Summer quarter busiest ever for home seizures

By Mary Ellen Podmolik
Posted Oct. 14, 2010 at 6:38 a.m.

More than 9,000 homes in Illinois were scheduled to go to foreclosure auction or were repossessed by banks in September, as mortgage lenders continued to push foreclosures through the system to ease the backlog of failed loan modifications, RealtyTrac reported Thursday.

Nationally for the entire third quarter, the company said, the number of foreclosure auctions scheduled nationally totaled more than 372,000, the highest quarterly total since the company began tracking foreclosures in 2005. Meanwhile, the more than 288,000 bank repossessions hit a record high for the third quarter.

For the three months ended Sept. 30, almost 26,000 Illinois homes were scheduled to be auctioned or were repossessed by lenders.

Those numbers are likely to dip in October and possibly for the rest of the year as lenders voluntarily suspend foreclosure sale actions while they determine the extent of improper documentation and factual errors that have dogged loan servicers for the past three weeks.

Already, Ally/GMAC Mortgage, Bank of America and JP Morgan Chase have suspended foreclosure sales and Tuesday, all 50 states called for an investigation into the mortgage servicing industry’s foreclosure procedures.

Lenders have said, however, that they continue to file initial notices of default against delinquent homeowners, and that was true last month as well. In Illinois, 6,780 homeowners received notice that their mortgage loan had gone into default and a foreclosure action against their properties had been initiated. In August, notices of default were filed against 6,912 Illinois homeowners.

Since lawsuits in several states first revealed that employees of some servicers signed affidavits necessary to move thousands of foreclosure cases a month toward judgment without reviewing the documents, there have been increasing calls for all lenders to temporarily halt foreclosures.

RealtyTrac said foreclosure activity in judicial states like Illinois, where most of the foreclosure documentation issues are thought to have occurred, accounted for 40 percent of all foreclosure activity in the third quarter and 36 percent of all bank repossessions of homes. That may be a trouble statistic, as worries have grown this week that a widespread shutdown of the foreclosure process would prolong the eventual recovery of the U.S. housing industry.

“If the documentation issue cannot be quickly resolved and expands to more lenders, we could see a chilling effect on the overall housing market as sales of pre-foreclosure and foreclosed properties, which account for nearly one-third of all sales, dry up and the shadow inventory of distressed properties grows, causing more uncertainty about home prices,” said James Saccacio, RealtyTrac’s chief executive officer.

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  1. Steve Thompson Oct. 14, 2010 at 9:43 a.m.

    For every foreclosure in every city across the Untied States, cities and other jurisdictions lose property tax revenue which will ultimately result in far less services and/or higher taxes for those who still own their home. As surrounding property values drop because of multiple foreclosures in a given neighbourhood, it will be years before cities recoup their lost revenue.

    How many markets will end up like Detroit Michigan where there are thousands of empty homes? The overhang of homes for sale is so large that the city is planning to demolish 10,00 homes over the next 3 years. Here’s a look at what Detroit is facing today: -house-fact-or-fiction.html

  2. crobb Oct. 14, 2010 at 10:15 a.m.

    Recession’s over eh?

  3. Chuck Ginsberg Oct. 14, 2010 at 11:24 a.m.

    The big issue is jobs. Until people are making a living, we will continue to see a bad real estate market. In my opinion, become part of the solution, spend your money locally and help your local economy. It will help you, it will help your neighbor. Chuck Ginsberg, Solfire Realty,

  4. Lucid Realty Oct. 14, 2010 at 12:58 pm

    You can find 1 1/2 years worth of Chicago foreclosure trend data at the bottom of this page:

    However, the more important factoid is that in September 44% of all home sales in Chicago were distressed – either short sales or foreclosures.

  5. 867-5309 Oct. 14, 2010 at 1:51 pm

    @Chuck – Up to now, my job is safe (I work in IT). Most of software development work was off-shored to India, Indonesia, Philippines, or China.
    Despite people like me still with a job, life changes…and so does your budget. With 2 daughters in college and overqualified for grants, unanticipated school loans kill your budget. Your car which craps out on the road with no money to fix it…you turn to getting a car loan. Also, unanticipated.
    I’m surprised more people are NOT being foreclosed.

  6. Rose Oct. 15, 2010 at 7:16 a.m.

    The article mentions “Failed loan modifications” which is a significant part of the foreclosure crisis. I attempted to work with Wells Fargo for months and, despite paying the reduced amount for 6 months, the bank ruined my credit and in the end, found an excuse not to modify the loan.

    I was left owing the balance of the reduced payment which amounted to over $6,000 which I couldn’t pay. The house is worth 1/4 less than what I paid for it. My credit is already ruined. I tried my best. So, now the bank can have the house with my blessings.

  7. Romeotybalt Oct. 17, 2010 at 4:43 a.m.

    So glad I defaulted on my nightmare and will be moving soon to an already paid off house.

  8. Romeotybalt Oct. 17, 2010 at 4:43 a.m.

    So glad I defaulted on my nightmare and will be moving soon to an already paid off house.

  9. ChadofCNC Oct. 25, 2010 at 9:53 pm

    The banks WANT you to fail. They can take your money (your trial payments) used to then fix up the home. Which they then sell at the current value to a new owner. THEN they come after you for the difference between the sale price and the original loan. If they can’t get the difference from you they place a lien on the home and then foreclose on the newest owner.

    The banks got billions of our tax dollars but can’t even seem to locate where most of that money went…the only part they can account for is the millions in bonuses the exec’s received. The rest disappeared in the black hole they call accounting.

    The TARP money should have been sent to the taxpayers who could have then paid off their home loans & credit cards (bank receives it bailoutand would have made a profit) housing market fixed. But that would have helped out more middle and lower income people which just can’t happen. Those in power have to make sure their friends stay rich to get them re-elected…….