Thursday, December 15, 2016

Alleged Racial Disparities in the Continuing Foreclosure Crisis

According to a recent article in The New York Times, fair housing advocates allege that there are racial disparities in the way that Fannie Mae cares for houses in foreclosure. While the nation largely has bounced back from the foreclosure crisis, thousands of properties remain in various stages of foreclosure across the country and many of them are in states of disrepair that are likely to prevent them from being sold. What is the specific allegation against Fannie Mae? As the article articulates, a number of organizations, “led by the National Fair Housing Alliance, say that Fannie Mae has systematically failed to care for houses in foreclosure in minority neighborhoods while ensuring those in working- and middle-class white communities were tended and ready for sale.”
These allegations appeared in a recent lawsuit, which refers primarily to actions (or inactions, in this case) taken by Fannie Mae “well after the predatory lending that forced many families out of their homes.” What else should you know about these allegations and how they may impact foreclosures in Illinois and throughout the country?
Disparities Alleged in Vacant Homes
As the article explains, a group of fair-housing advocates have begun visiting foreclosed properties across the country, from Oakland, California to Dayton, Ohio. What have they found? Thus far, of the more than 2,300 properties those advocates saw between the years of 2011 and 2015, the houses in largely minority neighborhoods are in varying states of deterioration. When certain houses goes into foreclose, Fannie Mae is responsible for properly maintaining them. What criteria did the fair-housing advocates use in assessing the homes they visited? They relied upon Fannie Mae’s own maintenance checklist, which includes items such as:
  • Broken gutters;
  • Missing mailboxes; and
  • Unmowed lawns.
Other items noted when visited foreclosures in minority neighborhoods included some of the following:
  • Peeling paint;
  • Rotting wood;
  • Missing or broken shutters;
  • Broken stairs;
  • Broken windows;
  • Damaged front/back doors;
  • Damaged siding;
  • Exterior holes; and
  • Damaged fencing.
What conclusion have fair-housing advocates drawn? By placing data on a graph, the National Fair Housing Alliance Census demonstrated that, of the properties most likely to have a high number of deficiencies, 75% were nonwhite. For instance, the data showed that “foreclosed homes in predominantly minority neighborhoods are six times more likely to have holes in the wall,” while foreclosed properties in those same neighborhoods are “two times more likely to have broken mailboxes” and “five times more likely to have broken windows.”
How the Housing Advocates Obtained Their Data
As we mentioned, the fair-housing advocates who have made allegations against Fannie Mae visited more than 2,300 foreclosed properties between 2011 and 2015. But how did they decide where to go? As the article explains, investigators visited 38 different metropolitan areas across the country. They conducted research into specific zip codes “in both minority and predominantly white work- and middle-class communities with a high number of foreclosures.” Investigators visited a wide range of properties within those groups, and then “assessed basic maintenance items,” including many of the items mentioned above.
In total, more than 30% of foreclosed properties in predominantly minority neighborhoods had 10 or more maintenance issues, compared with only 7% of properties in primarily white neighborhoods.
Foreclosure remains a serious issue in our country, as well as a problem for many individual homeowners in Illinois. If you have questions about avoiding foreclosure, an experienced Oak Park foreclosure defense lawyer can help. Contact the Emerson Law Firm today.
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Condominiums and Foreclosure in Chicago

