Local foreclosures jump
BY FRANCINE KNOWLES Business Reporterfirstname.lastname@example.org August 9, 2012 7:30AM
A foreclosure sign stands on top of a sale sign outside a home. | The Associated Press
Updated: September 10, 2012 1:45PM
The number of homes in the Chicago metropolitan area hit with foreclosure filings jumped 35 percent in July from a year earlier, and bank repossessions spiked 23 percent in the area and the state, bucking national trends, a RealtyTrac report released Thursday showed.
July marked the seventh straight month of annual increases in homes receiving filings in the area and in Illinois, and the numbers aren’t expected to return to more normal levels until mid-2014, said RealtyTrac Vice President Daren Blomquist.
The increases reversed declines in filings last year caused by documentation issues that slowed the process and that have since been resolved.
“We’re seeing a rebound in foreclosure activity off of artificially low levels last year,” said Blomquist. “What we’ve seen over the past year and a half is kind of a false bottom. The market is reaping the consequences of delaying foreclosures in the form of increased numbers this year.”
That’s bad news for the housing market. It means foreclosures “are going to continue to destabilize home values and home prices in the Chicago market and Illinois as a whole,” he said.
There were 12,683 homes in the Chicago area hit with filings in July, up from 9,395 a year earlier and down 9.5 percent from 14,014 in June.
In normal times, there would be fewer than 5,000 homes receiving filings each month, Blomquist said.
In Illinois, 13,774 homes received filings last month, up 29.6 percent from a year earlier and down 7.8 percent from June. One in every 385 homes received a filing, ranking the state the fifth highest in the country.
Nationally, filings totaled 191,925, down 9.8 percent from a year earlier and down nearly 3 percent from June.
There are two trends going on nationally, according to Blomquist.
“There’s one set of markets and states that are very similar to Chicago where the foreclosure numbers are resurging, and those tend to be states that have a longer foreclosure process, states like Illinois, Florida, New Jersey, New York, Pennsylvania and Indiana,” he said.
“On the flipside there’s a group of states and markets where foreclosure activity has continued the trend that we saw last year of a downward trajectory, states like California, Nevada, Arizona, Texas, Virginia, states where the foreclosure process is shorter and was not delayed as much last year by questions about the paperwork.”
Blomquist expects bank repossessions, which have risen annually for nine straight months in Illinois and in the Chicago area, to continue to rise.
“This is a process of the banks kind of clearing the decks of some of these distressed properties in their portfolios,” he said. “It’s safe to say we’ll see higher REO numbers for the next year.”
Foreclosure starts rose annually in 27 states, including Illinois, the report showed.
“That’s just a reflection that there’s still a big pool of homeowners out there who are not making their mortgage payments,” Blomquist said. “Banks are beginning to ramp up and start the foreclosure process on some of these homeowners who may have been missing payments for a substantial period of time.”
The overall higher foreclosure numbers in the Chicago area and state are problematic short-term, but long-term, they’re “getting the market to the point where foreclosure levels are back to normal and home prices can start appreciating in a more sustainable long-term way,” he said.