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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More Renters Due to Foreclosure Crisis

Protecting Widows and Widowers from Foreclosure

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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Protecting Widows and Widowers from Foreclosure

Mortgage Relief Programs Set to Expire

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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Mortgage Relief Programs Set to Expire

Report Shows Noticeable Decrease in “Zombie” Foreclosures

Mortgage Relief Programs Set to Expire

If you live in Oak Park and are at risk of foreclosure, you should be considering the mortgage relief programs that could be available to you since two significant federal programs will soon be expiring. According to a recent report from NBC 5 News Chicago, opportunities to obtain relief from the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP) will expire on December 31, 2016. Although the economy is recovering and home sales in Illinois are bouncing back, many families in the region continue to experience debt problems and continue to have difficulty making monthly mortgage payments. You should know that there are options to avoid foreclosure, and an experienced foreclosure defense lawyer in Oak Park can discuss those options with you.

In the meantime, if you might be eligible for relief under HAMP or HARP, you should learn more about these programs before their looming expiration date.

Federal Programs Already Have Helped Thousands of Families

According to the report, both HAMP and HARP already have helped thousands of homeowners in the Chicago area alone who have faced foreclosure. What have these programs been able to do? As their names suggest, they allow struggling homeowners to modify their mortgages or to refinance their home loans, lowering monthly mortgage payments in the process to an amount that homeowners can afford.

But these programs were not designed to last forever, and Chicago-area residents will need to act quickly if they want to take advantage of the benefits of HAMP or HARP. As NBC News explains, both of these federal programs were developed “during the height of the country’s foreclosure crisis,” and since we have largely emerged from that crisis as a nation, the programs are set to conclude.

Thousands of Chicago-Area Homeowners Remain Eligible

Despite the fact that the foreclosure crisis largely has come to an end, thousands of homeowners in the Chicago area remain eligible for HAMP and/or HARP. As the article explains, the Neighborhood Housing Services of Chicago (NHS) has identified 27,639 homeowners in the area who are eligible for HAMP and/or HARP. According to Karen Woods, the NHS director of homeownership services, “it’s important that homeowners not delay in seeking assistance through these federal programs.” As a non-profit counseling organization, NHS “works with businesses, government, and residents to revitalize Chicago’s low-to-moderate-income neighborhoods.”

If you are struggling to pay your mortgage, which program is likely right for you? According to an article in HSH.com, HAMP is primarily for homeowners who are currently in danger of defaulting on their loans. However, homeowners are only eligible for this program if their current mortgage payment equals more than 31% of the monthly gross income—HAMP helps homeowners by adjusting mortgage terms so that the monthly payment falls below this amount. Differently HARP can help all homeowners “no matter how far underwater” to refinance their mortgages.

Contact a Foreclosure Defense Attorney in Oak Park

If you are having difficulty making monthly mortgage payments and are currently at risk of foreclosure, you should understand the options that are available to you. An experienced foreclosure defense attorney in Oak Park can discuss those options with you today. Contact the Emerson Law Firm for more information about how we can assist you.

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Report Shows Noticeable Decrease in “Zombie” Foreclosures

New Principal Reduction Modification Program for Underwater Borrowers

Report Shows Noticeable Decrease in “Zombie” Foreclosures

Do Chicago residents still need to worry about vacant homes in foreclosure blighting neighborhoods? According to a recent article in Marketwired.com, the total number of “zombie” foreclosures throughout the country has decreased by about 30% over the last year. That number is good news for homeowners who are concerned about vacant properties on their streets, and it is a particularly positive update for Chicago residents who are hoping the value of their properties will increase.

What else should you know about the dwindling rate of zombie foreclosures in Chicago? Does the salient decrease in vacant homes suggest that residents of Chicagoland no longer need to worry about the threat of foreclosure?

Fewer Zombie Foreclosures Across the Country

The article cites a recent report from RealtyTrac, which provides housing data for cities throughout the country. A couple of weeks ago, RealtyTrac released its “Q2 2016 U.S. Residential Property Vacancy and Zombie Foreclosure Report13,” which provided details about the total number of vacant zombie foreclosures in America. In short, many of these vacant properties remain in urban areas of the country. As of May 2016, almost 1.4 million properties remained vacant due. This number (1,398,046 to be exact) represents around “1.6% of all residential properties” in our country, according to the article.

