illinois is developing a creative program to assist homeowners with underwater mortgages." Write to Jon Prior. Follow him on Twitter @JonAPrior.