Federal Funding for Foreclosure Prevention in Illinois

Despite the fact that urban areas through the country continue—albeit slowly in some states—to get through their foreclosure inventories and to begin repairing neighborhoods blighted by empty and abandoned properties, foreclosure prevention remains a major issue in the Chicago area. Indeed, according to a recent article in Crain’s Chicago Business, the U.S. Treasury Department has decided to send $118 million to our state “through a program set up after the financial crisis to help struggling homeowners and [to] address neighborhood blight.”

What do you need to know about foreclosure prevention in Oak Park and other Chicago areas?

“Hardest Hit” Funds to Help States Still Struggling from the Housing Crisis

According to the article, that $118 million that will be going toward foreclosure prevention and housing recovery in Illinois is part of a larger $2 billion package being divided among 18 different states and the District of Columbia. The U.S. Treasury Department has described the money as “Hardest Hit” funds, which will aim to do exactly as the title suggests—provide more opportunities for rebuilding in areas of the country that were hit the hardest by the housing crisis.

Cook County Commissioner Bridget Gainer lobbied specifically for this funding, and she emphasized how it will create “a huge opportunity for Illinois to help neighborhoods devastated by the housing crisis.” Gainer is chairperson of Cook County’s Land Bank Authority. When she started lobbying for this money to come to the Chicago area, she highlighted the many ways in which it could help both neighborhoods in Chicago proper as well as the numerous suburbs. Here are some of the things she hopes to be able to do with the funds:

• Demolish currently vacant and dilapidated homes;
• Encourage developers to come in and build new properties; and
• Develop additional foreclosure prevention initiatives.

Role of the Cook County Land Bank

It makes senses that the chairperson of the Cook County Land Bank Authority was among the people to urge the Treasury Department to support Illinois in the current round of “Hardest Hit” funding. After all, the Cook County Land Bank, established in 2013, is tasked with “buying salvageable vacant buildings, clearing their titles, and transferring them to developers that can put them back to use.” While some foreclosures might be eligible, many of the buildings in the particularly hard-hit areas of Chicagoland “need to be razed,” according to Gainer. The “Hardest Hit” funding can help with that.

The “Hardest Hit” program grows out of money set aside for the federal Troubled Asset Relief Program. In previous rounds of funding, Illinois received a total of $446 million, which went largely toward foreclosure prevention. The $118 million in the most recent funding round will focus the most on blight reduction. Last year alone, the Illinois House Development Authority (IHDA) approved a total of $5.4 million for razing vacant homes that are beyond repair.

If you have questions about avoiding foreclosure, do not hesitate to reach out to an experienced Oak Park foreclosure defense attorney. A dedicated advocate at our firm can answer your questions today. Contact the Emerson Law Firm to learn more.

See Related Blog Posts:

Update on Distressed Homes in Chicago

Foreclosure Buyers and Common Expense Assessments

Update on Distressed Homes in Chicago

How are Chicago neighborhoods faring when it comes to housing recovery and distressed homes? It has been a number of years since the housing bubble burst, but distressed homes still line a number of streets. However, according to a recent article in Crain’s Chicago Business, the fact that distressed homes remain on the market is not necessarily a bad thing. The article suggests that these properties are an “improbable bright spot” in “Chicago’s lackluster residential real estate market.”

Finding Value in Distressed Properties

For individuals selling their homes, there is not a lot of opportunity in the Chicago market to make a profit right now. However, as the article notes, “banks and other firms selling foreclosed houses were far luckier.” The median sale price for distressed homes, including foreclosures and short sales, actually rose by 6.3% in 2015. To put that number in perspective, the median sale price increase for conventional home sales was only 0.4% last year. In other words, the price increase on distressed homes was 16 times better than the price increase on standard properties.

This gap between distressed and conventional property sales is not limited to lower socioeconomic brackets. The disparity in sale prices “shows up even in many more-affluent parts of Chicago and its suburbs where the real estate recovery came earlier and stronger than it has for the metropolitan market as a whole,” according to the article. On the Near North Side of Chicago, for instance, lender-mediated sales rose by about 6% by the end of 2015, compared with a 2.8% price increase for conventional properties. In Buffalo Grove, for example, lender-mediated sales climbed nearly 19%.

