How the Foreclosure Crisis Continues to Affect Single-Family Homes

Although the foreclosure crisis occurred more than a decade ago and most people have bounced back from the recession that ensued, the effects of the foreclosure crisis linger. According to a recent article in DSNews.com, a new study reports that the foreclosure crisis and real estate bubble burst of 2008 continues to “impact housing, from more unaffordable house and household instability to increased rents and evictions, depressed house prices, and deferred maintenance.” To learn more about how the foreclosure crisis continues to affect home costs in the U.S., we want to take a closer look at the article and the recent study.

More Rental Properties in Suburban Neighborhoods
As a result of the foreclosure crisis, there are fewer family-owned single-family houses in suburbs across the country, including the suburbs of Chicago. According to Suzanne Lanyi Charles, a professor of city and regional planning at Cornell University who authored the report, more families are now renting instead of buying homes. Charles explained how “single-family rental housing is an increasingly prevalent form of housing tenure in U.S. suburban neighborhoods, representing a paradigm shift in how households gain access to a suburban single-family home.”

Why are there more rental properties than family-owned homes? Many large corporations, Charles clarified, purchased foreclosed single-family homes after the 2008 crisis “in an attempt to stabilize neighborhoods.” Those properties remain corporation-owned, and those corporations continue to rent properties to families in those areas. For some families, being able to rent—as opposed to buying—a single-family home in a suburban area has been helpful.

Charles suggests, the fact that many of these houses are now rentals makes them available to families that would not have been able to buy those same homes in those neighborhoods. At the same time, however, “the reverse is also true,” Charles argues. She discusses the paradox: “Single-family rental housing in some neighborhoods may afford renters access to the opportunity that some neighborhoods can provide, while . . . in others [it] may have negative effects on households and neighborhoods.” Accordingly, Charles argues that a one-size-fits-all solution to managing corporation-owned housing will not work for all families. Charles refers specifically to Democratic presidential candidate Elizabeth Warren’s plans to limit the ability of corporations to own a large portion of single-family rental homes.

Additional Changes in Housing Since the Foreclosure Crisis
In addition to shifts in the rental market—meaning that there are far more single-family homes for rent and fewer for sale—the foreclosure crisis has also led to other changes in single-family housing. An article in The Washington Post cites the following as other ways in which the foreclosure crisis has affected single-family homes:

• Types of home loans that existed before the foreclosure crisis largely do not exist anymore—instead, potential homebuyers typically choose between a fixed-rate loan or a loan that meets “Qualified Mortgage” standards”;
• Most loans require a down payment of at least 3.5%;
• Potential homebuyers are unlikely to qualify for a home loan with a credit score of under 620; and
• Potential homebuyers with a credit score of under 760 will likely pay more in interest.

Contact an Oak Park Foreclosure Defense Lawyer

If you have questions about foreclosure or need help saving your home, an Oak Park foreclosure defense attorney can speak with you about your options. Contact the Emerson Law Firm to learn more.


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Homeowners Win Mortgage Foreclosure Appeal

The dedicated foreclosure defense attorneys at the Emerson Law Firm recently helped homeowners in the Chicago area to win an appeal concerning the foreclosure of their homes. If you are at risk of foreclosure, it is extremely important to speak with an experienced foreclosure defense lawyer who can provide you with advice for keeping your home. To better understand the significance of the recent Court of Appeals decision in foreclosure actions, we should take a look at the facts of the case and the court’s reasons for finding in favor of the homeowners.

Details of the Appeal

In U.S. Bank v. Kosterman, the homeowners executed a mortgage in 2006 and made payments on their loan for a number of years. In 2011, the bank began foreclosure proceedings by filing a complaint, contending that the homeowners had not made timely payments. The homeowners responded with two affirmative defenses: lack of standing and lack of capacity to sue.

In effect, the trial court treated both defenses as concerning a lack of standing, and it emphasized that lack of standing is not an affirmative defense. As such, the trial court dismissed the homeowners’ affirmative defenses with prejudice. The bank filed a motion for summary judgment, which the trial court granted. When a motion for summary judgment is granted, it simply means that the court will enter a decision without hearing a full trial. Given that the motion for summary judgment was granted in the bank’s favor, the bank received an order of possession and an order of foreclosure, and the homeowners appealed.

The Appellate Court of Illinois disagreed with the trial court and remanded the case. How did it comes to its decision? In short, the Court made clear that “a challenge to standing in a civil case is an affirmative defense,” and this remains true even in a foreclosure action such as this one. The Court then had to determine whether the trial court had improperly granted summary judgment to the bank. Ultimately, the Court determined that summary judgment was granted erroneously. What did the Court’s reasoning look like?

When is Summary Judgment Inappropriate in a Foreclosure Action?

After the Court of Appeals made clear that the trial court should not have dismissed the homeowners’ affirmative defenses with prejudice, it turned to the question of summary judgment. How did the Court come to its conclusion that the bank should not have been granted its motion for summary judgment?

The Court emphasized that summary judgment is “appropriate when the pleadings, depositions, admissions, and affidavits, viewed in a light most favorable to the nonmovant, fail to establish a genuine issue of materials fact, thereby entitling the moving part to judgment as a matter of law.” In other words, a motion for summary judgment should only have been granted in this case if the facts presented by the bank, when viewed in the light most favorable to the homeowners, did not establish a substantial issue with regard to the homeowners such that it would have made sense to move forward with the case.

However, under this standard, the trial court improperly granted the bank’s motion for summary judgment. The Court emphasized that the bank’s motion was supported by an affidavit from a bank official that referred to “various records” concerning the foreclosure action. Yet, as the Court pointed out, “none of the records were attached to her affidavit.” According to the Illinois Supreme Court Rules, “affidavits submitted in support of motions for summary judgment ‘shall have attached thereto sworn or certified copies of all documents upon which the affiant relies.’”

Lack of Access to Records and Other Evidence

Many communications occurred between the homeowners and the bank, but the homeowners did not receive access to all of the records relied upon in the affidavit. The Court determined that the homeowners were denied the records and the ability to depose the bank official who provided the affidavit. As such, the Court concluded that the homeowners “had no meaningful change to challenge [the bank’s] contentions” since all the information they needed to do so was in the “sole possession” of the bank.

Upon retrial, the Court emphasized that the homeowners will be able to seek evidence for their affirmative defense and to replead that defense, as well as to seek access to the evidence surrounding the bank’s affidavit.

If you have questions or concerns about foreclosure defense, it is extremely important to contact an experienced Oak Park foreclosure defense lawyer. An advocate at the Emerson Law Firm can help with your case today.

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