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* House Speaker Michael Madigan has a new proposal on the foreclosure crisis…
Under the legislative proposal, a copy of which was obtained by the Tribune, a $1,000 mortgage prevention fee would be collected during the sheriff’s sale process from the purchasers of residential buildings with four or fewer units. The fees would go into a mortgage foreclosure prevention fund and would be distributed to organizations assisting delinquent borrowers, court-sponsored mediation programs and for legal services and temporary loans to homeowners.
The proposal would most directly affect lenders, which at sheriff’s sales most often buy back properties they have foreclosed upon. In February, 6,454 properties in Illinois received notices that a sheriff’s sale was scheduled, according to RealtyTrac.
* The Question: Do you agree with this idea? Explain.
posted by Rich Miller
Monday, Apr 12, 10 @ 12:02 pm
Sorry, comments are closed at this time.
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The interesting question would be would they just stop foreclosing. Also why make just for 4 or fewer units.
How about 1K for each unit over 4?
Comment by OneMan Monday, Apr 12, 10 @ 12:10 pm
When we return to a more historic rate of foreclosures,what happens to all these agencies that have become used to this supply of cash? What happens to the staffs that get hired because of this money, office spaces that were leased using this money, etc?
(Hint: it will be replaced with taxpayer funds)
Comment by Castor Monday, Apr 12, 10 @ 12:13 pm
Bad idea. The cost would just be passed by lenders onto future loan applicants. It’s unfair to individuals who loan money to family and friends to buy a home and take back a mortgage. There is no guarantee that the money will be spend as advertised. Such a program only extends the misery of residential property values inevitability going lower to honestly reflect the buyers’ ability to pay. It only serves to keep an insolvent taxpayer on the rolls so local government does not receive the shock it deserves for over-taxing real estate which in turn contributes to defaults.
Comment by Cook County Commoner Monday, Apr 12, 10 @ 12:18 pm
Given that courts placed a limit on impact fees on developers in a Naperville case, I would think that 1K wont fly in court either.
Comment by Pat Collins Monday, Apr 12, 10 @ 12:18 pm
Bad idea. This is just a way boost patronage to campaign workers, Dem supporters and contributors.
Gee, I wonder what “organizations” these funds would be distributed to?
Can you say “ACORN”?
Comment by PalosParkBob Monday, Apr 12, 10 @ 12:27 pm
Do what is possible at this time. Give this thing a shelf life of a few years, then have it expire. You don’t want to create a new fund based on this. Don’t make it permanent.
Comment by VanillaMan Monday, Apr 12, 10 @ 12:30 pm
$1,000 is too low. It should be a $10,000 foreclosure fee.
This would cause financial institutions to more properly evaluate risk when lending. And it would provide an incentive for lenders to negotiate with borrowers rather than jump to foreclosure.
The $10,000 should be split with school districts and municipal gov’t. $3,000 to the school districts and $3,000 to municipal government.
Comment by Carl Nyberg Monday, Apr 12, 10 @ 12:31 pm
BAD IDEA. It’s another tax. Part of the funds will go to help as intended. I suspect MOST of the funds will line the pockets of scammers and agencies seeking to maximize profits during this foreclosure crisis. I’m not usually this pessimistic.. BAD IDEA.
Comment by soundguy Monday, Apr 12, 10 @ 12:38 pm
$1,000 is too low. It should be a $10,000 foreclosure fee.
NO - make it a $100,000! That way, everyone will really know that we’re serious! Let’s just make it possible so that no one can stay in business!
Comment by VanillaMan Monday, Apr 12, 10 @ 12:47 pm
So it’s a tax on foreclosure sales? Bad, bad idea. And it would raise $6.5 million statewide during a peak year for foreclosures? It’s just an exercise in playing to the grandstand. Madigan should drop this kind of silliness and devote his attention to keeping the state out of foreclosure.
Comment by Excessively Rabid Monday, Apr 12, 10 @ 12:47 pm
Oops. OK, $6.5 million for a peak month….
Comment by Excessively Rabid Monday, Apr 12, 10 @ 12:49 pm
So the Leader of the House who doesn’t want a tax increase is again wanting to raise fees. Didn’t the Dems raise fees on license plates, alcohol, cigarettes, farm chemicals, and trucking firms the last time they didn’t want to raise taxes? It is a good thing they are looking out for us taxpayers.
You know it is cold out when you see a Democrat with his hands in his own pockets.
Comment by irish Monday, Apr 12, 10 @ 12:57 pm
Bad Idea. $1000 will barely pay for the bloated organization of 100K per year staffers required to monitor this program
Comment by Hank Monday, Apr 12, 10 @ 12:59 pm
Bad idea. The problem is that the process and the financial environment for getting banks to make loan adjustments on delinquent/underwater mortgages isn’t working, and that problem is occurring on a national scale. So if the goal is to reduce foreclosures, not only are the people pushing this $1,000 fee shooting at the wrong target (the buyers of foreclosed properties), but they’re missing that one also and hitting innocent bystanders in the process.
