1Q foreclosure data shows shift to suburbs, Chicago's communities of color still reeling

May 18, 2009 - 2:00am

A recent fact sheet released by Woodstock Institute shows that in the Chicago Six County area foreclosure filing activity increased by over 36 percent between the first quarter of 2008 and the first quarter of 2009.

 

Areas with the biggest year-over-year increases in new foreclosure filings were largely found in suburban Cook County:  Northwest Suburban, North Suburban, and West Suburban Cook County all had year-over-year increases in foreclosure filings of over 67 percent.  The City of Chicago saw a year over year increase of nearly 39 percent.  Within the city, areas experiencing the largest increases in filings include Lincoln Park, McKinley Park, Montclare, West Elsdon, and Forest Glen.  Municipalities with the largest year-over-year increases include Evergreen Park, Schaumberg, Skokie, Burbank, and Park Ridge which all had over 50 filings in the first quarter of 2009 and had a 100 percent increase in filings year-over-year. 

Many of the areas in the region with the highest levels of foreclosure activity saw only modest year over year increases or declines in foreclosure activity.  For example South Suburban Cook County saw a year-over-year increase of less than 8 percent.  In the city of Chicago, community areas with over 80 foreclosure filings in the first quarter of 2009 such as Woodlawn, South Shore, South Chicago, and West Englewood all saw slight year-over-year declines, while other high foreclosure areas including Auburn Gresham, New City, Englewood, and Grand Boulevard saw small year-over-year increases of less than 10 percent. 

As referenced in a recent Crain’s Chicago Business story, a shift in the growth of foreclosures indicates a possible change in the nature of the foreclosure problem:

“While the first wave of foreclosures hit hardest in poorer city neighborhoods targeted by high-interest-rate lenders with loose credit standards, the latest round is striking middle-class areas where most borrowers qualified for standard-rate mortgages.”


[F]oreclosure-weary communities in the city are beginning to see new mortgage defaults plateau or decline as subprime loans disappear. Foreclosures in Englewood on the South Side, one of the city's poorest neighborhoods, fell 30% in the first quarter, to 126, from 179 in the fourth quarter.

"They stopped making subprime loans in July of '07," says Michael van Zalingen, director of homeownership services for Neighborhood Housing Services of Chicago Inc., the city's largest housing counseling agency, with 22 counselors handling 3,000 cases a year. "There's just not much more left to foreclose on in the low- to moderate-income communities on the South and West sides."

While it is possible that growth in new filings in traditionally high foreclosure areas such as a Englewood may be slowing, this does not mean the foreclosure crisis in these communities is ending.  The number of new foreclosure filings is still high in these areas.  However, the focus of federal, state, and local government interventions in these communities will likely shift.  Future strategies will likely increasingly emphasize limiting the impact of vacant and abandoned properties on the broader community.