But for banks, the situation is different. Banks and other mortgagees or secured creditors that foreclose on a home don't pay a tax connected to the transfer of the title in question. 

But a new resolution from Ald. Roberto Maldonado will give voters a chance to end this tax break by placing a referendum on the ballot to make banks pay for transfer taxes on foreclosures.

 Maldonado championed the referendum resolution to pressure banks to negotiate more “loan modifications for homeowners,” instead of jumping to, what he called the “worst possible outcome” for homeowners and the city: foreclosure.

“Consumers who buy or sell a home in Illinois have no choice but to pay taxes to transfer the title…from seller to buyer,” Maldonado said. “But banks and other mortgagees … that foreclose on those same homes, whose loans are now in default, acquire title free and clear of any tax consequence.”

Noting that Chicago was hit with 5,000 more foreclosure filings during the first quarter, Maldonado said, “It is our job as legislators to bring fairness and equity to the law and to the people it is supposed to protect: homeowners in Chicago who have been victimized by unregulated behavior and a Wild West mentality.”

The transfer tax amounts to $3.57 for every $500 of the purchase price. An additional $1.50 per $500 goes to the CTA.