Remnants of the Foreclosure Crisis

Final Stages of Housing Crisis, Says RealtyTrac

The nationwide foreclosure crisis has been nearing its end for quite a few months, and Chicago residents have been in various stages of financial recovery as neighborhoods begin to return to their pre-crash characters.  So why did RealtyTrac recently report an increase in completed foreclosures and bank repossessions?  According to a recent article in Mortgage News Daily, April statistics that showed a rise in bank repossessions and completed foreclosures is actually an indication that “the housing crisis is in its final stages.”

The statistics showed that overall foreclosure filings were down, and these included default notices and scheduled auctions.  Specifically, the total number dropped by 1 person to about 116,000.  However, data showed that the number of completed foreclosures actually rose last month by 4 percent to more than 30,000 completed foreclosures.

If you have questions about foreclosures in the Chicago area, contact an experienced Oak Park foreclosure defense lawyer.  The dedicated attorneys at the Emerson Law Firm can answer your questions today.

Illinois Among Recovering States?

According to RealtyTrac data, Illinois had the eighth-biggest REO (real estate ownership) increase from April 2013, with a 55 percent change from last year.  In other words, bank repossessions rose by 55 percent in Illinois.  Other states with particularly high percentage changes in REO increases included Iowa, New York, Delaware, Oregon, Nebraska, New Jersey, and Kentucky.  Daren Blomquist, the vice president at RealtyTrac, emphasized that “the rise in bank repossessions in many states,” like Illinois, is “a sign that those markets are working through the final remnants of foreclosures left over from the recent housing crisis.”

In other words, more repossessions means getting more abandoned and “bottom-of-the-barrel” properties into the hands of buyers and investors who can help to turn blemished neighborhoods around.  Blomquist explained that “these incoming REOs,” or those that have recently increased the statistical number of bank repossessions, “will likely be best-suited” for buyers and investors who are “willing to do more extensive rehab.”

And all in all, foreclosures are down when we take a look at the numbers from last year.  Foreclosure filings dropped by 20 percent from April 2013, completed foreclosures are down by 14 percent from this time last year, and foreclosure auctions have decreased by more than 20 percent.  The total percentage of housing units with foreclosure activity has decreased substantially in Illinois.

However, our state still had one of the highest rates of foreclosure filing per unit, with one in every 700.  But Illinois isn’t the worst state in the country when it comes to foreclosure filings.  As in previous months, Florida still ranks at the top of the list with a filing on approximately one in every 400 units, which is “almost three times the national average,” according to RealtyTrac.

Contact a Chicago Foreclosure Defense Lawyer

Just because the foreclosure crisis is nearing its end doesn’t mean that Chicago families are in the clear.  Indeed, despite the continuing economic recovery, many Illinois residents continue to struggle with debt and monthly mortgage payment.  An experienced consumer protection attorney at the Emerson Law Firm can talk with you about your situation today.  Contact us to learn more about how we can help.

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Foreclosure Prevention Work in the FHFA

Incentives to Buy Illinois Foreclosures

Foreclosure Prevention Work in the FHFA

Foreclosure activity is down everywhere.  In fact, a recent article in the National Mortgage Professional Magazine reported that April 2014 foreclosure filings, which include default notices, bank repossessions, and scheduled auctions, are down by 20 percent from April 2013.  And the numbers have been dropping over the last few months, too.  The April 2014 foreclosure statistics are down one percent from March 2014.  But the rate of foreclosure remains a serious issue in Chicago and throughout the state.

Illinois Foreclosure Statistics

What do the numbers look like?  In April of this year, about 116,000 properties across the country were linked to foreclosure filings, and this shows a significant decline on the whole.  However, according to data gathered by RealtyTrac, Illinois continues to have one of the highest foreclosure rates in America.  It’s listed as having the sixth-highest rate of foreclosure, with 14 percent of residential units at a stage of foreclosure.  That means that one out of every 706 housing units in our state had a foreclosure filing at the time of RealtyTrac’s measure.  And when it comes to metro areas, Chicago has the fifteenth-highest rate of foreclosure, with “one in every 550 housing units with a foreclosure filing.”

So what is the Federal Housing Finance Agency (FHFA) doing for Illinois and some of the other states with a surprisingly high number of foreclosures on record?  A report in DSNews.com indicated that the FHFA’s Foreclosure Prevention Report suggests that the agency has actually been doing quite a bit to prevent foreclosures in Illinois and throughout the country.

The FHFA’s Foreclosure Prevention Report

According to the article in DSNews.com, the FHFA’s Foreclosure Prevention Report contains important information about the future of Fannie Mae and Freddie Mac when it comes to completing foreclosures.  In February 2014, Fannie and Freddie completed more than 28,000 “foreclosure prevention actions,” and approximately 58,000 foreclosure prevention actions in 2014 as of May of this year.  In total, Fannie and Freddie have recorded about 3.2 million foreclosure prevention actions since 2008.

