New data illustrate a logjam in Chicago region foreclosure processes

Chicago region foreclosure cases are taking longer to complete the foreclosure process, resulting in a dramatic drop in foreclosure completions from the first half of 2010 to the first half of 2011, new data from Woodstock Institute show. As fewer cases complete the foreclosure process each quarter, it is likely that the number of homes tied up in the foreclosure process is growing.

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The data show that:

 

The Chicago region experienced a significant decrease in foreclosure auction activity in the first six months of 2011 as compared to the first six months of 2010. In the six-county region, 8,515 cases completed the foreclosure process at auction in the first half of 2011.  This represents a 50.9 percent decline in regional auction activity when compared to the first half of 2010, when 17,331 cases completed the foreclosure process.

o Lake County and Cook County saw the greatest declines from the first half of 2010 to the first half of 2011. Over that time period, completed foreclosure auctions declined by 55.2 percent in Lake County and by 55.1 percent in Cook County.

 

Completed foreclosure auction activity in the second quarter of 2011 was at its lowest level since the beginning of the housing crisis. In the six-county region, only 3,604 properties completed the foreclosure process in second quarter of 2011--fewer auctions than in any other quarter since 2007.

 

Fewer cases completing in a given quarter are likely influenced by longer foreclosure process times, which are currently at record highs. For cases in the six-county region that completed the foreclosure process at auction in the second quarter of 2011, the median length of the foreclosure process was 359 days--a record high since 2008. This is 25.5 percent longer than cases completing in second quarter of 2010, 26.9 percent longer than cases completing in the second quarter of 2009, and 50.8 percent longer than cases completing in the second quarter of 2008.

o Kane County and Will County saw the longest median length of the foreclosure process for cases completing in the second half of 2011. Cases in Kane County spent a median of 390 days in the foreclosure process, while the median days-in-process was 373 days in Will County.

o Foreclosure process times were the shortest in McHenry County, where median days-in-process was 307 days for cases completing in the second quarter of 2011.

 

As fewer cases complete the foreclosure process each quarter, the number of cases and properties tied up in the foreclosure process is growing. In the second quarter of 2011, seven percent of Illinois loans held by a servicer were in foreclosure—one of the four highest rates in the nation.

 

These trends are a continuation of declines in foreclosure auctions observed at the end of 2010. The 2010 declines were attributed to the moratoria that many servicers imposed in response to the robo-signing scandal. Today, county courts are processing cases that would have been scheduled in 2010 in addition to foreclosure cases filed in 2011, which is likely straining their capacity.

 

“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, Senior Research and Project Associate at 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.”

 

“Significant outreach efforts must be made to inform homeowners of their rights and connect them with housing counseling, mediation, and legal aid resources,” Duda says. “In addition, county courts should investigate ways to expedite the foreclosure process for vacant homes so that they have less time to deteriorate. Illinois should also pursue legislation that empowers communities to better hold servicers accountable for maintenance of homes before the foreclosure process is completed.”

 

For more information, contact Sarah Duda at sduda@woodstockinst.org or 312-368-0310.