October 28, 2010

Foreclosure activity is up across most U.S. metro areas, and the Chicago area is no exception.

In a report by RealtyTrac Inc., Chicago has seen a sharp increase in foreclosure warnings and has had the third-highest number of homes repossessed by lenders in the quarter. Another red flag in the foreclosure forecast- one in every 84 households in the Chicago-Naperville-Joliet metropolitan area has received a foreclosure notice. That’s up 35-percent.

Many of the current foreclosures are not a result of subprime or exotic mortgages. Homeowners in traditional mortgages are falling behind. Neighborhoods in the area that seemed immune to the subprime crisis are seeing the impact of high employment and the sluggish economy.


Along the shores of Lake Michigan, a new wave of foreclosures is hitting neighborhoods like Edgewater.

“It’s not as visible as you would find it in other neighborhoods but that’s not to say it’s not happening,” said Reggie Griffin, Edgewater Community Council.

Most of the real estate in one section of Sheridan Road is condominium buildings. On that block alone, there were 27 foreclosure filings this year.

The Woodstock Institute reports foreclosure filings are up in Edgewater 59-percent since last year. Job loss and reductions are believed to have ignited a new round of foreclosures in neighborhoods that had previously skirted a first wave of foreclosures caused by subprime mortgage crisis.

“With the economy not getting any better, a community like Edgewater is now beginning to feel the impact,” said Griffin.

In the suburbs, McHenry saw the largest increase in foreclosures this year – 72-percent; Palatine is up 71-percent and Hoffman estates is up 68 percent.

In the city, the Loop had the largest increase in foreclosures, 77-percent higher than last year. The near South Side is up 70-percent and the near West Side up 64-percent.

Recent job reductions brought some Cook County residents to seek help fighting foreclosure.

“I was depending on overtime for the payment and overtime just went away, started getting 40 hours,” said Ruben Garcia, homeowner.

“First thing people canceled was the cleaning service so our income went down every week,” said Magdalena Huk, Homeowner.

Cook County residents in foreclosure can get free counsel from the Circuit Court’s Mortgage Foreclosure Mediation Program. Attorneys and counselors help homeowners through the foreclosure process and when possible modify their loans to stay in their homes.

“I really want to keep my house and I still can afford my house, maybe not $2,000, but I still can afford half of that,” said Huk.

Since the Cook County program started, they have seen more than 3,000 homeowners. They say in 40 to 50-percent of their cases, the homeowners are able to negotiate new terms and stay in the home.

Foreclosure activity up across most US metro areas

Seattle, which like Chicago is outside of the states that have shouldered the worst of the housing downturn, has also seen a sharp increase in foreclosure warnings.

California, Nevada, Florida and Arizona remain the nation’s foreclosure hotbeds, accounting for 19 of the top 20 metropolitan areas with the highest foreclosure rates between July and September, foreclosure listing firm RealtyTrac Inc. said Thursday.

Those states saw housing values surge during the housing boom years. When the boom ended, values collapsed and foreclosures soared.

But the latest data show that many of the metro areas in those states saw a decline in the number of households receiving foreclosure-related filings, while many cities in other states saw a spike in foreclosure activity.

“The epidemic is spreading from the states at the ground zero of the foreclosure problems out into areas that hadn’t been previously affected,” said Rick Sharga, a senior vice president at RealtyTrac.

The trend is the latest sign that the nation’s foreclosure crisis is worsening as homeowners facing high unemployment, slow job growth and uncertainty about home prices continue to fall behind on their mortgage payments.

In all, 133 out of 206 metropolitan areas with at least 200,000 residents posted an annual increase in foreclosure activity in the three months ended Sept. 30, RealtyTrac said.

The firm tracks notices for defaults, scheduled home auctions and home repossessions — warnings that can lead up to a home eventually being lost to foreclosure.

Eleven out of the nation’s 20 largest metropolitan areas saw foreclosure activity increase in the third quarter compared to the same period last year.

The Seattle-Tacoma-Bellevue metro area registered the sharpest annual increase — 71 percent. One in every 129 households received a foreclosure filing.

The Chicago-Naperville-Joliet metropolitan area posted the second-highest annual jump, a 35 percent increase. One in every 84 households received a foreclosure notice.

Among the other metro areas where foreclosure activity jumped by a large margin this summer were Houston-Sugar Land-Baytown, up 26 percent; Detroit-Warren-Livonia, at nearly 23 percent; and, Atlanta-Sandy Springs-Marietta, up 20 percent.

Economic woes, such as unemployment or reduced income, continue to be the main catalysts for foreclosures this year. The U.S. unemployment rate hit 9.6 percent last month.

In the Seattle metro area, unemployment stood slightly lower at 8.5 percent in August and has been edging lower. It was 8.7 percent in August last year.

Still, many troubled homeowners have been unable to hang on. As a result, there’s been no letup in the inventory of foreclosed homes on the market this year, says John Bauer, an agent with ZipRealty in Seattle who represents lenders selling foreclosed properties.

“It has been on an upward trend curve ever since 2008,” Bauer said. “And not just the third quarter of this year, but the last 12 months, it’s been on a steady ascension.”

Chicago also had the third-highest number of homes repossessed by lenders during the quarter — 12,568 — behind the Phoenix metro area’s 14,317 and the Miami metro area’s 12,963, RealtyTrac said.

Banks have seized more than 816,000 homes through the first nine months of the year and are on pace to seize more than a million.

A controversy stemming from allegations that banks evicted people without reading foreclosure documents wasn’t a factor in the July-September quarter, Sharga said.

Lenders such as Bank of America and Ally Financial’s GMAC Mortgage initially halted foreclosure activity but have since resumed processing foreclosures.

Preliminary data from this month shows almost no change in foreclosure activity versus September, Sharga said.

“We’re not seeing what we might have anticipated in terms of a falloff,” he said.

The Las Vegas-Paradise, Nev., metropolitan area topped the list of metropolitan areas with the highest foreclosure rates in July-September with one in every 25 homes receiving a foreclosure warning — more than five times the national average. But foreclosure filings declined 20 percent from the same quarter last year.

“It’s not out of the woods yet, it’s just less bad than it was a year ago,” Sharga said.

Rounding out the rest of the top 10 metros with the highest foreclosure rate were Cape Coral-Fort Myers, Fla.; Modesto, Calif.; Stockton, Calif.; Merced, Calif.; Riverside-San Bernardino-Ontario, Calif.; Miami-Fort Lauderdale-Pompano Beach, Fla.; Phoenix-Mesa-Scottsdale, Ariz.; Bakersfield, Calif.; and Vallejo-Fairfield, Calif.

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