Need for an Improving Economy in Chicago

While it might seem as though high selling prices on distressed homes is a good thing, it may point to a sluggish Chicago economy. Chicago has seen relatively stagnant job growth and limited investment returns. The decline in conventional home sales may be evidence of the sluggish economy.

In terms of decreasing conventional home prices in Chicagoland, sales showed no growth at all in Evanston last year, and home prices dropped in Oak Park by 4.1%. In other words, the conventional real estate market does not look especially good outside out distressed home sales. But at the same time, the fact that more distressed homes are getting bought is a good thing, no matter what lens you view it through, according to the article.

According to Jonathan Smoke, the chief economist at Realtor.com, this trend is a common one toward the end of real estate recovery periods. While he remarks that Chicago remains behind in its recovery compared to many other urban areas in the U.S., the price gap that we are seeing between distressed and conventional properties simply makes clear that Illinois is “working through [its] foreclosure overhang.”

If you have questions about distressed properties or avoiding foreclosure, an experienced Oak Park foreclosure defense attorney can help. Contact the Emerson Law Firm today to learn more about how we can assist you.

See Related Blog Posts:

Foreclosure Buyers and Common Expense Assessments

Chicago Ranked Among Cities with Most Distressed Home Sales

Foreclosure Buyers and Common Expense Assessments

If you buy a foreclosure, can you be liable for costs incurred by the previous owner? According to a recent article in the Chicago Tribune, the Illinois Supreme Court ruled that “under certain circumstances a buyer of a foreclosed condominium unit may be responsible for unpaid common expenses not paid by the previous unit owner.” In other words, while Chicago neighborhoods continue along a path of recovery, the Illinois Supreme Court ruling could potentially limit recovery from the foreclosure crisis.

Condominium Act and Foreclosures

As the article notes, Section 9(g)(3) of the Condominium Act (765 ILCS 605/) states that someone who buys a foreclosed condo unit is “responsible for paying assessments beginning the first day of the month following the foreclosure sale.” Generally speaking, a condo association can collect fees for common expenses from a buyer on a foreclosed unit when the original owner has not made those payments. However, the ability for the condo association typically is limited to six months.

Yet that is not the conclusion that the Illinois Supreme Court recently came to when it decided the case of Lake Shore Association v. Deutsche Bank National Trust Co. back in December. To better understand how the court came to its decision and the impact the decision could have on foreclosure issues in Chicago, we should take a closer look at the facts of the case.

In this case, the defendant purchased a foreclosed condominium unit. Two years after the purchase, the defendant received a demand for payment from the plaintiff, the condo association. That demand for payment was for common expenses that had not been paid by the previous owner. The plaintiff filed a complaint seeking, among other things, more than $62,000 in unpaid assessments (in other words, the unpaid common expenses).

The defendant argued that, under Section 9(g)(3) of the Condominium Act, it “could not be held liable . . . for unpaid assessments that accrued before it purchased the unit at the judicial foreclosure sale.” Those assessments totaled more than $43,000 of the amount sought by the plaintiff.

Illinois Supreme Court Rules Against Foreclosure Buyers

After lower court rulings, the Illinois Supreme Court determined that the plain language of the Condominium Act “creates a lien in favor of a condominium association upon the failure or refusal of a unit owner to pay common expense assessments.” The Illinois Supreme Court made clear that if a buyer does not start paying assessments on the property at the beginning of the first month after the foreclosure sale (as required by the Condominium Act), that buyer can be “liable for all of the previous unit owners’ unpaid common expenses,” according to the Chicago Tribune article. To be sure, a buyer cannot rely on the Condominium Act to “extinguish the association’s lien on the foreclosed unit.”

The lesson, the article suggests, is that buyers and condominium associations need to have experienced attorneys to help contend with these complicated assessment issues.

If you have questions about buying a foreclosure or if you are having trouble making regular mortgage payments, an experienced Oak Park foreclosure defense attorney may be able to help. Contact the Emerson Law Firm today.

See Related Blog Posts:

Chicago Ranked Among Cities with Most Distressed Home Sales

Foreclosure Inventory Remains Above Normal Levels

Chicago Ranked Among Cities with Most Distressed Home Sales

Why is Chicago still identifiable as one of the cities in America with the largest share of distressed home sales, including foreclosures and short sales? That is a question recently posed in an article in Crain’s Chicago Business, which reported that “Chicago’s housing market is struggling to slim down its stock of distressed homes.” A business data report from CoreLogic made clear that more than 20% of houses sold in September 2015 were identified as foreclosures or short sales.