How many of those vacant properties are empty because of foreclosure? In total, there are 19,187 vacant residential properties throughout the United States that are “actively in the foreclosure process.” In total, this number represents “4.7% of all residential properties in foreclosure.” While that might sound like a lot of homes, the good news is that the number is on the decline. It is down more than three percent from April 2016, and it is down by 30.1% from May 2015. The total number of vacant homes that are currently in foreclosure has dropped by more than 30% over the last year.

According to the article, the “strong seller’s market” has enabled lenders to sell more vacant homes and to lower the number of zombie foreclosures. As Daren Blomquist explained, “as these zombie foreclosures hit the market for sale they are providing a modicum of relief for the pressure cooker of escalating prices and deteriorating affordability that have defined the U.S. housing market in recent years.”

Higher Rate of Zombie Foreclosures in Illinois

Despite the fact that there are far fewer zombie foreclosures now than at this same time last year, Illinois still is ranked among the states with the highest number of vacant properties. According to the article, Illinois had the fourth-highest rate of vacant zombie foreclosures as of May 2016, with 1,074 listed in this category. When it comes to metropolitan areas with vacant zombie foreclosures, Chicago was ranked third-highest with 857 properties. The only cities with higher zombie foreclosure numbers were New York and Philadelphia.

The housing market is getting better, and Illinois neighborhoods are improving. However, foreclosure issues remain. If you have questions about avoiding foreclosure, and experienced Oak Park foreclosure defense lawyer can assist you. Contact the Emerson Law Firm today for more information.

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New Principal Reduction Modification Program for Underwater Borrowers

Chicago Suburbs and the Slow Recovery from Foreclosure

New Principal Reduction Modification Program for Underwater Borrowers

Are you seriously delinquent on your mortgage and at risk of foreclosure? According to a recent press release from the Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac will offer a new Principal Reduction Modification program for “certain seriously delinquent, underwater borrowers who are still struggling in the aftermath of the financial crisis.” It is the hope that this new program will allow these homeowners to stay in their houses and to avoid foreclosure.

Terms of the New Modification Program

What will the new Principal Reduction Modification program entail? First, it is important for borrowers to recognize that it is a one-time offer. And it is only good for current mortgage holders with a loan that is “owned or guaranteed by Fannie Mae or Freddie Mac.” But those are not the only eligibility criteria. To be eligible, homeowners will also need to fall within the following categories:

• Must be owner-occupant borrowers (in other words, the homeowners must actually be living in the house and using it as a residence, rather than renting it out, for instance, to a tenant);
• Must be delinquent on their mortgage by 90 days or more as of March 1, 2016;
• Must have a mortgage with an outstanding unpaid principal that is $250,000 or less; and
• Must have mark-to-market loan-to-value (MTMLTV) ratio that exceeds 115 percent.

Most of these terms should be relatively easier for borrowers to understand. But what is an MTMLTV ratio? According to an article in HousingWire, the MTMLTV ratio is “the gross unpaid principal balance of the mortgage, including any principal forbearance amount, if applicable, divided by the property value obtained.”

Other Key Items to Note About the New Offering

According to the FHFA’s fact sheet for the Principal Reduction Modification program, the following represent some key facts surrounding the decision to develop the program, as well as some more information about the borrowers it is most likely to help:

• The FHFA expects around 33,000 borrowers to be eligible for the new program.
• The program is designed to provide borrowers who are seriously delinquent on their mortgages a “last opportunity to avoid foreclosure while also addressing negative equity remaining from the financial crisis.”
• Over the last four years, the total number of underwater homeowners who currently have loans owned or guaranteed by Fannie or Freddie has declined by approximately 80 percent.
• Only around 2% of currently underwater loans would fall under the category of those that are “seriously delinquent” and are owned or guaranteed by Fannie or Freddie.
• Around half of all loan modifications currently include some form of principal reduction.

Borrowers who are eligible for the new program must receive a solicitation letter by October 15, 2016.

Contact an Oak Park Foreclosure Defense Lawyer

Despite the fact that much of the housing market has recovered from the financial crisis, there are still many families in Illinois who have not been able to get back on their feet over the last five years or more. Programs like the one recently announced by the FHFA are intended to help struggling homeowners, but it is also important to seek advice from an experienced Oak Park foreclosure defense lawyer. Contact the Emerson Law Firm today for more information.

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Chicago Suburbs and the Slow Recovery from Foreclosure

Federal Funding for Foreclosure Prevention in Illinois