On Friday, Illinois officials announced a not-for-profit agency which will modify home loans for underwater homeowners, or those with properties worth less than what owners owe on mortgages, according to Crain’s. The agency, which is starting out by targeting Chicago homes before branching out throughout Illinois, was approved by the Illinois Housing Development Authority.
The agency serves as a public-private partnership of Mercy Housing Inc., Enterprise Community Partners Inc. and National Community Stabilization Trust.
“The Mortgage Resolution Fund will begin with $100 million in federal funds and use that money to buy delinquent loans from financial institutions. Those loans will then be modified to reflect the home’s current value,” said the article.
Housing Wire adds that once underwater borrowers are revived to positive equity, “the fund will then resell the loan and reinvest the income toward the purchase of other delinquent loans.”
The funds are being extracted from the $445.7 million which Illinois received from the Treasury Department through the Obama administration’s Hardest Hit Fund.
“Illinois is committed to addressing the foreclosure crisis with strategic financial solutions,” said Gov. Pat Quinn in a release. “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.”