Chicago Acts to Soften Impact of Foreclosure on Renters


Chicago wants renters to be able to keep living in buildings that have fallen into default or be paid thousands for their pains. A new law designed to protect renters from suddenly losing their homes because of foreclosure just took effect this week in Chicago, with the hope that it will also stem a tide of vacant and derelict dwellings that have afflicted that city and many others in the wake of the housing crisis. The ordinance, called "Keep Chicago Renting," requires that a renter of a foreclosed property be paid $10,600 to relocate or be granted a rent-controlled lease until that property is sold.

In 2010, AOL Real Estate reported that the occupants of more than 8,500 rental units in Chicago were pushed out by foreclosures in 2009. Along with losing their homes, it was estimated then that it cost Chicago's renters $7.3 million in lost security deposits. The situation then got even worse, with "banks systematically empty foreclosed buildings, leaving them vacant for months or years," according to the Lawyers' Committee for Better Housing (which Bloomberg Law described as a primary force behind the Chicago ordinance). Chicago radio station WBEZ cited committee figures for 2012 that said there were 4,346 foreclosures on Chicago apartment buildings that affected 11,932 rental units.

In a story that year about the impact of vacant properties on neighboring homes and whole neighborhoods, the executive director of Neighborhood Housing Services of Chicago described to AOL Real Estate how they were pushing other homes toward foreclosure and worse. "They become magnets of crime," Ed Jacob said of the vacant properties. "They'll get stripped of all their copper. People use them to stash their drugs. It's a huge psychological effect on homeowners who are hanging on." The Lawyers Committee said criminal activity in such buildings rose 48 percent in seven years.

Banks, landlords and real estate agents opposing the "Keep Chicago Renting" ordinance warned that it would only aggravate the problems it's designed to relieve. "It's going to be a disincentive for investment in multi-units from a wide range of financing sources," Brian Bernardoni, senior director of government affairs and public policy of the Illinois Association of Realtors was quoted by WBEZ as saying. "Any time you have a lack of investment, there's going to be a lack of rehab, a lack of sustainable affordable housing and preservation of affordable housing units."

See more details and reaction to the "Keep Chicago Renting" ordinance in the video above.

More about vacant homes:
Abandoned New Orleans House Falls on Neighbor's Home
U.S. Cities With the Most Vacant Homes
Abandoned Home a 'Den of Violence,' Neighbors Say

More on AOL Real Estate:
Find homes for rent in your area.
Find out how to calculate mortgage payments.
Find foreclosures in your area.
See more celebrity real estate.

Follow us on Twitter at @AOLRealEstate or connect with AOL Real Estate on Facebook.

Add a Comment

*0 / 3000 Character Maximum