Friday, November 25, 2016

Avoiding Credit Card Debt in Chicago this Holiday Season

Dealing with substantial credit card debt can be frustrating, and it may feel as though you will never be able to get ahead. During the holiday season, many Chicago residents, along with consumers across the country, will spend hundreds and sometimes thousands of dollars on gifts, decorations, and holiday travel. For many families, the additional expenses that accrue during the holidays are beyond their monthly budget. What happens when families do not have the necessary cash to pay for holiday costs? By and large, many of them turn to credit cards. For those Americans who are already struggling with credit card debt, the holidays can be a particularly difficult time.
In some cases, consumers who have unmanageable credit card debts may be eligible for personal bankruptcy. However, consumers cannot simply plan to file for Chapter 7 bankruptcy and, before doing so, rack up additional credit card debt during the holidays. Regardless of your plans for bankruptcy, it is important to consider ways of avoiding additional credit card debt this holiday season.
Costs are High for Holiday Spending, from Gifts to Seasonal Travel
How much do Chicago residents spend, on average, over the holidays? Each year, the American Research Group, Inc. conducts surveys to determine how much the average household plans to spend during the holiday season. According to its fact sheet, last year the average spending per adult totaled $882. That total represents a 2% increase from the previous year, in which the average spending per adult was listed as $861. For some, this might not sound like a lot of money to spend during the entire holiday season. However, this number is the average of spending on Christmas gifts alone. In other words, it does not include purchases for holiday meals, decorations, and other expenses associated with the season.
If the average adult is spending nearly $900 alone on gifts—a number that likely goes well above $1,000 when adding in other costs—how is the average adult paying for these items? According to a recent article in Forbes Magazine, many Americans are swayed by the in-store discounts associated with store credit cards. However, as the article clarifies, these credit cards often serve only to put consumers deeper into debt.
Spending on Credit in Illinois During the Holidays
Last year alone, we mentioned that the average American adult spend $861 on gifts. According to the Forbes article, holiday spending in general “sent the average American $986 deeper into debt.” Many of those debtors decided to use store credit cards in order to receive particular discounts and other perks. In the long run, however, store credit cards may only encourage more spending—of money that consumers do not have—making the small discounts and perks negligible.
Most importantly, consumers need to recognize the different between waived interest and deferred interest. Most store credit cards that offer 0% financing offers during the holidays have deferred interest, which means that all of the interest will come due if you do not pay off the balance within a certain period. Moreover, the APR on a store credit card is typically very high. For instance, a Lowes card “charges a flat APR of 26.99%.” In brief, unless you can afford to pay of the balance in a relatively short period of time, relying on store credit cards to make holiday purchases can set you back further in the long run.
If you have questions about managing consumer debt or filing for personal bankruptcy, an Oak Park bankruptcy lawyer can assist you. Contact the Emerson Law Firm today.
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Friday, November 18, 2016

Recent Foreclosure Rates Show Sharp Increase

For quite some time now, the monthly rates of foreclosure in the Chicago area have shown a general decline. However, according to a recent article in HousingWire, October 2016 saw a substantial jump in the number of foreclosures reported that month. The number rose by 30%, meaning that October of this year showed the “largest monthly increase since August 2007.” If you think more carefully about what that means, the number suggests that foreclosure numbers are looking more akin to those around the time of the housing market crash.
How did foreclosures rise so dramatically in just a single month? And is there actually reason for concern, or are there other explanations for the sharp increase in foreclosure rates?
Are We at the Beginning of a New Foreclosure Crisis in America?
Many consumers might be asking an obvious question about the recently released data: Are we at the beginning of a new foreclosure crisis in America? Generally speaking, experts suggest that it is not yet time to worry. The data cited in the article, which comes from an ATTOM Data Solutions Foreclosure Market Report, indicates that more than 105,000 foreclosure filings, default notices, bank repossessions, and/or bank auctions occurred this October. Yet this number, when we look at what it does to annual percentages, still puts the country at a rate of foreclosure that is around 8% lower than it was at this same time in 2015.
As Daren Blomquist, the senior vice president for ATTOM Data Solutions, explained, “[t]he increase in October isn’t enough evidence to indicate a new foreclosure crisis emerging in these states, but it certainly demonstrates that this housing recovery is not completely devoid of risk.” The states with particularly high rates of foreclosure last month did not include Illinois. To be sure, those listed in the article include Arizona, Colorado, and Georgia.
However, Illinois does come up when we begin talking about the highest foreclosure rates in general (and not only in October). Then, Illinois ranks fourth in the nation, with one foreclosure for every 704 units. It comes in behind only Delaware (with one out of every 355 units in foreclosure), New Jersey (one out of every 564 units in foreclosure), and Maryland (with one out of every 679 units in foreclosure). After Illinois, South Carolina ranks fifth, and experts suggest that Florida likely will make this undesirable list in the near future.
Post-2009 Loans Leading to Foreclosure
Are the new foreclosures connected to older home loans, or are they indicators that more Americans are having trouble affording their mortgages shortly after they obtain them? By and large, the article suggests, recent foreclosure activity is “more heavily tied to loans originated since 2009—after most of the risky lending fueling the last housing boom had stopped.”
What kinds of loans are going into foreclosure? Most commonly, borrowers who have obtained FHA and VA loans that have low down payments seem to be more likely to be at risk of foreclosure than other homebuyers. To be sure, “FHA and VA loans combined represent 49% of all active foreclosure inventory for loans originated in the seven years ending in 2015.”
If you have questions about protecting your home from foreclosure, an experienced Oak Park foreclosure defense lawyer can answer your questions today. Contact the Emerson Law Firm today to discuss your case.
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Friday, October 14, 2016