The goals should be as follows:
1) Get the banks to really get serious about adjusting underwater/delinquent mortgages (See www.housingwatch.com for more details). It’s pretty clear they’re not. And that’s a national problem, but the effects are experienced locally.
2) Now that both Fannie and Freddie are out of the repurchase market in a big way (both their programs ended 03.31.2010), the early look is that the private market isn’t yet filling the gap. So there’s going to be lots more foreclosures coming into the marketplace regardless. Again, a national problem, but experienced locally.
3) If that’s going to be the trend, the goal then locally has to become to “recycle” those foreclosures back out into new ownership as quickly as feasibly possible, and that proposed $1,000.00 fee is just one more obstacle placed in the way of potential buyers. That’s why it’s a really bad idea.
4) If we don’t get this wave of foreclosed properties cleared out & back into new ownership, it’s going to continue to grow into a small mountain of foreclosed properties, many of which will start/continue to deteriorate, and that’s one result that’s bad for everybody.
Remember, we’re not going to see a whole lot of new construction while we have this overhand of foreclosed properties looming over the real estate market.
Thanks what it looks like out here.
Comment by Judgment Day Is On The Way Monday, Apr 12, 10 @ 1:01 pm
I think it is a good idea. If this isnt an option then foreclosures continue to rise and the lenders, with there great public outreach lending programs, yea right, will continue there inhumane practices. I feel truly sympathetic to those who have lost there jobs and are put into this unfortunate position of having to foreclose on there home. The kids are effected the most, we own the people of this state some sort of solution. It is so easy to be pesimistic these days. I wish that some people would walk in someone elses shoes before being so negative about programs to help people. It always comes back to the same old rehtoric, patronage & taxes will end up paying for this program.
Comment by Stallion Monday, Apr 12, 10 @ 1:02 pm
A horrible idea. It will diminish the demand for real estate and subsidize organizations from the government. Mike Madigan sure knows of real estate values, it’s his full time job.
Comment by Steve Monday, Apr 12, 10 @ 1:12 pm
It’s not a bad idea. It’s a shot across the bow at the predatory lenders; pretty mild really. They’re the folks who made — and took off the table — the big money during the bubble.
Make them pony up a little bit more for their despicable business model: bleeding folks dry, tossing them out of their homes and then flipping it at a profit over and over again.
Comment by wordslinger63@gmail.com Monday, Apr 12, 10 @ 2:36 pm
VM, there’s no fee for institutions that don’t make bad loans.
How about some personal responsibility?
A foreclosure is a bad outcome for the community, which is not a party to the original transaction. The community deserves to be compensated when borrowers and lenders screw-up.
Comment by Carl Nyberg Monday, Apr 12, 10 @ 2:47 pm
If I remember correctly, it costs a lender in Illinois nearly $20,000 to file foreclosure paperwork and formally remove a homeowner from his or her home. The greatest of these costs are, of course, legal counsel and court fees. The idea is a good one if only as a deterrent to larger lenders who are only worried about the bottom line. Then again, Illinois also has some of the strictest anti-foreclosure laws in the country, which essentially makes the process more expensive both internally and externally.
I imagine the Illinois Bankers Assn. and the Independent Community Bankers of America would not be too happy with another fee placed on smaller banks who already must contend with the steep cost of home foreclosures in Illinois.
Comment by Team Sleep Monday, Apr 12, 10 @ 3:03 pm
A foreclosure is a bad outcome for the community, which is not a party to the original transaction. The community deserves to be compensated when borrowers and lenders screw-up.
How about some personal responsibility?
Wait. You actually wrote both of these statements in one blog. You seemed to have forgotten the “screw ups” that over-bought. If I went out and got a Rolls Royce, would it be the fault of Rolls Royce if I can’t pay the mortgage, or would you blame RR for building such expensive cars and be willing to sell one to me?
…a community deserves compensation.
Really? Where do you think the compensation would come from, or be based on? Whatever you think is fair to give, you first have to decide from whom to take. You seem comfortable to just take from the guy with the money to take, then come up with a lame excuse why he is unworthy of keeping his own money.
I agree with you - personal responsibility from all parties involved. How about that, and some common sense?
Comment by VanillaMan Monday, Apr 12, 10 @ 4:03 pm
Looks like the predadtory lenders and all their allies were hard at work today
THis is a great idea and will help limit foreclosures
Remember it was Madigan who fought BLagoof and the predators over HB 4050. If the nation would have followed his lead the ensuing disaster might have been avoided.
Comment by CircularFiringSquad Monday, Apr 12, 10 @ 5:32 pm
Bad idea. Virtually all BK’s and foreclosures are caused by one of three items 1) health 2) loss of income 3) divorce. This new tax does nothing to solve those problems. Yes, my info is correct, I’m a mortgage loan officer.
Comment by DRB Monday, Apr 12, 10 @ 6:08 pm
Great Idea!! The sooner Illinois implodes the better it is for the country overall. Lik eit or not, thats the way it is
Comment by Yawwwnnn Monday, Apr 12, 10 @ 8:37 pm