Each Oak Park foreclosure attorney at our firm understands intimately the complications of dealing with the mountain of underwater homes in the area. Of course, the “Great Recession” had compounding effects--many lost their jobs (and ability to pay their mortgage) while house values plummeted. Together that made many families unable to pay homes and many other owning homes worth far less than what they owed on them.
We understand that solutions to the problem are different at the individual level and the government-level. In other words, a solution to an underwater home issue for an individual homeowner is far different than a public official addressing the issue of thousands of underwater homes.
Eminent Domain Idea
For example, one idea recently floating in the Chicago area was use of the government’s eminent domain power to take homes that are underwater and then refinance the mortgages. The idea was pitched to local alderman by an out-of-state firm this week; though some are already calling the proposal a non-starter.
During the pitch meeting Mayor Emanuel told reporters that he was against the idea, noting that he “didn’t think it was the right way to address the problem.” His concerns are shared by the Federal Housing Finance Agency which previously noted that it had “significant concerns” about using this government power in the aid of underwater homeowners.
Many aldermen have similarly voiced worry over the idea. Yet, the informational meeting on the maneuver went ahead anyway, no doubt at a result of the need to at least consider any sort of new idea to help struggling homeowners. Several years into the criss and many are still struggling. The latest data suggests that nearly 1 in 4 homes in the city is underwater--totaling more than 100,000 borrowers.
The basic idea is somewhat straightforward. The city would use its eminent domain power to seize the underwater property. The mortgage would then be refinanced at a discount--written down to close to fair market value. The new loan would then be offered to the homeowner at a slightly higher amount than what it was purchased for. The hope is that the monthly payment would then be lower than it is now with the homeowner retaining at least 5% equity. The company which arranges the agreements would receive a set amount per mortgage and the city would only face administrative costs.
It remains to be seen if the Mayor’s comments are a sign that the proposal is dead-on-arrival. At the very least, working through this sort of maneuver without approval from Emanuel is near-impossible.
No matter what action is or is not taken on a city or statewide level, please do not forget that options are available in your individual case. The Oak Park and River Forest foreclosure defense attorneys at our firm are here to help in any way necessary--from fighting the bank challenge to helping with a short sale. If you are anywhere in our area and are fighting these issues please take a moment to call our office and see how we can help.
See Our Related Blog Posts:
Attorney General Announces $3 Million for Foreclosure Mediation Programs, But Will They Be Effective?
Wells Fargo Settles with Illinois and U.S for $175 Million
(Photo courtesy of Steve Soblick)