Wednesday, August 12, 2015

Stubborn Foreclosure Rates in Illinois

The foreclosure crisis, for all intents and purposes, appears to be over. Homeowners are not as concerned as they used to be about risks of foreclosure, and according to a recent article in USA Today, far fewer homes are “entering the foreclosure process now than before the housing bubble burst.”
However, foreclosure rates in certain states remain particularly “stubborn,” according to the article. By examining data contained in a RealtyTrac report, we can see that Illinois is near the top of the list of states that still have a markedly high rate of foreclosure. What’s going on in Illinois, and how long will it take before the foreclosure crisis truly comes to an end?
Home Loans in Foreclosure Originated Years Ago
By and large, home loans that are currently “in some state of foreclosure were originated between 2004 and 2008.” Many Americans purchased expensive houses with high price tags before the real estate market crashed, and since 2008 they have found themselves with seemingly valueless homes that are underwater.
A home that sold for $500,000 in 2006—for which a Chicago family took out a mortgage of $450,000—that is currently only valued at $200,000 means the owners could not even begin to recoup their investment if they sold the property. For some Chicagoans in this position over the last decade, it did not make sense to stay in the house. Other homebuyers in this situation attempted to make monthly mortgage payments on time, but the difficulties of the recession made this impossible.
Shouldn’t we see strong evidence of improvement by now? The data from RealtyTrac suggests that we are definitely seeing fewer foreclosure starts, but we are witnessing particularly lengthy time periods for completing the average foreclosure. On the one hand, “foreclosure starts (a first notice of loan default or notice that a lawsuit has been filed regarding the ownership of a property) are at a 10-year low.” That is the good news, but on the other hand, “it’s taking forever to get those bad, crisis-era loans through the system.”
RealtyTrac identified a current average of 629 days to complete a foreclosure, which is “the longest the foreclosure process has been since RealtyTrac started tracking the metric in 2007.”
Illinois Remains Hard-Hit By Foreclosures
In RealtyTrac’s calculations, Illinois is the fifth-worst state in the country when it comes to foreclosure issues. As the article points out, some aspects of Illinois’s foreclosure statistics are getting better. For instance, current foreclosure starts are below the level they were at in 2006, before the housing bubble burst. However, our state also had “a city in the top-10 metro areas . . .with the highest foreclosure rates in the first half of the year.” In Rockford, Illinois, one in every eighty-seven homes was reported to be “in some state of foreclosure.”
Other states that made the list with Illinois include, in order from best to worst:
  • Tennessee
  • South Carolina
  • Indiana
  • Ohio
  • Delaware
  • Nevada
  • Maryland
  • New Jersey
  • Florida
To see a visual representation of the continued problem of foreclosure time from start to finish, readers only need to look at a color-coded map provided by RealtyTrac. The states in darkest green are having the hardest time dealing with continuing foreclosure issues, and Illinois remains a dark green spot in the middle of the country. Currently, RealtyTrac estimates that there are more than 51,200 foreclosures in Illinois. When we compare that number with a figure from a state marked in light green, such as Mississippi, we can see the stark difference. In Mississippi, RealtyTrac estimates that only 523 foreclosures are currently on record.

If you have concerns about avoiding foreclosure or have questions about modifying your mortgage payments, you should contact an experienced Oak Park foreclosure defense attorney as soon as possible. An advocate at the Emerson Law Firm can help.
See Related Blog Posts:
Subprime Lending, Home Values, and the Reasons for Foreclosure

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