What is a foreclosure prevention action?  In many cases, it’s a permanent modification.  For instance, in February of 2014, about 60 percent of all actions were permanent modifications.  But modifications in general tend to be on the decline.  Indeed, permanent modifications were down 7 percent from the beginning of the year.  And other foreclosure prevention actions also exist, such as principal forbearance.  In addition, approximately 4,500 short sales and deeds-in-lieu of foreclosure were completed in February 2014, which showed a 19 percent decline from January of this year.

The report also depicted declines in “serious delinquency rates,” which were at 2.28 percent by the end of February.  And it looks like homeowners aren’t likely to begin the descent into foreclosure, either.  According to the FHFA, “foreclosure starts dropped 33 percent to 21,900 in February.”   

Foreclosures no longer account for a large part of the real estate market, but many families in the Chicago area continue to struggle with monthly mortgage payments.  If you’re concerned about foreclosure, it’s important to speak to an experienced Oak Park foreclosure defense lawyer at the Emerson Law Firm today.

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Consumer Protection Implications in Illinois Eavesdropping Law

Distressed Illinois Properties Afflict Neighborhoods

Consumer Protection Implications in Illinois Eavesdropping Law

Until recently, Illinois had one of the strictest eavesdropping statutes.  In short, in almost every circumstance, it was illegal in Illinois to record a conversation without the consent of all parties involved.  Other states have “one-party consent” rules that permit conversations to be recorded as long as at least one party in the conversation consents to the recording.  In most of these cases, as you might imagine, the person doing the recording often is the person who has consented.  However, according to a recent article in the National Law Review, the Illinois Supreme Court recently struck down the very broad eavesdropping law in our state.  And this decision could have important implications for consumers dealing with debt collection and mortgage servicers.

Have you been harassed by a debt collector who lied to you over the phone?  Or perhaps you’ve had a conversation with a mortgage loan servicer who instructed you to stop paying your mortgage? Now, Illinois residents are going to have more freedom to record these conversations and to file claims when they have proof that they’ve been treated unfairly.  At the Emerson Law Firm, our experienced consumer protection attorneys and foreclosure defense lawyers are eager to help with your case, and we’re here to answer your questions today.

Broad Illinois Eavesdropping Law Deemed Unconstitutional

Before the recent Illinois Supreme Court Decision, Section 14-2 of the Illinois Criminal Code made it a felony offense for individuals who “knowingly use an eavesdropping device to record or intercept another’s conversation” without the consent of all parties involved.  This law was known as a “two-party consent” rule.

However, in People v. Melongo, the Illinois Supreme Court held that the two-party consent rule of the Illinois eavesdropping statute was unconstitutional.  The case began in 2010, when Annabel Melongo recorded phone conversations she had with a court reporter supervisor in Chicago.  Melongo had recorded the conversations in an “attempt to correct an error in a court transcript” that suggested she had not been in the courtroom during a proceeding, according to an article in the Chicago Tribune.  Melongo “later posted audio of the phone discussions on a website she created and her computer-tampering case.”

Melongo was charged with violating the Illinois eavesdropping statute and remained in jail after a 2011 jury deadlocked.  After appeals, the Illinois Supreme Court held that the Illinois eavesdropping statute is “overbroad and not narrowly tailored enough to meet constitutional standards,” according to the article in the National Law Review.

Why’d the Court decide as it did?  The Chicago Tribune detailed some of the Court’s reasoning.  In particular, the statiute was intended to protect “conversational privacy,” but in practice, it actually “criminalizes the recording of conversations that cannot be deemed private: a loud argument on the street . . . or any conversation loud enough that the speakers should expect to be heard by others.”  As a result of the Court’s decision, the law is currently unenforceable unless Illinois legislators enact a new eavesdropping statute.

Implications for Consumer Protection

When the eavesdropping statute remained good law, consumers weren’t legally permitted to record conversations with debt collectors or loan servicers.  However, as long as the law remains unenforceable, it may be possible for Illinois consumers to record phone calls in which debt collectors or mortgage loan servicers tell falsehoods.  Have you received threatening or harassing phone calls from debt collectors or loan servicers?  You may be able to file a claim for compensation.  Contact the consumer protection attorneys at the Emerson Law Firm today.

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Distressed Illinois Properties Afflict Neighborhoods

Incentives to Buy Illinois Foreclosures

Distressed Illinois Properties Afflict Neighborhoods

We’ve heard that the foreclosure crisis has essentially come to an end—or at least shown signs that the end is near—across the country.  However, a recent article in the Chicago Tribune suggested that signs of the foreclosure epidemic remain salient in Chicago neighborhoods and others across the state.  What’s the problem?  According to the article, Illinois just hasn’t completed enough foreclosures.  Indeed, there’s a “backlog of distressed and abandoned properties” in the state that “drags down neighborhoods that can least afford vacancies and blight.”

