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New Lifeboat for Underwater Chicago Homeowners

July 18, 2011

Are you a Chicago real estate owner that owes more on your mortgage than your home is worth? A new agency can help bring your loan back down to reality.

The Mortgage Resolution Fund (MRF) was created to buy delinquent loans around the Chicago area and then modify them to affordable levels to help keep more homeowners in their homes.

Last year, President Barack Obama created the Hardest Hit Fund to help states cope with high unemployment rates and declining home values.

house half underwaterThe Illinois Housing Development Authority board on Friday approved the use of $100 million of Illinois’ $445.7 million in Hardest Hit Funds for the MRF, which will take the money to buy delinquent loans from financial institutions. Qualifying mortgages will then be brought into alignment with today’s current values.

When a modification is not possible, the agency will take other steps to avoid foreclosure, like a short sale.

“The Hardest Hit Fund helps Illinois and other states that were most affected by the housing market downturn by providing the funds to implement innovative ideas to help struggling homeowners,” said Treasury Assistant Secretary for Financial Stability Tim Massad.

“I am glad to see that Illinois is developing a creative program to assist homeowners with underwater mortgages.”

The pilot program will target metro Chicago real estate in neighborhoods where foreclosures have taken over. If successful, the fund could expand to help other parts of the state.

The new agency, which will operate as a not-for-profit, is a public-private partnership featuring leaders in foreclosure prevention, including Mercy Portfolio Services, Mercy Housing Inc., Enterprise Community Partners Inc., the Housing Partnership Network and the National Community Stabilization Trust.

“Illinois is committed to addressing the foreclosure crisis with strategic financial solutions,” said Illinois Governor Pat Quinn.

“With this unique coalition of housing leaders, we are able to stretch this federal resource further with the involvement of private partners and help more people stay in their homes.”

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