Illinois Gov. Pat Quinn has announced a new pilot program aimed at assisting homeowners and rehabilitating vacant, foreclosed upon properties in Cook County.
Illinois Gov. Pat Quinn recently introduced a new pilot program to rehabilitate vacant, foreclosed upon properties in Cook County and give assistance to homeowners.
The multi-pronged Illinois Building Blocks program comes in addition to a menu of local, state and federal strategies to address vacant properties, foreclosures, and sometimes both of these huge problems at once.
Chicago, for example, has a similar program to rehab vacant, foreclosed-upon properties.
According to housing advocates, though, these government efforts lack resources – to both financially assist homeowners and communities and twist the arms of mortgage servicers to participate.
“With any of these programs,” says Bob Palmer, policy director for Housing Action Illinois, “the resources are limited compared to the scope of the problem.”
Rebecca Boykins, spokeswoman for the Illinois Housing Development Authority, says that the state “met with major lenders regarding the program,” but adds that Building Blocks is “under development.”
One possible way of getting banks to cooperate, according to Boykins, is the state’s donation tax credit. Banks would get a 50-cent income tax credit for each dollar contributed to an affordable housing project.
The Illinois Housing Development Authority will put $50 million into Building Blocks and Cook County will add another $5 million. Building Blocks aims to “return vacant and foreclosed upon properties to their proper use” in six Cook County cities: Berywn, Chicago Heights, Maywood, Park Forest, Riverdale, and South Holland.
Part of that strategy is helping potential homebuyers purchase foreclosed homes. The state will provide up to $10,000 in down payment and closing cost assistance to homebuyers. Illinois will also lower the credit score needed to qualify for a mortgage.
Also, Building Blocks adds to the existing Illinois Foreclosure Prevention Network.
There’s more money for the foreclosure prevention network’s housing counselor services and also the Illinois Hardest Hit program – which provides mortgage financial assistance to homeowners hit by unemployment or severe underemployment.
Building Blocks unquestionably responds to a major problem.
The foreclosure crisis in Cook County has hit a new stage, where foreclosures are down but many foreclosed upon properties lie vacant, in a legal limbo. The average foreclosure case in Cook County court now lasts 567 days.
“There are more properties that are vacant and stuck in the foreclosure process,” says Tom Feltner, vice president of the Woodstock Institute, a research and advocacy group.
Feltner applauds Building Blocks for stabilizing communities victimized by the lowered property values, vandalism, and crime associated with vacant properties.
Palmer of Housing Action agrees. “The idea of targeting specific communities is good,” Palmer says.
The Greater Government Response
According to Palmer, what the state can do – with Building Blocks and the Foreclosure Prevention Network – is limited. The biggest funds for foreclosure prevention come from the federal government.
The main federal program, though, the Homeowner Affordable Modification Program, or HAMP, remains disappointing. About 736,000 mortgages have been permanently modified from the program that President Barack Obama said would help 3 million to 4 million homeowners when the president rolled it out in February 2009.
And, in the realm of vacant properties, the federal government has actually conflicted with Chicago in one way.
The Chicago City Council passed an ordinance in November to increase accountability on mortgage servicers that tend to hold vacant, foreclosed-upon properties. The ordinance would, for example, make property holders pay $500 to register a property as vacant.
But the Federal Housing Finance Agency sued Chicago over the ordinance. FHFA contends that they have the sole ability to regulate the vacant properties held by government-sponsored enterprises Fannie Mae and Freddie Mac. Fannie and Freddie have about 258,000 properties in the Chicago area.
Cook County approved their own, comparably modest version of a vacant property ordinance in December.
Chicago, meanwhile, plans to fight FHFA in federal district court. And they plan to implement the Vacant TIF Purchase and Rehabilitation Ordinance, which the City Council passed last May.
The city will use Tax Increment Finance, or TIF, money to rehab vacant properties, and turn them into affordable housing under that ordinance.
Julie Dworkin, policy director for the Chicago Coalition for the Homeless, has worked with the city on implementation – and says that they have identified three initial TIF districts in which to roll out the plan.
Dworkin says that she does not know if banks will cooperate in either the city program or Quinn’s Building Blocks. “It’s going to be a building-to-building effort,” Dworkin says.
“There’s no global way to getting banks on board," she said, adding that getting the financial instutions to participate is “an enormous barrier.”