The presence of abandoned and unsightly properties goes hand-in-hand with Illinois foreclosures, as many homes went into disrepair when their owners couldn’t make monthly mortgage payments.  RealtyTrac ranked Illinois as the third worst offender in terms of the number of foreclosures yet to be completed (putting only Florida and California head in the total number of foreclosures).  Many Chicago residents want their home values to increase, but that’s not likely to happen if neighborhoods remain blighted by abandoned properties.  If you have questions about your rights as a homeowner or a consumer, contact the dedicated foreclosure defense attorneys at the Emerson Law Firm.  We have years of experience dealing with the foreclosure crisis in Illinois, and we can answer your questions today.

Vacant Properties and Potential Homebuyers in Chicago

With the economy entering recovery, many Illinois residents are looking to buy homes.  Yet abandoned properties that have gone into foreclosure but haven’t been completed aren’t available.  Based on recent data from RealtyTrac, Illinois citizens “yearning to buy empty homes” would be better off “if the state completed more foreclosures.”  Indeed, according to the article in the Chicago Tribune, the key to real estate recovery doesn’t appear to be avoiding foreclosure.  Instead, it’s about getting “these eyesores on the market, so buyers can fix ‘em up or tear ‘em down.”

How bad can it really be?  The housing crash happened more than seven years ago, and there are still approximately 18,000 vacant properties in Chicago alone.  The Institute for Housing Studies at DePaul University emphasized that, by the end of 2013, more than 18 percent of residences in the Englewood neighborhood “had been unoccupied for at least two years.”  More than 9 percent of Humboldt Park residences have been vacant for more than two years, and 8.5 percent of homes in Austin have met this “two-year vacancy rate.”  Poorer suburbs report similar numbers, with a 9.1 percent vacancy rate for residential properties in towns in south Cook County where residents make up lower socioeconomic brackets.  The Chicago Tribune put it starkly: “Those properties sit, rotting.”

Yet it’s important to note that the problem is not rampant in wealthier areas of Chicago and in wealthier suburbs.  The Loop, Near North, and Lincoln Park appear to be doing just fine.  In those neighborhoods, along with suburbs like Winnetka, “housing has staged a comeback amid strong demand.”

What’s Causing the Foreclosure Backlog?

A couple of explanations exist for the Illinois foreclosure backlog.  First, while recent Illinois legislation intended to speed up the foreclosure process, it might actually have slowed it down in the short term since lenders and servicers need time to adjust to such changes.

Some commentators believe the slowdown is a result of Attorney General Madigan’s lawsuit against Safeguard Properties, a firm that “lenders use to secure buildings in foreclosure.”  Others believe the rising number of short-sales might be a cause, while still others wonder if banks’ efforts to prevent foreclosures are resulting only in abandoned, decrepit properties.

If you have questions about how the foreclosure crisis might affect your chances to sell or buy a home in the Chicago area, contact an experienced Illinois real estate attorney today.

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Incentives to Buy Illinois Foreclosures

Despite Equity Gains, Homeowners Continue to Struggle

Incentives to Buy Illinois Foreclosures

Are you currently in the market for a new home and thinking about buying a foreclosure?  According to a recent article in the Chicago Tribune, Fannie Mae and Freddie Mac “are upping the incentives to interest consumers, rather than investors, in purchasing foreclosed properties and making them their homes.”  Right now, there are approximately 31,000 foreclosures for sale through Fannie Mae, and the federal lender has agreed to cover 3.5 percent of the final sale price for buyers in certain states. Luckily for Chicago residents who are thinking about buying a foreclosure, Illinois is one of the 27 states where Fannie Mae has offered this incentive.

Are you thinking about purchasing a foreclosure? Or are you at risk of foreclosure in your current Illinois home?  The experienced real estate attorneys and foreclosure defense lawyers at the Emerson Law Firm have been handling foreclosure matters in Illinois for years.  We can answer your questions about Chicago foreclosures today.

Details of the Fannie Mae Incentive

The 27 states that are eligible for the incentive are those with the highest number of foreclosed homes, owned by Fannie Mae, that are currently in a state of limbo.  In fact, “75 percent of the foreclosed homes” that Fannie Mae has repossessed are in the states qualified for the incentive.

But the incentive isn’t available to all foreclosures.  The properties must be part of Fannie Mae’s First Look program.  In this program, homes are placed in a “20-day period” in which they’re “only marketed to owner-occupants before they can be bid on by investors.”  In other words, the incentive offer isn’t available to investors—it’s intended to help potential homeowners to buy a foreclosure that they’re planning to reside in.  Recently, there were 130 homes in the Chicago area that were part of the First Look program, and these properties included an “assortment of condominiums and single-family houses,” according to the Chicago Tribune.

