It soon could become easier to rid neighborhoods of abandoned, foreclosed homes.
This week, the Illinois General Assembly approved legislation that could speed up the foreclosure process for vacant, abandoned homes, decreasing the length of the judicial process from as much as two years to as little as three or four months.
The measure, Senate Bill 16, was passed unanimously by the state Senate on Wednesday and the state House on Tuesday.
Gov. Pat Quinn is expected to sign the measure, which was supported by Illinois Attorney General Lisa Madigan and the Illinois Bankers Association, among others.
The law also would slap new fees on lenders seeking foreclosure action. The fees, ranging from $50 to $500 per foreclosure, would be used for two primary purposes.
Some of the money would fund foreclosure prevention counseling programs. The rest – about $28 million, according to the bill’s supporters – would be split among the state’s cities and counties to offset public costs to maintain and secure abandoned properties.
The bill specifies that 30 percent of the money be spent in Kane and other suburban collar counties. But its lasting impact could be changes to the foreclosure process itself.
Presently, neighborhoods in the Tri-Cities and elsewhere in Kane County are rife with so-called distressed properties, or those subject to either foreclosure or short sale. As much as a third of all properties sold each month in the Tri-Cities, for instance, are considered distressed, according to data supplied by local real estate trade associations.
That relatively large inventory of distressed properties drags down housing values for everyone in the neighborhood, making refinancing or selling other homes more difficult. And those depressed values also drag down the taxable value in many communities, leading to increased property tax rates, even if local governments leave their levies unchanged.
By speeding up the process, supporters believe the inventory of foreclosed homes could be more quickly reduced, easing the burden on lenders and stabilizing home values.
While the Realtor Association of the Fox Valley officially has remained neutral on the issue, Ron Ewing, an Elgin real estate agent and president of the RAFV, said he believed the bill could produce benefits locally.
He estimated that Kane County’s housing market is flush with about seven months of inventory, tilting the leverage decidedly to the buyer. A balanced market, he said, has about 3.5 months of inventory.
Real estate broker Leslie Ebersole, of Baird & Warner’s St. Charles office, said the excess inventory not only left the market imbalanced but has also burdened public services and harmed neighboring homeowners.
Reducing the inventory of foreclosed homes will remove some of the uncertainty from the market, Ebersole said.
“Having homes that are unoccupied and unsellable is not good for the neighborhood or the community,” Ebersole said. “And ultimately, it’s not good for the homeowner, either, because it takes them that much longer to close this chapter of their life and move on to something better.”