By Mary Ellen Podmolik
September 22, 2011
More than three years into the housing crisis, the foreclosure process isn’t speeding up. It’s slowing down.
In Cook County during this year’s second quarter, it took a median 363 days to move a foreclosure case through the court system. The median is the point at which half the cases took longer and half less. In Kane County, it was 390 days. And in McHenry County, it was 307 days.
The median number of days to resolve foreclosure cases, most of which go to court-ordered auction and are repossessed by lenders, rose 25.5 percent in the Chicago area for the three months ended in June, compared with a year ago, according to a report to be released Thursday by the Woodstock Institute. Compared with three years ago, processing times are up almost 51 percent.
Longer processing times, and the lowest number of completed foreclosure auctions completed since the housing crisis began, are giving homeowners more time to try and save their homes. But they also are putting additional pressure on neighborhoods struggling with a rising inventory of foreclosed homes. There also are indications that the number of delinquent homeowners is again on the rise.
“If the reason why auctions are down is that people’s homes are being saved, that’s really positive. But I don’t think that’s what’s happening,” said Sarah Duda, a senior research and project associate at Woodstock, a Chicago-based research and advocacy group.
Some of the backlog is the result of state and federal investigations that began last fall of mortgage servicers’ internal processes, which put a temporary hold on cases. That slowed not just the processing of cases but also auctions and notices of mortgage default filed with county court systems, the first step in the foreclosure process. During the year’s first half, initial foreclosure filings fell 13.5 percent in the Chicago area, Woodstock found.
The longer processing times in Illinois, as opposed to other states, also are due to state laws intended to protect homeowners. Homeowners have seven months after they receive a foreclosure complaint, or three months after a judgment is entered, to bring the mortgage current and keep the home. Also in Illinois, where courts oversee foreclosure actions, the judicial system is ill-equipped to deal with the crush of cases brought in the past few years.
The concern going forward, though, is that loan modifications have slowed, and that after a brief respite August saw a dramatic leap in new foreclosure filings that will add to the backlog. Last week, RealtyTrac said initial notices of default in the Chicago area rose 30 percent in August from July; Woodstock’s preliminary data pegs the month’s increase at 26.6 percent.
“Process times are likely going to increase going forward, especially because now, in August, we see a big increase in cases,” Duda said. “It’s adding to inventory that’s not being relieved by cases exiting the system. Without intervention, cases are going to continue to get longer.”
In the Montclare neighborhood on the city’s Northwest Side, a home that neighbors say has been vacant for the better part of a decade is an eyesore, with a section of the roof lying on the driveway and a large blue tarp affixed in its place. A foreclosure complaint was filed against the property in October 2008, and six months later the homeowner filed an appearance with the court and argued that the lender, GMAC Mortgage LLC, did not have the legal right to pursue the foreclosure. Eventually, the court ruled in GMAC’s favor, and three months ago the property was sold back to GMAC in a court-ordered auction and became bank-owned.
Altogether, the foreclosure action took 979 days.
Meanwhile, in Cicero, Theresa Herdzina, who has lived in her home for 52 years, worries about the fate of her block. The house across the street has been boarded up for more than a year. One down the block just became bank-owned after a 998-day foreclosure process, records show.
And when she tends to the garden in her tidy backyard, she’s staring at a raised ranch next door that sold for $132,000 in 2000, records show. In September 2008, it went into foreclosure, and 19 months later it became owned by the U.S. Department of Housing and Urban Development. First listed for sale at $88,000, it is now priced at $43,467.
“I’m worried about this house, that gangs don’t go in there,” said Herdzina, as she leaned over the chain-link fence dividing the backyards. “It upsets me to see all of these boarded-up houses. Banks should be able to try and sell them right away.”
In Cook County, which accounted for 60 percent of the area’s foreclosure cases completed in the second quarter, there are attempts under way to expedite some cases in a court system that predicts it will have about 77,750 foreclosure cases pending at the end of September, compared with about 75,500 at the end of June.
First, the Cook County Board has tinkered with its foreclosure mediation program, funding the hiring of a case manager for each judge handling foreclosures. The case managers will separate cases into two piles: those where there is a better chance of saving the home and those where an orderly exit is the best option.
Meanwhile, in January, Cook County Circuit Court’s Chancery Division will undertake a pilot program to expedite the hearing of uncontested foreclosure cases involving vacant and abandoned residential properties. Additional judges have been assigned to hear cases three days a week, and another four judges will hear cases as needed.
“We have a huge number in the pipeline,” said Cook County Commissioner Bridget Gainer. “It’s hard to see the circumstances that make foreclosure stop happening. The housing market isn’t rebounding. Home sales numbers aren’t rebounding. All those things that would suck up some of that capacity aren’t happening.”
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