What do you need to know about foreclosures in Chicago? Do the recent statistics suggest that our city has not fully recovered from the financial crisis?

Rate of Distressed Home Sales in Chicago is Double the National Average

Based on the data gathered by CoreLogic, Chicago has the “fifth-highest percentage [of foreclosures and short sales] among major U.S. cities and more than double the national rate of 9.7%.” The rate of distressed home sales in Chicago is not too far off from the highest number in the country. The percentages look like this, in order of highest-rate of distressed property sales:

·      Orlando, Florida (22.7%);

·      Tampa, Florida (21.5%);

·      Baltimore, Maryland (21.2%);

·      Miami, Florida (21.2%);

·      Chicago, Illinois (20.8%);

·      Newark, New Jersey (15.7%);

·      Las Vegas, Nevada (15.5%);

·      St. Louis, Missouri (14.4%); and

·      Atlanta, Georgia (12.6%).

As you can see, there is a relatively large drop-off after Chicago’s statistics, and the rates among the top five cities are comparatively close in number. Statistics suggest that the rate of distressed home sales in Chicago is not declining with a quick enough pace. At this same time last year, the rate of distressed property sales was at 21.4%—a number that is less than one point higher than this year’s total.

Many Chicago-Area Homes Remain Underwater

According to a real estate agent in the Chicago area, the “region’s volume of distressed homes is coming down, but it’s not happening fast enough.” She predicts that we will continue to see high numbers of distressed home sales for at least two more years, and possibly more. Why have we not witnessed a quicker decline in the number of foreclosure sales and short sales in our city?

Generally speaking, the “local residential market has bounced back from the crash,” the article emphasizes. At the same time, however, home price growth has not been moving in a steadily upward direction. As a result, a number of houses in Chicago remain underwater, meaning that they are worth less than what the owner currently owes on the mortgage. When homeowners cannot make enough money by selling their homes to pay off their mortgages, they are more likely either to default (resulting in a foreclosure) or to agree to a short sale.

Another potential reason for the high number of distressed home sales in Chicago is the fact that Illinois is a “judicial state” when it comes to foreclosures. In other words, all foreclosures go through our courts, and this can take a long time. At the same time, many Chicagoans are not making the kind of money they were before the crash and thus are not able to afford monthly mortgage payments.

If you have questions about foreclosure in the area or if you need help avoiding foreclosure, you should discuss your options with an experienced Oak Park foreclosure defense attorney as soon as possible. Contact the Emerson Law Firm today to learn more about our services.

See Related Blog Posts:

Foreclosure Inventory Remains Above Normal Level

New Mortgage Disclosure Rule

Foreclosure Inventory Remains Above Normal Levels

Have we really recovered from the economic downturn if there are still a higher-than-average number of foreclosures lurking in Chicago neighborhoods? According to a recent article from DSNews.com, the foreclosure inventory across the country remains at “more than double” the normal level of foreclosures we would expect to see.

Foreclosures on the Decline, But Numbers Remain High

Over the last several years, the number of foreclosures across the country has declined substantially. Yet according to the article, the rate of foreclosure inventory (or the “percentage of residential properties that were in some state of foreclosure”) is more than two times what it was before the recession. As of the end of September, nearly 740,000 properties were listed as being in pre-foreclosure inventory. While that number represents a decline by more than 200,000 properties at this same time last year, the total nonetheless is higher than most commentators would like to see. In total, homes in some state of foreclosure account for almost 1.5% of “all residential mortgages nationwide.”

While the rate of foreclosure has declined in significant ways of the last three or four years, consumer advocates would like to see a lower number of properties classified as part of the pre-sale foreclosure inventory. The reported numbers do not mean that we are not handling the foreclosure crisis and its aftermath in a useful manner. Many states, including Illinois, have been lowering the total properties in foreclosure throughout the year. But we may still have a long way to go before we see the foreclosure inventory numbers that were typical before the housing market crash.

Who is Buying Houses After the Foreclosure Crisis?

