Foreclosure auctions are on track to shoot up dramatically in many north suburban towns this year if current trends continue. Even some wealthy towns are not immune, according to a recently released report by the Chicago-based Woodstock Institute.

In Glenview, the number of auctions shot up fourfold leaping upward from 5 during the first half of 2007 to 20 in the first half of 2008; in Northbrook, the increase was fivefold from 4 to 22; and in Skokie the auctions have tripled, going from 19 to 57.

In Arlington Heights the number jumped from 12 to 39.

While these figures represent only a small percentage of the total mortgages held in every town, such increases should be of concern to municipalities because many properties remain vacant for extended periods of time. This could lead to blighted areas of town, said Geoff Smith, vice president of the Woodstock Institute and co-author of the report, which received major funding from the John D. and Catherine T. MacArthur Foundation.

In addition, studies have shown vacant properties can negatively impact surrounding property values, the report stated.

"I am concerned about the municipalities, too, and I am showing more vacant homes than ever before," said Marsha Schwartz, a broker associated with Coldwell Banker in Northbrook who studies the local North Shore market.

The federal government can do only so much on a local level. Rather, municipalities, regional associations and community groups need to explore the steps they can take to prevent these properties from staying vacant for too long, Smith said.

The situation is also complicated by the fact that the local community banker may no longer be the one who holds the title to the property. With innovations in home financing, the property owner is more often a group made up of investors in "securitized mortgages."

It is difficult to talk to such a nameless and faceless entity about ways to expedite the sale of the property to get the home occupied again, Smith said.

A foreclosure auction is the last step in a process that starts about a year earlier when a homeowner is 90 days late on making a timely mortgage payment.

In the past, the lender had several options, which prevented the home from going to foreclosure:

• The lender worked out an agreement to refinance the loan;

• The borrower looked for other sources to help pay the mortgage, such as family members;

• The borrowers found another lender.

"Three years ago, credit was looser. Now that’s not an option with tighter credit," Smith said.

If the borrower can’t figure out a way to keep paying the mortgage, the lender then has the option of simply taking over the property, called a "deed in lieu." But lenders don’t do this too often, Smith said.

"Lenders don’t like to do this because they are still holding out hope they can sell," he said.

If the lender is willing, a seller can also look for a buyer to whom he can make a "short sale," where the property is purchased for less than the mortgage amount. Indeed, many investors thrive on current down markets looking precisely for such bargains, Smith said.

On the North Shore, Schwartz said she is seeing a big trend of more short sales, where properties are sold for less the amount owed to the lenderShe is also seeing sellers who bring money to the table at closing, to make up for the drop in price.

But in some towns, the combination of lenders tightening their credit and falling home prices means the homeowner and lender have no choice but to go to the foreclosure auction. In 2005, about 60 to 70 percent of sales went to the lender and 30 percent went to a third party; now about 90 percent of auctions go to the lender, who is then saddled with paying the property taxes and insurance on a vacant property.

So the property just sits there, while the municipality looks on seemingly helplessly.

"It is not a matter anymore of going to the corner bank and saying ‘You should give us this property,’ Unfortunately most of the properties are not controlled by banks, but by nameless and faceless pools of mortgage holders," said Smith.

Towns that have home rule can increase their control over the vacant property, using building ordinances that slap increase costs the longer the buildings are empty, for example, he said.

"Municipalities need to think about strategies," he said.

To see the Woodstock Institute’s foreclosure auction figures for the north, northwest and western suburbs covered by Pioneer Press, go to www.Pioneerlocal.com or go to Woodstockinst.org for the complete foreclosure auction report listing all Chicago neighborhoods and suburbs.