Ninety-five percent of the completed foreclosures became lender-owned instead of selling to a third-party buyer at auction. Lender-owned foreclosed properties often stay vacant for a significant period of time.
“The addition of 25,614 lender-owned properties to the region’s vacant property inventory poses a significant challenge to municipalities, as vacant properties decrease tax rolls while raising maintenance costs,” said Woodstock Senior Vice President Geoff Smith. “These properties also affect the stability of local real estate markets by adding to the supply of for-sale housing in the region.”
The recent controversy over evidence of improperly prepared foreclosures at some mortgage servicers may complicate the return of some vacant homes to the market. Some servicers have implemented moratoria on foreclosures in some or all states in order to review their files and ensure they were properly prepared. One of the components of the moratoria is that lender-owned properties cannot be listed or sold during the moratorium while their files are being reviewed, which means that a large number of properties will stay vacant for an even longer period of time and contribute to neighborhood decline in areas that have high concentrations of vacant properties—namely, communities of color. Additionally, potential home buyers may be deterred from buying foreclosed homes because of the added delay and concerns that the lender listing the property for sale may not have clear title to the property.
The report also found:
• New foreclosure filings continue to rise. Over the first nine months of 2010, there was a 28 percent increase in new foreclosure filings compared to the same period in 2009. Within the region, the biggest increases were in Northwest Cook County (49.7 percent), McHenry County (49.2 percent), and Southwest Cook County (44.4 percent). The City of Chicago had the smallest increase at 14.2 percent.
o In the City of Chicago, areas with significant increases in new foreclosure filings include the Loop (76.7 percent), the Near South Side (70.1 percent), and the Near West Side (63.7 percent). Areas with large decreases in new filings within the City include Hermosa (-13.7 percent), West Englewood (-11.1 percent), and Englewood (-9.3 percent).
o In the suburban Chicago region, areas with significant increases in new filings include McHenry (72.4 percent), Palatine (70.5 percent increase), and Hoffman Estates (68.1 percent). The largest decreases in new filings in the suburbs were found in Hinsdale (-17.6 percent), Wilmette (-6.5 percent), and Westchester (-6.1 percent).
“While levels of new foreclosure filings largely are stable or on the decline in lower-income communities and communities of color, this does not mean these communities have emerged from the foreclosure crisis,” Smith said. “Communities of color were hit early in the crisis. They continue to experience high levels of foreclosure activity and have large concentrations of vacant properties that take longer to return to productive use than do vacant homes in predominantly white neighborhoods. The new delays may further set back these communities’ paths to recovery.”
For more information, please contact Geoff Smith at (312) 368-0310 or gsmith@woodstockinst.org.