Throughout Illinois and across the U.S., courts carry on with foreclosures. As homeowners continue to face the repercussions of being unable to make mortgage payments (including hits to their credit reports), a recent report from Black Knight Financial Services reported that high-credit borrowers seem to be the ones making a serious impact on the housing market. Based on the buying patterns of high-credit borrowers, “it would appear that the market is experiencing a vibrant recovery.” Yet the conclusion is not so simple.

In the last three years, “only 20% of purchase loans . . . involved borrowers with credit scores of less than 700,” which is “the lowest level for that segment in over 10 years.” The disproportionate buying of homes does not stop there. The current average credit score for new homebuyers is 755, which is a “record high.” To put that another way, high-credit borrowers who are buying houses help to give the appearance that we are nearly back on track when it comes to the real estate market. The number of homes still in a state of foreclosure, however, tells a different story.

In addition to drawing a connection between market recovery and high-credit borrowers, Black Knight also noted that “third quarter foreclosure starts were up 1.70 percent from the second quarter due to a rise in repeat foreclosure.” In other words, Chicagoans should not assume that foreclosure risks have been eradicated.

Do you have questions or concerns about foreclosures in the Chicago area? Do not hesitate to reach out to an experienced Oak Park foreclosure defense attorney with your questions. Contact the Emerson Law Firm today to learn more about how we can assist you with your case.

See Related Blog Posts:

New Mortgage Disclosure Rule

Homeowners Win Mortgage Foreclosure Appeal

New Mortgage Disclosure Rule

In the age of the real estate crash and the foreclosure crisis, many Chicagoans found themselves with subprime mortgages and the inability to make any headway on their home loans. Now, while the risk of foreclosure in Illinois remains a reality for many homeowners, many more find themselves in a better financial situation. One of the reasons that more homeowners are under control of their financial futures, according to a recent news release from the Consumer Financial Protection Bureau (CFPB), is the institution of laws aimed at protecting consumers.

Consumer advocates have emphasized that soon-to-be home buyers simply need more information about the terms of their loans, and how those terms are likely to impact their financial futures. A new rule that aims toward the goal is now in effect.

Know Before You Owe and Mortgage Disclosure Requirements

The “Know Before You Owe” mortgage disclosure rule represents one of those legal changes. As the CFPB explains, the “disclosures required for getting most mortgages have been redesigned to help you shop around to compare offers and find the loan that is best for you.” In addition to underlining the need for consumers to shop around to find the best mortgage for their needs, the new rule also requires the following:

• Lenders to give homeowners more time to review the terms of a mortgage prior to acceptance;
• Lenders allowing homeowners to ask direct questions or to seek advice about the terms of a loan from an experienced consumer protection lawyer.

The Know Before You Owe rule is not entirely new. The Dodd-Frank Act mandated mortgage disclosure changes for new homeowners. At the same time, the new rule does even more for consumers. In addition to disclosures, as we mentioned, it also gives soon-to-be homeowners additional time to understand the terms of the loan and to ask questions they need to know to feel comfortable with the mortgage. For most Americans who apply for a mortgage on or after October 3rd, the new disclosures will be mandatory.

Helping Consumers to Avoid Costly Mistakes

The Know Before You Owe initiative from the CFPB is designed ultimately to prevent consumers from seeing “costly surprises” once they agree to the terms of a mortgage. When it comes to getting a fair mortgage and affordable terms based on your income and lifestyle, education is the key. In addition to “making the mortgage process easier” for consumers, the CFPB’s initiative also comes with tools to help you make the right decisions—and ultimately to avoid foreclosure—including but not limited to:

• Sample loan estimate for consumers considering a mortgage;
• Closing disclosure for soon-to-be homeowners so they do not have any financial surprises when it comes time to close on a house;
• Tools to help you learn more about the process of getting a mortgage, including information about local rates, loan options, and the steps in a closing; and
• Budgeting information, including worksheets and checklists to help you get through the process of buying a home affordably.

If you have concerns about how the new rule will affect you, or if you have questions about avoiding foreclosure, it is important to seek advice from an experienced Oak Park foreclosure defense lawyer. Do not hesitate to contact the Emerson Law Firm. We can discuss your case with you today.

See Related Blog Posts:

Homeowners Win Mortgage Foreclosure Appeal

Illegal Mortgage Servicing Results in $1.5 Million Fine