Foreclosure Help

Job losses and economic uncertainty over the last several years have led to a wave of foreclosures across America. As more people have trouble paying their mortgage, some local communities have become flooded with "distressed sale" properties.

Housing inventories, fueled by continuing additions of foreclosed properties continue to dampen housing price recovery in the Illinois and Chicago markets. According to the National Association of REALTORS® for all of 2009 distressed homes accounted for 36 percent of total sales last year.

Short Sales

• A “short sale” is an industry term for when the owner of the home does not have enough equity in the property and not enough cash or liquid assets to be able to sell the property, pay off liens and selling expenses (e.g., property taxes, transfer taxes, real estate commissions) and provide a clear title to the purchaser. 
• Many consider a “short sale” better in the long run for the homeowner because it avoids foreclosure which will damage a person’s credit score and make it much harder for the owner to buy another home in the future.
• The Obama Administration’s Home Affordable Foreclosure Alternatives Program (HAFA), effective April 5, will help homeowners who are unable to retain their home under the Home Affordable Modification Program (HAMP), by providing incentives for short sales and deeds-in-lieu of foreclosure rather than foreclosure. HAFA offers financial incentives for the borrowers and loan servicers to choose these options over foreclosure proceedings and attempts to streamline the short sale process by providing a standard process, timeframes and standard documentation.
• U.S. Treasury officials recommended sites: Making Home Affordable Administrative Website for Servicers and Counselor Escalation Process (5/2/11)

Neighborhood Stabilization

• The Neighborhood Stabilization Program is a nationwide effort authorized under the Housing and Economic Recovery Act (HERA) of 2008 providing nearly $4 billion in grants to states and local governments to purchase and redevelop foreclosed and abandoned properties. A second round of funding was approved under the American Recovery and Reinvestment Act of 2009 providing grants to states, local governments and nonprofits on a competitive basis.
• For example, the City of Chicago NSP grant program focuses on 25 south and west side communities with boarded-up buildings. The federal NSP funds will allow the city to buy and rehab more than 1,400 foreclosed and vacant properties in order to protect public and private investments in those neighborhoods. The city chose the 25 areas of greatest need from its 77 official community areas based on local foreclosures and sub-prime loans.

Resources to Help Homeowners
At-risk homeowners are encouraged to ask a local REALTOR® or a HUD-certified financial counselor:

• www.MakingHomeAffordable.gov – A federal mortgage modification and refinancing programs.
• U.S. Housing and Urban Development homeowner counseling, 1-800-569-4287, www.hud.gov  
• Neighborhood Works America Center for Foreclosure Solutions, 1-888-995-HOPE (4673), www.nw.org  
• Illinois Legal Aid, www.illinoislegalaid.org
• Illinois Attorney General’s Office has been on the forefront of mortgage fraud prevention. www.illinoisattorneygeneral.gov/pressroom/2008_10/20081010.html