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Foreclosure limbo costing cities

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SPRINGFIELD — Lenders foreclosing on properties in Illinois would pay for the maintenance of thousands of vacant houses, rather than putting that financial burden on municipalities statewide under a plan in the Illinois House.

By Andrew Thomason

SPRINGFIELD — Lenders foreclosing on properties in Illinois would pay for the maintenance of thousands of vacant houses, rather than putting that financial burden on municipalities statewide under a plan in the Illinois House.

"They sit in limbo for a period of time, and we cannot get anybody to take action on them," said Jeff Stehman, the building code official for the southern city of O'Fallon. "Our city is required to do the maintenance and abatement on some of these properties."

The measure would allow cities to create an ordinance to levy fines against banks and other lending institutions for the problems associated with vacant houses, such as cutting the grass, boarding up broken windows and fixing other code violations.

Stehman said O'Fallon pays up to $150 each time it mows the overgrown lawn of one of these houses.

When homeowners could not pay their mortgages and faced foreclosure, the maintenance and upkeep of the vacated properties fell to the municipalities.

In April alone, Illinois had 10,055 foreclosures, with the majority in Chicago and its surrounding counties, according to RealtyTrac, a company that monitors foreclosures nationwide. In 2009 and 2010, the state had 173,890 and 106,419, respectively, according to RealtyTrac.

George Koczwara is the deputy city manager of Crystal Lake in McHenry County. The county had 400 foreclosures in April. Koczwara described the conditions he and other city workers must fix at vacant homes.

"Broken windows, open doors, unsecured properties, which we can't let happen because of the potential for crime within those homes," Koczwara said.

The Illinois Banking Association, a group that lobbies on behalf of banks in the state, opposes the bill, because banks and other lenders cannot possibly know the rules for each affected municipality, said Debbie Jemison, an IBA spokeswoman.

"It could be one thing outside of Chicago; it could be something different downstate — just a whole different patchwork of ordinances," she said.

The IBA has created a counter proposal that would collect a $50 fee whenever an institution initiated a foreclosure in the state.That money would be pooled in a fund from which municipalities could draw when upkeeping the empty houses.

The IBA estimates the fund would generate about $6 million annually.

The proposal, which was introduced in March, has not been brought to the General Assembly.

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