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.