A cursory glance at foreclosure data released Friday by the Woodstock Institute might suggest a downturn in the number of foreclosures in the Chicagoland area. In the six Chicagoland counties studied, there was a 51 percent decline in home auction activity when the first halves of 2010 and 2011 were compared. The largest declines in foreclosure activity occurred in Lake and Cook counties, which both saw 55 percent reductions during those periods.
But a closer look at the data reveals a cumbersome problem: the foreclosure process time is at an all-time high, meaning home loans, and borrowers, are finding themselves in a logjam of paperwork and bureaucracy at the service provider.
During the second quarter of 2011, seven percent of all home loans in the State of Illinois were in the foreclosure process, which was among the highest rates in the nation. According to the Woodstock Institute, county courts are hearing cases that should have been scheduled in 2010 if it were not for the moratorium put in place in the wake of the robo-signing scandal. That is on top of the 2011 cases the courts would normally see.
“A prolonged foreclosure process cuts both ways. It means that vacant homes in foreclosure have more time to become blighted and destabilize neighborhoods,” says Sarah Duda, a senior research and project associate at the Woodstock Institute. “If a family is still in the home, however, the longer process could give them more time to negotiate a solution with their loan servicer.”
A new Chicago ordinance requires banks to maintain foreclosed properties as well as hire security for the buildings. The ordinance passed after community organizations pressured city council into action. Homes and neighborhoods have been blighted by the foreclosure crisis. Cook County Commissioner Bridget Gainer is in the process of introducing a similar ordinance for Cook County as early as the end of October. She is working with 60 different suburbs and the ordinance is currently being reviewed by the state’s attorney.
“The goal is to get consensus with municipalities. Some are drowning in this issue,” said Gainer.
A little more than 3,600 properties went through the full foreclosure process in the second quarter of 2011. It is the fewest since 2007, the beginning of the housing crisis. The first half of 2012 will likely see a dramatic increase of foreclosure activity as the robo-signing issue winds down and the prolonged process comes to a final end.