CHICAGO
07/27/2010 04:19 pm ET Updated May 25, 2011

Illinois Lawmakers Reconsider Foreclosures Bill That Would Keep Counties From Collecting Fees

Illinois lawmakers are reconsidering a bill that would prevent local governments from collecting fees during home foreclosures.

The bill passed the House and Senate unanimously, with two senators voting "present," in May of this year. But now, one of its co-sponsors has removed his name from the bill, and some lawmakers are asking the governor to veto it.

"I'm in favor of the governor vetoing this or at least letting us go back and change it in such a way that it doesn't hurt counties," state Rep. Dan Brady told the Chicago Tribune, after removing his name from the measure last week.

"I don't think many of us realized what the unintended consequences of this might be," Brady said.

The consequences come from a provision in the bill, HB5055, that alters the mediation process for people who are dealing with the legal proceedings around foreclosure. Until now, in the collar counties surrounding Chicago, judges usually appoint the local sheriff's office to help oversee the process.

In addition to paying the cost of the sheriffs' time, banks pay an administrative fee to the county for using government employees.

This has become quite a valuable revenue stream for the counties, as the Tribune reports:

In Will County, where years of housing growth have given way to mounting foreclosures, administrative fees brought in an additional $1.5 million last year and are expected to rake in close to $2.5 million in 2010, officials said. Records show similar fees earned DuPage and Lake counties more than $1.2 million in 2009; Kane County pulled in about $1 million.

But under HB5055, banks -- not judges -- would choose the mediator. They could choose private companies instead of the sheriffs to avoid paying the extra fee.

History shows that they're likely to do just that. In Chicago's Cook County, where banks already have this power, 98 percent of cases go to private companies, sheriff's spokesman Steve Patterson told the Tribune.

Senator A.J. Wilhelmi, who sponsored the bill in the State Senate, has requested a meeting with Governor Quinn to discuss the financial risks of the bill.

And Dan Brady in the House said in an interview, "My hope is that the governor may amendatory-veto it, and allow us to make some adjustments."

The foreclosure crisis has been especially devastating in Illinois. The state faces one of the highest rates of foreclosure in the country, and earlier this year, rates were up nearly 40 percent over the same period in 2009.