The state of Illinois recently amended sections 7.30 and 7.31 of the Housing Development Act resulting in a number of changes to its foreclosure laws. The changes include revisions to the definitions of approved counseling and abandoned residential property, an update to the foreclosure process for vacant or abandoned property, an increase in foreclosure filing fees, and the creation of an abandoned residential property municipality relief program. These changes will be effective June 1, 2013.

  

  

The foreclosure prevention program was established, in part, for the purpose of making grants to approved counseling agencies which provide counseling programs to borrowers. In addition, the program also provides grants to community based organizations for the purpose of creating and maintaining prevention outreach programs. The state hopes that by making these services available to borrowers it will lower the number of foreclosures filed. The amendments have updated the following definitions relative to the foreclosure prevention program:

Abandoned residential property has been defined as residential real estate that either “is not occupied by any mortgagor or lawful occupant as a principal residence” or “contains an incomplete structure if the real estate is zoned for residential development, where the structure is empty or otherwise uninhabited and is in need of maintenance, repair or securing.” The definition also requires some evidence of intent to abandon the property. Some examples of such intent include:

Due to these new amendments, the definition for abandoned property has become particularly important, because a mortgagee may now elect to use an expedited judgment and sale procedure in the case of an abandon property. If the court finds that the property is abandoned it shall grant the motion for expedited judgment and sale, and proceed immediately to a foreclosure trial. As a result, the foreclosure process for abandoned properties is estimated to be reduced from 500 days to roughly 100 days.

  

Illinois state law had previously required a 50 dollar fee to be deposited into the Foreclosure Prevention Relief Fund whenever a foreclosure complaint was file. These fees, which are being used to fund borrower counseling programs, have been increased under these new amendments. The amount of the increase is dependent on the number of foreclosures filed by the mortgagee. The mortgagees with the largest number of filings (more than 175 in a year) will be included in the “first tier,” and are subject to a 500 dollar increase. Mortgagees in the “second tier” will face a 250 dollar increase, and those with the fewest filings are in the “third tier” which faces a 50 dollar increase.

  

  

Lastly, the amendment created the Abandoned Property Relief Program which makes grants to municipalities and counties in order to assist with costs incurred as a result of caring for abandoned property. These costs include trimming trees, removing garbage or debris, boarding up windows, demolition, and repair/rehabilitation of the property.

  

This fund was created as a response to a number of problematic effects abandoned properties are having on the state. Abandoned properties have been found to lower surrounding property values, increase crime, and create a greater strain on the court system. The state hopes that by creating a way to secure these abandoned properties it will help to solve some of these issues.

 

 

Nicole is Assistance Vice President & Senior Counsel at Bankers Advisory, Inc.   She is a graduate of the University of Massachusetts, Amherst and earned her J.D. at Roger Williams School of Law.  She is admitted to the Bar in Massachusetts and New York.  She can be reached at nicole@bankersadvisory.com