Foreclosures are down in the Chicago metropolitan region, according to data released yesterday by the Chicago research and advocacy group the Woodstock Institute, but a troubling trend has persisted: People who lost their jobs continue to lose their homes.
Filings are down between the second half of 2010 and second half of 2011 – by 18.9 percent in the six county region that includes Cook, DuPage, Kane, Lake, McHenry, and Will counties. There were 79,986 filings in the second half of 2010 and 64,877 filings in the second half of 2011.
Cook County saw a 17.5 percent decrease in filings, and the city of Chicago witnessed a 20.1 percent drop during that period.
Lenders have pursued alternatives like short sales, where the borrower sells the property for less than their debt obligation on the home, or a deed-in-lieu of foreclosure, where the borrower conveys their interest in a property to a lender without going through the formal foreclosure process.
Also, 68 percent of homeowners in the six county region who filed for foreclosure took out conventional, fixed-rate mortgages. They are entering foreclosure not because of shady loans, but a prolonged job crisis.
“We are really seeing the impact of elevated levels of unemployment,” says Woodstock Institute Vice President Tom Feltner.
A typical situation is a family entered into a conventional mortgage between 2005 and 2007 and then the borrower lost their job or saw a significant reduction in wages.
“We are seeing more employees like Cook County and City of Chicago workers falling into that situation,” says Liz Caton, director of counseling services at the Northwest Side Housing Center.
Caton advised that some homeowners who fit this profile can apply for the Illinois Hardest Hit Program, which uses federal money to give up to $25,000 to struggling homeowners who have endured a 25 percent drop in income. Hardest Hit, which the state rolled out in September 2011, “Has a lot of potential to bring these mortgages current,” Caton says.
Another potential boost to some homeowners is the $1.5 billion Illinois will receive from the federal settlement over five major lenders “robo-signing” foreclosure paperwork. However, Feltner cautioned that negotiation over the robo-signing settlement put foreclosures on hold – those foreclosures could now be processed, increasing filings in 2012.