Condominiums and Foreclosure in Chicago

According to a recent article in Crain’s Chicago Business, it has now been ten years since the housing bust, but many condominiums have not bounced back from the high rates of foreclosure during the recession. Indeed, as the article highlights, “when the housing market crashed in 2006, Chicago was awash in unsold condominiums—and the wave tripled in size as the crisis deepened.” Even now, condos still are worth, on average, 7% less than they were just prior to the housing crash. What does this mean for condo owners in the Chicago area? A lot of these properties went into foreclosure, and they simply are not worth what they were a decade ago. As such, for any condominium owners who are underwater and are hoping to sell for a profit, it might not be possible.
The “Logjam” of New Condominiums in Chicagoland
In 2006, condominium construction was booming in Chicagoland—from buildings downtown in River North to suburbs in Naperville. Yet, as the article explains, this sudden growth in condo development ultimately led to “what would turn out to be an epochal logjam of new condos.” When 2006 came to an end, about 2,500 condominiums had gone unsold, and that number rose to more than 7,500 by the end of 2007. And for those who did purchase condos in 2006, many of them ended up underwater.
Why were many condo buyers underwater by 2008 and later? In short, at the peak of home sales and condominium construction, prices for condos were high—it was a seller’s market. For instance, if a buyer paid $400,000 for a condo in 2006, statistics show that the condo likely would have been valued at just over $270,000 by the start of 2012. If the condo owner was having difficulty making mortgage payments and decided to sell the condo, she probably would have ended up still owing more than $100,000 (to make up for the change in value), and that is assuming that she was able to sell the unit at all.
Chicago Continues to Have High Number of Bank-Owned Homes
In some ways, the market for condominiums has recovered more firmly than has the single-family home market. The change in average home prices dropped more substantially for condos than single-family homes (approaching a decline in value of nearly 35%, as opposed to an approximately 30% decline for single-family homes). However, the average difference between condo prices now as in September 2006—the peak of the market—is only minus about 7.5%. Compared with single-family homes, which remain at a deficit of about 13.6% since 2006, condos are selling, on average, for prices that are closer to those in 2006.
While condo prices may look like they are becoming steadier, presenting the possibility that Chicago can get out from under the “logjam” of empty condos, Chicago remains at the top of the list for unsold, bank-owned homes. According to a recent article in the Chicago Tribune, Chicago is second only to Detroit in having the highest number of bank-owned homes that remain empty. Although the number of foreclosures has declined significantly in the city and surrounding neighborhoods, “more buildings are sitting vacant as banks prepare to sell them,” the article explains.
If you have questions about avoiding foreclosure, an experienced foreclosure defense attorney in Oak Park can help. Contact the Emerson Law Firm today for more information.
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Friday, September 9, 2016

