Consumer Laws Helped Stave Off Foreclosed Homes Foreclosure

Consumer laws helped prevent the rise in the number of repo homes, in the city of Chicago, Illinois. This is the findings of a study of six metropolitan areas in the country.

The study was designed to determine the factors that could help an area recover from the foreclosure crisis and to examine how federal, state and private sector regulations affect various metropolitan areas.

According to the study, the number of distressed foreclosure houses in Chicago was somewhat controlled due to the effectiveness of some of the city’s consumer laws.

These laws provided protection to consumers against predatory lending, gave distressed homeowners ample time between notices of defaults and foreclosure sales and created collaborations between public and private organizations.

The study concluded that Chicago is one of the most resilient cities when it comes to the foreclosure issue. It noted that policies initiated in the state between 2001 and 2002 helped protect homeowners from predatory lending.

Furthermore, the state also enacted a law that gives a 265-day grace period to distressed homeowners between the filing of notices of defaults until foreclosure sales, double the amount of the national average of 120 days.

The study explained that the entire foreclosure proceedings can take up to one year or longer, including the filing of notices of defaults to auctions or foreclosure sale. This gap, the study said, can help homeowners find ways to avoid foreclosures such as negotiating with their lenders for loan modification or refinancing.

Furthermore, the study noted that the city of Chicago benefitted from various organizations that are committed to help homeowners avoid foreclosures and for neighborhoods to recover from the impact of the crisis.

The study cited the city’s Housing Department and policy and advocacy group, Woodstock Institute in using data to draw attention to the foreclosure problem. Additionally, the study also praised the Home Ownership Preservation Initiative which allowed regional collaboration among nonprofit and financial organizations. The study pointed out that collaborations between nonprofit organizations and public groups have helped boost foreclosure counseling services in Chicago.

But the study noted that even if foreclosure counseling services have helped a great number of distressed homeowners in the city, the effort needs to spread to suburban areas where foreclosure activity is reportedly on the rise.

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