The suspension of House Bill 4050 comes as great news for investors, mortgage brokers, and the residents of the Chicago neighborhoods affected by the legislation. House Bill 4050, the Predatory Lending Pilot program, was a
reactionary bill passed to address the high foreclosure rates in 10 Chicago zip codes, and the concern over predatory lending, (see our previous article for more details about HB4050.)
Unfortunately, like most bad legislation, HB4050 had some unintended negative consequences which adversely affected the people it was attempting to help. In a recent study by the University of Illinois at Champaign-Urbana, home sales declined by 50% from the fall of 2006 in the affected zip codes, while similar unaffected zip codes saw a drop of only 20%....whoops!!
The goal of eliminating predatory lending and fraud is a noble one, however eliminating the consumers choice is not the answer. The suspension of HB 4050, the Predatory Lending Pilot Program, is a good first step in reversing ill
conceived legislation, repealing SB2340 would be a great second step.