And potential buyers also might be able to get additional financing for renovations if they’re not satisfied with the current state of the property.  Yet commentators emphasize that these homes for which the incentive applies “aren’t all the horror stories of standing water in the basement, torn-out pipes and missing furnaces.”  While some of the properties “may have dated interiors,” most of them are move-in ready for all intents and purposes.  Indeed, the properties currently available through the First Look program “range from a $464,900 two-bedroom condo near Water Place to a gutted, boarded-up four-bedroom, $3,150 home in the Englewood neighborhood.”

What do potential buyers have to do to get the incentive?  If you’re thinking about purchasing one of the foreclosures listed in the First Look program, you will need to make an initial offer on the property by March 31, 2014, and you’ll need to close on the house by May 31, 2014.

There’s a Freddie Mac Incentive, Too

Fannie Mae isn’t the only one offering an incentive for buying a foreclosure.  Freddie Mac has also offered potential buyers in 23 states, of which Illinois is one, $500 to use for “condominium association dues, flood insurance premiums, or a home warranty.”  There are even more properties that are eligible for this incentive, as Freddie Mac owns approximately 12,000 foreclosures nationwide.  In Illinois alone, there are about 1,000 properties that will qualify buyers for the $500 incentive.

If you have questions about how these incentives work, or if you need advice about Illinois foreclosures, contact an experienced Chicago real estate lawyer at the Emerson Law Firm today.

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Housing Market Approaches Pre-Crash Statistics

First-Time Buyers Interested in Buying Foreclosures

Despite Equity Gains, Homeowners Continue to Struggle

In a previous post, we mentioned that increases in home equity and housing market numbers statistically place borrowers at a lower risk of foreclosure. In short, if a homeowner has positive equity in her property, she’s likely to be in a position where she can sell the home, rather than be subject to foreclosure proceedings, if she can’t afford her payments. However, there’s another side to this coin. A recent article in DSNews.com suggested that the rise in positive equity that “has been cause for celebration among industry commentators,” often doesn’t have any relation to the level of financial hardship that many homeowners continue to experience.

If you are concerned about paying your mortgage payment, or if you’re currently facing foreclosure, it’s important to speak to an experienced Chicago foreclosure defense lawyer. Even though the housing market looks to be on an upward trend, the dedicated attorneys at the Emerson Law Firm know how difficult a foreclosure threat can be to struggling Illinois families. Contact us today to discuss your case.

Positive Equity Doesn’t Necessarily Equal Fewer Foreclosures

A recent press release from Fitch Ratings indicated that rising equity is “not much comfort to those who continue to struggle to pay their mortgages.” Naturally, as we’ve noted previously, equity does play an important role in borrowers’ actions and their ability to avoid foreclosure. Yet it doesn’t have a discernable impact on the underlying causes for a homeowner’s ability to comfortably make her mortgage payments. Indeed, many borrowers haven’t recovered from the housing crash and economic crisis—many remain without jobs, or without significant sources of revenue.

As a result, many of these at-risk borrowers are still winding up in foreclosure situations. In short, rising prices and equity increases don’t necessarily spell an end to the foreclosure crisis. Indeed, according to an article in Business Wire, “Fitch estimates that the percentage of borrowers entering foreclosure with positive equity has roughly doubled in the last two years.” Why is that? According to the article, “income and ability to pay are key drivers” in determining foreclosure risk.

Do some borrowers remain at greater risk than others? Can we identify any trends connected to rising equity and steady foreclosures? Fitch Ratings suggests that many of the recent foreclosures we’re seeing can be linked to residential mortgage-backed securities, or RMBS, loans.

But shouldn’t the growing amount of positive equity that’s accompanying higher selling prices be enough to cover these loans if the owners were to sell them? According to Business Wire, one of the primary issues is the age of the loans in question. Many of them were involved in previously unsuccessful loan modifications, and many of the homeowners have missed about two years of payments on their properties. As a result, equity increases aren’t enough to cover the amounts that many of these borrowers owe.

And while mortgage servicers have many tools to help struggling homeowners, their hands are often tied once those borrowers continue to miss “regularly scheduled mortgage payments” on their properties, “even after loan modifications involving significant rate reductions,” reported Business Wire.

Illinois Foreclosure Defense Lawyers Can Help

If you are at risk of foreclosure or have questions about obtaining help with your monthly mortgage payments, it’s never too soon to contact an experienced Illinois foreclosure defense attorney. Contact the Emerson Law Firm today.

See Related Blog Posts:

Housing Market Approaches Pre-Crash Statistics  

Buying a House After Foreclosure