New Legislation To Reduce Foreclosure

citizen |

by SheRico Jones

According to the foreclosure marketing firm Realty Check, Illinois is the 9th biggest foreclosure state in the country. Cook County is the biggest foreclosure county in the state of Illinois and as of March 2011, new foreclosures are up 6.5%.

People are losing their homes in record numbers as unemployment rates soar nationwide. State Representative LaShawn K. Ford recently proposed House Resolution 45. This legislation proposes loan re-modification as an alternative to foreclosure. Ford says that the response to House Resolution 45 has been favorable.

Were asking the federal government to make sure we do our best to modify loans for current homeowners before we [resort to] foreclosure, Ford said. If we modify the loan, the current owner would be in a position to be able to pay the mortgage.

When homes are foreclosed, banks often sell the homes for much less than they were originally worth.

Lets say you own a home and owe $200,000 with an interest rate of 8% and the properties in the neighborhood are worth $130,000; you owe more than the home is worth. Ford said. If you cant afford to pay it and the bank modifies the loan, it would cut the interest rate in half and then you will be able to afford it because the mortgage payment goes down $300. Banks should say well do that, keep your house and you can have a stable 30 year mortgage.

Fords House Resolution 45 was passed on April 12th and is going to Congress. Now, Ford says, its up to Washington to work with banks to change their attitudes toward loan modification.

Stabilizing the housing market will help other industries as well, Ford says. He thinks that the unstable state of the real estate market is the reason the recession continues, adding that when the housing market was stable, more people were working.

The real estate market is the real reason we cant dig out of the recession, he said. When the housing industry was stable, more people were working because when people own houses, companies like Sears, Montgomery Wards and Menards get more business; so they hire more people. When people have jobs they buy cars; [therefore] the auto industry will improve. Thats how were going to repair the economy.

Foreclosure is taking away peoples prized possession, their homes. So we need to do all we can to reduce foreclosure, he said.

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