Chicago region sees jump in completed foreclosures

An increasing number of Chicago area homes were lost to foreclosure in the first three months of 2010, according to new foreclosure data released by Woodstock Institute.  In the first quarter of 2010, there were 9,302 completed foreclosure auctions in the region, the largest number of completed auctions recorded in a quarter since the beginning of the mortgage crisis in 2006.  In the Chicago six-county area the number of completed foreclosure auctions in the first quarter of 2010 increased by 56 percent when compared to the first quarter of 2009. The region also saw a nearly 80 percent increase in completed foreclosure auctions from the fourth quarter of 2009 to the first quarter of 2010.

The newly released data also show:

  • Despite recent declines in completed foreclosure auction activity, Cook County experienced significant increases in the number of completed foreclosure auctions in the first quarter of 2010. Between 2008 and 2009, Cook County saw an 8.7 percent decrease in completed foreclosure auctions. However, this trend was reversed in early 2010 when Cook County saw a 61.3 percent increase in the number of completed foreclosure auctions from the first quarter of 2009. Completed auctions increased by 59 percent in the City of Chicago, 31.2 percent in South Cook County, and 77.3 percent in West Cook County between the first quarters of 2009 and 2010. In the City of Chicago, some communities of note with large increases in the number of completed foreclosure auctions from the first quarter of 2009 and the first quarter of 2010 were Uptown (450 percent), Douglas (280 percent) and Lincoln Square (236.4 percent).
  • Within the six-county area, Kane County saw the greatest year-over-year increase in completed foreclosure auctions, with nearly a 122.7 percent increase from the first quarter of 2009 to the first quarter of 2010.
  • From the fourth quarter of 2009 to the first quarter of 2010, Cook County saw the biggest regional increase in completed foreclosure auctions. The number of properties where a foreclosure auction was completed increased by 122.2 percent in Cook County.  Within the county, the biggest quarter-over-quarter increases were observed in Northwest Cook County (168.8 percent) and North Cook County (135 percent). The City of Chicago saw a 113 percent increase from the fourth quarter of 2009 to the first quarter of 2010. In Chicago, neighborhoods of note with large quarter-over-quarter increases were Washington Park (400 percent), Douglas (375 percent) and Jefferson Park (333.3 percent). Of the collar counties, Will County saw the largest quarter-over-quarter increase in completed foreclosure auctions (58 percent).
  • The vast majority of properties that go to foreclosure auction become lender-owned, or Real Estate Owned (REO). In the first quarter of 2010, 95.1 percent of Chicago area properties that completed a foreclosure auction entered REO status.

The first quarter increases in completed foreclosure auctions are likely tied in part to the January 31 end of restrictions that prevented mortgage servicers from completing foreclosures on any homeowner who had applied for help through the federal government’s Home Affordable Modification Program.  Another likely factor contributing to the increase observed in the first quarter completed foreclosure auctions was the lifting of moratoriums on foreclosure sales instituted by many of the major financial institutions over the December holidays.

“The increase in completed foreclosure auctions means that more homes have been lost due to foreclosure and more distressed, lender-owned properties have entered the market in the first quarter of 2010 than in any quarter since the beginning of the mortgage crisis,” says Geoff Smith, Senior Vice President of Woodstock Institute. “These properties often stay vacant for long periods of time, depress local real estate markets, strain municipal resources, and generally destabilize communities.”

The data also show little year-over-year change in the number of new foreclosure filings from the first quarter of 2009 to the first quarter of 2010. In the six-county region, new foreclosure filings increased by 1 percent from 2009 to 2010. However, new filings continued to grow in middle- and higher-income communities, such as Northwest Cook County (20.1 percent), Lake County (16 percent), and McHenry County (11.5 percent). Declines in new filings were observed in the City of Chicago (-12.4 percent), West Cook County (-3.3 percent) and South Cook County (-1.8 percent). Within the City of Chicago, large increases in the number of new foreclosure filings were observed in North Park (88.9 percent) and Edgewater (54 percent), while large decreases were seen in Hyde Park (-57.7 percent), Avalon Park (-42.9 percent) and the Lower West Side (-41.7 percent).

“Given the devastation experienced in many communities hard hit by foreclosures, the most effective way to stabilize these neighborhoods is to keep people invested in their homes and communities through sustainable loan modifications that include principal reductions,” says Smith.