Springfield, IL – Homeowners in Illinois who are facing foreclosure will have a means to alleviate their debt under a new short sale requirement measure that was signed into law today. 

When a house has been assessed at less than the value of the debt, an individual can sell the house for less than the amount of debt in a short sale as long as the bank agrees.  Senate Bill 1259, sponsored by State Senator Ira I. Silverstein (D – Chicago), will require lenders to respond to a short sale request within 90 days. UPDATE, 1.26.12 via Chicago Tribune: 16% of homes sold in Illinois in 3Q were in foreclosure

"Economic analysis is showing that the housing market is not expected to fully recover until at least 2023 so we must give families responsible options to get out of foreclosure," Silverstein said.  "While short sales are not the ideal option for lenders, we have to provide opportunities for homeowners who are struggling that will help save them from further financial ruin.  I want to thank Governor Quinn for recognizing the importance of this measure and I am happy that families in Illinois will be able to benefit from it." 

Opponents to the bill believe it forces lenders to accept short sale offers, some of which may be far below market value of the property.  The measure does not require the mortgagee to agree to short sale but the mortgagee must provide reasonable justification. The measure also gives courts the authority to hold banks accountable to the 90 day response provision.  Previously, the court had no jurisdiction over unresponsive lenders.

"What we have seen happening over the past few years is that a lender will receive a short sale offer on a house and then not respond to the offer in an effort to get more money through foreclosure proceedings," Silverstein added. "These hold-ups leave homeowners unsure about their fate which is unnecessary when an obvious solution has been presented but ignored by the lender.  This also leads to our judicial system being clogged by foreclosure proceedings and is not a productive use of our taxpayer money."

Senate Bill 1259 is effective immediately.