Competition for Foreclosure Auction Sales is Good for Homeowners, Communities and Chicagoland

CHICAGO--(BUSINESS WIRE)--Attorneys’ Title Guaranty Fund, Inc. (ATG) www.atgf.com, the only bar-related title insurance company based in Illinois, is one of many parties that strongly believes House Bill 5055 benefits homeowners and communities. (Disclosure: ATG has a division, The Judicial Sales Corporation (TJSC, http://www.tjsc.com), that handles foreclosure auctions.)

“The revenue sheriffs gain from conducting foreclosure sales does not make up for the damage communities suffer by having a backlog of foreclosed properties on their books and in their neighborhoods”

House Bill 5055 was introduced in June 2010 with the primary purpose of clarifying existing law that the plaintiff (banks or mortgage lenders) in a foreclosure action is allowed to select who conducts the foreclosure sale – the official (such as a sheriff) or a third party (such as a private seller).

ATG states that the issue of greatest importance with the bill isn’t sheriff revenue. Instead, it’s about processing the mass quantity of foreclosed homes in a responsible, efficient, and cost-effective manner. Doing so helps to ensure foreclosed properties that are already subject to a judgment order clear the system and don’t unnecessarily wait for months to be auctioned. When homes are in limbo, they can become vacant and blight the surrounding communities.

“The big-picture issue is the positive impact this bill will have on communities besieged by mounting foreclosures and the rights of foreclosure litigants,” stated Peter Birnbaum, president of Attorneys’ Title Guaranty Fund. “This bill is intended to add efficiencies to a woefully inefficient foreclosure process. The bill would benefit distressed homeowners who have to pay these costs and the communities affected by vacant homes and the foreclosure crisis.”

“The revenue sheriffs gain from conducting foreclosure sales does not make up for the damage communities suffer by having a backlog of foreclosed properties on their books and in their neighborhoods,” stated Mitch Lieberman, real estate attorney and partner with Noonan and Lieberman Ltd.

Following are five reasons why House Bill 5055 should pass:

Vacant homes hurt everyone: For example, in Kane County, where the courts appoint only the sheriff, sales are conducted just once a week. In that county today, it takes eight or nine months to schedule a sale, even when the redemption periods have been waived or have expired. During those nine months, foreclosed properties can often become vacated, fall into disrepair, become havens for gang activity and remain off the market. These communities become blighted and neighborhood stabilization is delayed.

In counties like Cook, where private selling officers are regularly appointed, sales are conducted daily and regularly occur within 30 days of the judgment when the redemption periods have been waived or are expired.
Borrowers benefit when private selling officers are used: Homeowners bear the cost of a foreclosure. Private selling officers nearly always charge far less than the sheriff. If this bill doesn’t pass, borrowers who want to invoke their redemption rights will be hurt. It is clear that sales conducted by sheriffs increase the costs associated with the foreclosure process. The unintended consequence increases a homeowner’s difficulty with finding an exit strategy from a foreclosure. If a sale is cancelled, which happens regularly in foreclosure matters, private selling officers do not charge a cancelation fee if cancelled within a designated time frame. This is often not the case with a sheriff’s sale.
Private selling officers provide better value, efficiency: It has been proven for years that private selling officers reduce the fees and costs associated with the foreclosure process. Also, private selling officers provide considerably more services to the lenders than any sheriff. Private selling officers are properly experienced, staffed and trained. They conduct hundreds of sales every day.
The bill is NOT far reaching and does not go beyond foreclosure auctions: The impact of the bill is limited solely to foreclosure auctions. Nothing in the bill intends to replace the sheriff in handling evictions. Nothing in the bill impacts the sheriff's right to handle evictions. Additionally, this bill does not confer a monopoly on private selling officers. It does, however, retain the choice of selling officer for the party bringing the action, the lender.
The bill is consistent with the Illinois Mortgage Foreclosure Law: When the law was amended in 1987 to allow for the appointment of private selling officers, the intent was to create competition in an inefficient market. Prior to 1987, the market conferred a monopoly on the sheriffs. Foreclosure sales were inefficient and expensive. Returning to that time is not beneficial to communities or homeowners. Now, certain county boards have usurped competition through the implementation of municipal ordinances and judicial dictate. In short, they want to reclaim the monopoly the legislature sought to dismantle when it introduced the concept of private selling officers in 1987. And yes, sheriffs can still compete for and win this business from the banks. But they must do so on a level playing field.

Attorneys’ Title Guaranty Fund, Inc.

For nearly two years, ATG has co-sponsored three suburban “Keep Your Home” and six Chicago “Fix Your Mortgage” foreclosure-prevention events. ATG has recruited, trained and volunteered hundreds of real estate attorneys to provide free assistance at these events. Along with ATG’s co-sponsors’ efforts, thousands of at-risk homeowners have received help applying for loan modifications.

Through its nearly 4,000 member attorneys across Illinois, Wisconsin and Indiana, Attorneys’ Title Guaranty has presided over more than 2.5 million home closings and provided homebuyers with competitively priced title insurance since 1964. The only bar-related title insurance company based in Illinois, ATG has built a significant market share by providing excellent service at competitive prices. It has a financial stability rating of “A Prime Unsurpassed” from the independent ratings bureau, Demotech.