Recently, this blog has discussed on several occasions the losing battle being fought by the City of Chicago with an ever-increasing number of foreclosures and the associated negative effects. Since the beginning of the financial crisis in 2008, the number of foreclosures in Illinois has increased dramatically. According to realtytrac.com, as of November of 2013, one in every 528 properties in Illinois was in foreclosure, and through the first half of 2013 Illinois posted the nation’s third highest foreclosure rate – 1.20% of housing units with a foreclosure filing.
Both Chicago and the State of Illinois have been proactive in their efforts to curb the negative effects of foreclosures. Chicago has adopted measures such as the “Keep Chicago Renting” legislation, which requires any individual or institution attempting to foreclosure on real estate to provide any tenants the opportunity to enter into a rent-controlled lease the property is sold, and Illinois Attorney General Lisa Madigan has filed a lawsuit against Safeguard Properties, alleging that Safeguard wrongfully prevented residents from entering their homes by breaking in, changing locks, shutting off utilities while foreclosure proceedings were still pending.
Now it would appear that the U.S. Government is contributing something new to the fight against foreclosures, as according to a recent article in the Chicago Tribune, Fannie Mae and Freddie Mac “are upping the incentives to interest consumers, rather than investors, in purchasing foreclosed properties and making them their homes.” According to the article, there are approximately 31,000 foreclosures for sale through Fannie Mae, and the federal lender has agreed to cover 3.5 percent of the final sale price for buyers in certain states, including Illinois.
There are 27 states eligible to receive the incentive, which have the highest number of foreclosed homes representing approximately three quarters of the foreclosures owned by Fannie Mae. To qualify for the incentive, a property must be part of Fannie Mae’s First Look program, in which certain properties are placed in a “20-day period” where they are “only marketed to owner-occupants before they can be bid on by investors.” Essentially, this means that the incentive isn’t available to investors, but rather is intended to assist only potential purchaser buy a home in which they plan to reside.
As of the date of the Tribune article, there were 130 homes in the Chicago area that were part of the First Look program, including an “assortment of condominiums and single-family houses.” However, buyers wishing to take advantage of the incentive had to have made an initial offer on a house by March 31, 2014, and close on the property by May 31, 2014.
Freddie Mac is also offering a similar incentive in 23 states, again including Illinois, that will provide potential buyers $500 for “condominium association dues, flood insurance premiums, or a home warranty.” In Illinois, there are approximately 1,000 properties that will qualify buyers for the Freddie Mac incentive.
If you have questions about the Fannie Mae and Freddie Mac incentive, or other questions regarding the purchase or sale of real estate, contact the experienced real estate attorneys at The Slater Firm, Ltd. today.