Is Illinois Housing Recovery Being Held Back by the Federal Government?
When the economy first plummeted, the Illinois housing market took a major hit. People were unable to afford houses and others were losing their jobs making it very difficult to ward off foreclosure. The amount of foreclosures and short sales skyrocketed, which not only hurt the people who made payments, but also the banks and the economy. To try and prevent these issues the government passed a few different housing relief packages to kick start the economy and the housing market.
One of these Real estate relief packages is called principal writedowns. Most people involved in real estate and those struggling to save their homes were relieved to hear that this policy would help home owners keep their homes and help new home owners afford a home. The news came as a relief, but soon turned into a disappointment when the Attorney General Lisa Madigan, of Illinois, realized the Federal Government was holding back Illinois housing recovery. What was even more shocking was 8 other states were asking for the man at the top of the Federal Housing Finance Agency to be fired for this reason.
The official that is being questioned is Edward DeMarco, who feels that he is doing the right thing by withholding the principal writedowns. DeMarco is concerned that allowing Illinois to use this housing recovery will make tax payers responsible for the individual homeowner’s losses.
An even more alarming piece of information is that DeMarco has been at odds with many of President Obama’s administration about the issues around the principal writedowns. Even the treasury Secretary, Tim Geithner, has asked DeMarco to reconsider withholding the principal to help those struggling in Chicago and all of the other cities and states that are struggling to get their housing market back on track.
Many people in Illinois feel that DeMarco is purposely holding the policy from them, which can tremendously help the housing market in Chicago and all over the state of Illinois. Madigan also states that the principal writedowns will help prevent foreclosures, which will ultimately help the state’s economy and the overall economy.
One major complaint about the withholding of principle writedowns is it is preventing Fannie Mae and Freddie Mac, two major government supported enterprises that facilitates loan-guaranteeing, from providing principle reductions for many that are on the brink of foreclosure. This is a letdown for the struggling home owners seeking government assistance.
That is why it is important that homeowners stay proactive and seek multiple options when facing foreclosure (Read Options When Facing Foreclosure to learn more). It is a good idea to do research and work with reputable real estate solutions companies that understand the foreclosure process and provide alternative solutions.