Foreclosures weigh on Chicago housing market

By Mary Ellen Podmolik
Posted Nov. 22, 2010 at 11:05 a.m.

Three reports issued Monday paint a grim picture of the foreclosure crisis in the Chicago area, particularly compared to the nation as a whole.

TransUnion reported that mortgage loan delinquencies in the Chicago area fell only slightly in the third quarter, to  7.79 percent of  mortgage loans that are at least 60 days delinquent. That compared with 7.98 percent in second quarter, and 6.95 percent in 2010’s third quarter.

Nationally, mortgage loan delinquencies fell to 6.44 percent in the third quarter, from 6.67 percent in the second, marking the largest quarterly decline since 2006’s fourth quarter. However, delinquencies remain higher than the 6.25 percent rate in 2009’s third quarter.

Another report, from information provider CoreLogic, said it would take more than 30 months for the Chicago area to work through its supply of distressed housing, in large part because of an increase in the number of homes considered shadow inventory. Those are homes that are seriously delinquent on their mortgages, in foreclosure,or have been repossessed by banks but are not listed for sale.

Nationally, CoreLogic found that as of August, the residential shadow inventory totaled 2.1 million homes, up from  1.9 million homes a year earlier. The visible inventory of distressed properties listed for sale remained flat at 4.2 million units. The overall supply of 6.3 million distressed homes means there was 23 months of supply in August, up from 17 months a year earlier.

Traditionally, a healthy housing market has six to eight months of inventory available at any one time.

Separately, a survey found that news of investigations into whether mortgage servicers held title to foreclosed properties they were selling spooked would-be buyers, who largely stayed away from distressed properties in October.

The monthly Campbell/Inside Mortgage Finance survey found that 14 percent of home buyers and 6 percent of investors refused to look at foreclosed properties. So, distressed property sales accounted for 44.3 percent of transactions in October, down from 47.5 percent of all sales in September.

Housing analysts have long said that the key to reinvigorating housing prices and the overall housing market is to shrink the number of foreclosed properties for sale at rock-bottom prices.

On Tuesday, the Illinois Association of Realtors will report existing home sales for October. Nationally, they are expected to fall.



  1. romeotybalt Nov. 22, 2010 at 2:46 pm

    Foreclosures are just a symptom of a housing market that is returning to it’s normal valuations. The bubble influenced prices were just too high to be supported by actual incomes. Yet, you wonder why banks and politicians always harp about higher real estate values.

    Consumers need lower home prices, not higher! Yet, every affordable housing program does nothing to keep homeowners in their homes. This is just a way to transfer more money to the banks at the expense of the taxpayer.

    The 30-year mortgage incentivized by a mortgage tax subsidy, is the biggest scam going. We as Americans are just too gullible and stupid. Who would you spend one dollar just to save 20 cents? Our current financial system just a way to enslave the American cosumer through more interest debt created out of thin air. Think, people.

    Personally, I strategically defaulted on my 400k nightmare, and I am contesting the foreclosure. This way I have lived in the home for over 13 months, I plan to fight another 18 months. With a 3k monthly mortgage, I have all the incentive in the world to keep fighting for my legal rights.

    The banks actually did me a favor when they created my fradulent loan. The websites, IrvingHousingblog, and, were particularly helpful. I don’t see why so many Americans choose to pay for an underwater investment when they could save their money be defaulting, squatting, or both!

  2. Larry Fleckinger - Short Sale Expert Nov. 22, 2010 at 2:48 pm

    Here in Brevard County FL our distressed property sales are over 50% of the real estate sales in our MLS. Going to get worse before it gets better. Good news is now is a GREAT time to buy a home with interest rates under 5%!
    Larry Fleckinger

  3. Morris Eedelman Nov. 22, 2010 at 9:16 pm

    Chicago IL – It takes a lender months to foreclose on your house. I have seen some lenders take 2-3 years to foreclose on a house. There are two reasons this is happening. First, there are a lot of people unable to make their payments. Second, the court system is backed up.

    This gives you plenty of time to negotiate a loan modification. Discover how to negotiate a loan modification here.

    Here are a few examples. I have seen many lenders wait up to a year to file for foreclosure. The homeowner stopped making their payments in January. Their lender didn’t file for foreclosure until October or November that year. In many situations, the lenders are waiting even longer than that. Obviously it all depends on the lender.

    Here is an example of how the court system is backed up. Many lenders will file for foreclosure. In some situations, it takes a judge two to three months to respond to a request. The court system is only designed to handle so many cases.

    There are simply too many cases being shoved into the system. Once a judge is overloaded, it takes longer for them to respond. The other thing is that the lawyers for the lenders are overloaded. Many of these law firms reduced staff during the last economic boom. Now they are having to crank up production. It is taking time for them to hire on and train new staff.

    What does that mean to you? They are slow to file the foreclosure case. They don’t “push” the case to foreclose faster. I have heard of foreclosure cases in some states that would sit dormant for 1-2 years. The foreclosure lawyers simply weren’t filing the necessary paperwork. If you are facing this is good news.

    You can stay in your home rent free for a long time. I saw one person move out of their house a couple of months after the foreclosure started. He couldn’t afford rent at his new house and was evicted. However, it took his lender over two years to foreclose on his house. He could have lived in his original house for free during those two years.

    Morris Edelman is a Real Estate Associate Broker at Keller Williams Realty and the Stop Chicagoland Forclosures Institute.

  4. Lucid Realty Nov. 23, 2010 at 8:35 a.m.

    Foreclosure activity in Chicago is trending up:

    And in October 39% of all closings were distressed properties. Prices just have to come down but many, many people just can’t afford to sell at the required prices.

  5. Don G Nov. 26, 2010 at 2:59 pm

    Reading this article, I don’t actually come away thinking that now is a bad time to invest in real-estate in Chicago. Rather, the forclosure issue will depress any price appreciation for the next few years. It is hard to imaging that the foreclosure problems will last for much more than 2 years, though. Also, theses low mortgage rates are almost at generational lows (although as is seen in Japan, low rates lasted ofr decades, aand thus were porbably noit the bargains they look like in a historical context).

  6. ruth calhoun Nov. 30, 2010 at 10:06 pm

    i love your article i would like to talk with you about my situation.(let talk)