UPDATE 1-Sheriff in Chicago halts foreclosure evictions

(Adds sheriff meeting judge)

By Andrew Stern

CHICAGO, Oct 9 (Reuters) - The sheriff of the third-most populous U.S. county halted evictions on foreclosed properties on Thursday, saying innocent tenants were being put on the street. But bankers said he was breaking the law.

Cook County Sheriff Tom Dart said he understood he was flouting the law in refusing to have deputies carry out the rising number of eviction requests, but said mortgage holders must be accountable.

"These mortgage companies only see pieces of paper, not people, and don't care who's in the building," Dart said.

"This is at the heart of so many of the problems we have nationwide now, which is the banks' lack of due diligence, this very cavalier way of dealing with properties and subprime loans," he said. "Doing very little research, saying 'It's just paper, let's just move it, move it, move it,' and that's what has got us here."

Dart, whose county includes the city of Chicago and encompasses 5.4 million people, said he believed he was the first sheriff in a major metropolitan area to take such a step. Chicago is the hometown of Democratic presidential candidate Barack Obama.

The Illinois Bankers Association trade group said Dart was ignoring the law and engaging in "vigilantism."

Dart met with Judge Dorothy Kinnaird, who presides over evictions in Cook County, and presented his case, sheriff's spokesman Steve Patterson said.

"We offered a handful of proposals to put the necessary safeguards in place to protect not only ourselves but the tenants," Patterson said.

Dart wants banks that foreclose on properties to knock on doors and identify and notify tenants of the eviction notice before sheriff's deputies carry out the grim task.

Kinnaird said she would give the issue a thorough review, Patterson said.

The moratorium on evictions applied to any home, apartment building or condominium facing mortgage foreclosure. Other evictions due to such issues as failing to pay rent would continue.

Illinois law was recently revised to require the owner of the property and mortgage holder to notify whoever lives there 120 days before an eviction is carried out.

"In announcing his plan, Dart acknowledged he could be found in contempt of court," the Illinois Bankers Association said in a statement, adding the sheriff's decision "should not be tolerated."

"We have to have the ability to take over collateral upon default, and if we don't have that assurance, or we think evictions won't be made ... we simply won't make the loan," the group's president, Linda Koch, said of the moratorium.

There were more than 500 evictions for foreclosure scheduled over the next six weeks in Cook County and the sheriff's office was on pace to conduct 4,500 evictions this year.

Mortgage foreclosure cases filed in Cook County are likely to exceed 43,000 this year, compared with some 18,000 in 2006, the sheriff said. (Editing by Peter Cooney)