Bankers warn that a move by the sheriff's office to stop evictions on Chicago foreclosures could end up preventing new lending in the area.
The Chicago metropolitan area saw 21,488 foreclosures filed during the second quarter, according to RealtyTrac. The level of activity ranked it as the sixth worst in the country.
|Cook County Sheriff Thomas J. Dart issued a statement Wednesday indicating he is suspending all foreclosure evictions.
The county is home to the City of Chicago -- the third largest city in the country.
Dart explained that the move was taken because mortgage servicers are not conducting due diligence to determine who occupies the properties. As a result, unknowing renters, who may have been making timely rental payments, are finding themselves without a home.
"These mortgage companies only see pieces of paper, not people, and don't care who's in the building," Dart said in the statement. "They simply want their money and don't care who gets hurt along the way.
"On top of it all, they want taxpayers to fund their investigative work for them."
Cook County photo
of Thomas Dart
Dart speculates he is the first sheriff in a major metropolitan area to take such steps.
He is calling on the state's legislature or courts to force mortgage companies to prove that they have notified any tenants. He said that more than one-third of the trips made by sheriff eviction teams are futile.
"The people we're interacting with are, many times, oblivious to the financial straits their landlord might be in," Dart added. "They are the innocent victims here and they are the ones all of us must step up and find some way to protect."
Illinois Bankers Association spokeswoman Debbie Jemison didn't respond to MortgageDaily.com's request for a statement.
But the trade group's president, Linda Koch reportedly told Reuters that the sheriff is engaging in "vigilantism" and warned that if lenders can't be assured that they have the ability to take over collateral upon default, "we simply won't make the loan."
The sheriff's move might be, at least in part, politically motivated.
Dart, who was elected to a four-year term of sheriff in 2006, touts his political savvy on his biography page, which notes, "He has frequently been mentioned as a rising star in Illinois politics."
His moves are similar to recent actions by Philadelphia Sheriff John Green.
In March, Green suspended sheriff sales for the month of April. Green was responding to political pressure from the city council, Shoshana Bricklin, a legislative counsel for one of the city councilmen, told MortgageDaily.com at the time.
"The sheriff is nothing if not a political animal; he's elected," she explained. "He can look good by ... stopping this for a moment."