More Renters Due to Foreclosure Crisis

We are nearing a decade since the housing crash occurred, homeowners began dealing with foreclosure in large numbers, and the recession began. Experts tell us that, as a nation, we are firmly within a period of economic recovery. Yet have Chicago residents truly gotten back to a way of living that many enjoyed prior to the housing crash? According to a recent article in the Chicago Tribune, there are far more renters in the U.S. than there are homeowners, suggesting that the recession may have had a more significant impact than some of us might have been led to believe.
Lingering Effects of the Foreclosure Epidemic
The recession, and the stark economic difficulties it brought, may not have faded as soundly as some have suggested. In particular, the after-effects of the foreclosure epidemic remain quite visible in the ratio of homeowners to renters across the country. Many of the current renters in the country dealt with their homes going into foreclosure. While they may have bounced back economically and gotten their personal finances under control, the history of foreclosure and economic setbacks may be what has left so many Americans as renters.
Before the housing crash, Americans tended to have a higher rate of homeownership than citizens of most other nations. However, as the article explains, a recent study conducted by the Harvard Joint Center for Housing Studies explored “rental trends in the U.S., Canada, and Europe and reported that Americans are now average rather than remarkable.” To be sure, approximately one-third of all U.S. residents rent their apartments or houses, a number that places our country “right in the middle of households that rent throughout the nations studied.”
In addition to determining the sheer number of renters in the U.S. compared to those in other similar countries, the study also established that Americans actually are worse off in certain regards than other renters in Canada and Europe. As the article clarifies, “Americans are in worse shape than people in any other country when it comes to being able to afford the apartments and houses they rent.” In other words, it looks as though more Americans are putting themselves in danger of being unable to afford the payments that keep them in their rental homes.
“Unprecedented Surge” in Home Rentals Across the U.S.
The Harvard study got underway following news that there has been an “unprecedented surge in rental demand in the U.S.” over the last ten years. After the housing crash, the Chicago Tribune reports that eight million American homeowners lost their houses to foreclosure. As such, we should not be too surprised that the demand for rental units rose from about nine million to a whopping 43 million households. The article intimates that many of those new renters were forced into renting as a result of credit score declines due to foreclosure.
Homeownership in the U.S. is currently at its lowest rate since 1965. Currently, only about 62% of Americans are homeowners.
Contact a Foreclosure Defense Lawyer in Oak Park
While we discuss the declining number of homeowners, there are still residents of the Chicago area who are struggling to keep their homes. If you have questions about avoiding foreclosure, an experienced Oak Park foreclosure defense attorney can help. Contact the Emerson Law Firm today for more information.
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Saturday, August 13, 2016

Protecting Widows and Widowers from Foreclosure

What happens is your spouse passes away unexpectedly and your name is not on your home loan? Generally speaking, if you are not having financial difficulties, you may be able to simply continue making monthly mortgage payments without any hassle. However, how will a mortgage servicer look at a widow or widower who is not on the original note but needs help with a mortgage modification? These situations can get complicated, and they can easily result in the surviving spouse having to contend with the possibility of foreclosure. According to a recent article in the Los Angeles Times, the Consumer Financial Protection Bureau (CFPB) has issued new rules that aim to prevent widowed homeowners from going into foreclosure.
Complications and Difficulties for Widowed Homeowners
Widowed homeowners tend to have a lot of trouble obtaining mortgage modifications. What is the issue? Often, survivors, including those who previously owned their homes through marriage or inherited them through the death of a spouse, run into difficulty with servicers. Even though they have a legitimate claim to the house following the death of a spouse, their names might not be listed on the original mortgage note. As such, when they have get behind on mortgage payments—often due to the death of the spouse—they cannot deal with the mortgage servicer in the same manner that the spouse who is the person listed on the loan.
As the article explains, “often companies won’t allow a modification until the surviving spouse assumes the loan, which can’t happen until the owner is current on the mortgage—something of a Catch-22.” Additionally, surviving spouses have complained that mortgage servicers do not provide accurate or up-to-date information about the documentation they need to provide in order to be listed on the mortgage in order to be eligible for a modification.
Given these facts, it can be extremely difficult for a surviving spouse to avoid foreclosure when they cannot afford mortgage payments. What is the CFPB doing to help?
New CFPB Rules to Protect Surviving Spouses from Foreclosure
Recognizing that many surviving spouses are at risk of foreclosure in the weeks and months following the death of the other spouse, the CFPB has announced new rules to protect those widowed spouses. Earlier this month, the CFPB said that its regulations will “generally give surviving spouses who are not on a mortgage note the same protections borrowers have.” The regulations will also protect against dual-tracking, which is a process “in which mortgage servicers negotiate with clients to modify a mortgage while simultaneously pursuing foreclosure.”
When will surviving spouses begin receiving these protections? The article highlights that the new rules are scheduled to take effect about a year and a half from now. But just because surviving spouses will have these protections does not mean that they will be able to obtain a mortgage modification regardless of other factors. To be sure, widowed spouses still will need to provide evidence in support of a modification, and the servicer will not be required to provide it.
Contact an Oak Park Foreclosure Defense Lawyer
If you have questions about avoiding foreclosure, an Oak Park foreclosure defense lawyer can help. Contact the Emerson Law Firm today to learn more about how we can help with your situation.
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