Sept. 22, 2008 – The Cook County Board of Commissioners approved Wednesday a resolution calling for a statewide moratorium on home foreclosures, a move that some say has more bark than bite.
County Board President Todd H. Stroger first called for the moratorium last week. On Wednesday, he gained the full support of the 17-member board, which urged state lawmakers to halt foreclosures for one year to help struggling families reassess their financial options.
The resolution also notes that the board would consider divesting tax funds from financial institutions responsible for the more than 34,500 foreclosures that have plagued Cook County so far this year.
Citing high rates of foreclosure in Illinois, Commissioner Earlean Collins (D-1st) urged the board to take action.
"There's something fundamentally wrong about this picture, and we cannot just sit by and let this happen," she said. "I say to the people of Cook County, ‘stay in your homes no matter what happens until the sheriff comes and puts you out.’ And I say to the sheriff, ‘just don't do it.‘"
Despite the resolution’s unanimous board support, it does not carry any weight. Only a moratorium issued by the state can stop lenders from foreclosing on defaulting mortgages, according to a lawyer for the board president.
"If we had the authority to regulate at the county level, we would've done an ordinance," said Rich Velázques, special counsel to Stroger. That kind of regulation, he said, must be legislated by the Illinois General Assembly.
Kendall Reid, a mortgage counselor for the Neighborhood Assistance Corporation of America, a non-profit that helps homeowners struggling to meet mortgage commitments, called the moratorium a "win-win."
Not only will it give homeowners some relief, Reid said, it will also save banks from losing as much as $45,000 per foreclosure, which he said is the average amount banks lose when they are forced to foreclose on a home.
But David Kreisman, who is a partner at Fisher and Shapiro, LLC and represents lenders in foreclosure cases, said a moratorium would have a terrible effect on his clients.
"A moratorium is not a solution," he said. He said moratoriums are not fair because under them, some people can stay in their homes for free, while others must continue to pay their mortgages.
Kreisman said he empathized with those losing their homes, but he does not believe that a moratorium will reduce foreclosure rates. A better solution for people struggling to keep up with payments, he said, would be to file for bankruptcy, which would reduce debt and make payments more reasonable.
Dennis R. Judd, a political scientist at the University of Illinois at Chicago, said he's not convinced such a move by the state would even be legal.
"I'm extremely skeptical that the county or the state has the legal authority to impose such a restriction on private business," he said. "It would immediately go into litigation and would lose."
Judd said he believes the move is no more than political posturing on the part of the board.
But James Ramos, a spokesman for Stroger, said the board expects the state to pass the moratorium, although state lawmakers would likely reduce the one-year time frame suggested by the board.