Foreclosures up in Illinois, bucking U.S. decline

By Mary Ellen Podmolik
Posted Nov. 11, 2010 at 6:18 a.m.

A sharp uptick in initial foreclosure filings in Illinois meant the state did not follow the pattern of the nation as a whole, which saw a 4 percent decrease in foreclosure filings in October.

The number of homes that received an initial notice of default in Illinois, the first step in the foreclosure process, rose 24 percent in October, to 8,388 Illinois homes, from 6,780 in September. Altogether, the number of all types of foreclosure filings in Illinois totaled 16,969 last month, an increase of almost 7 percent from September but down almost 15 percent from a year ago.

Like much of the country, the number of properties that were repossessed by lenders fell last month due to a freeze on foreclosure sales while mortgage servicers and banks participate in a wide-ranging investigation of foreclosure practices. In Illinois, the number of homes returned to lenders, labeled as real-estate owned, or REO properties, totaled 3,670 homes in September, a decrease of almost 20 percent from September.

Nationally, bank repossessions of foreclosed homes decreased in 33 states and Washington, D.C., while scheduled foreclosure auctions decreased in 26 states and Washington, D.C.

The number of U.S. homes repossessed by lenders last month fell by the sharpest margin this year, as several major lenders temporarily halted most or all of their foreclosures amid allegations thousands of foreclosures were handled improperly.

Home repossessions dropped 9 percent from September to October, foreclosure listing firm RealtyTrac Inc. said Thursday. The decline represents the first significant hitch in a foreclosure steamroller that’s had lenders on pace to seize more than 1 million homes this year.

In recent weeks, some lenders that had suspended taking action against borrowers severely behind in payments have announced plans to resume doing so, though at a more measured pace, in an attempt to ensure there aren’t any flaws in the process.

That means the number of homes lost to foreclosure should begin picking up again, but at a much slower pace.

“We will still see some softness in the numbers in November, just because of the lag time from when you announce something like this and when you can actually enact it and then reverse it,” said Rick Sharga, a senior vice president at RealtyTrac.

Lenders such as Bank of America, Ally Financial’s GMAC Mortgage and JPMorgan Chase & Co. suspended some or all of their foreclosure activity after the foreclosure documents mess erupted in late September. In recent weeks, they announced plans to resume some foreclosure actions.

Bank of America announced Oct. 8 it would withdraw for review some 102,000 pending affidavits related to foreclosure proceedings in 23 states where courts play a role in the process.

About two weeks ago, the lender said it would begin resubmitting those affidavits, a process that was expected to take several weeks to complete.

It continues to have a hold on trustee sales or sheriff’s auctions of foreclosed homes, and is still delaying foreclosures in the 27 states that don’t require a judge’s approval as it reviews its cases in those states.

JPMorgan Chase said last week it would be restarting the foreclosure process later this month after halting foreclosure proceedings on 127,000 loans in 40 states.

“We expect it will take about three or four months to basically get back up to speed,” said spokesman Thomas Kelly.

GMAC, meanwhile, has been reviewing its thousands of foreclosure cases and moved ahead with them on a case-by-case basis.

“The moratorium may have been lifted by just about all the banks, but it’s gone from a foreclosure moratorium to a foreclosure slowdown,” said banking analyst Nancy Bush of NAB Research.

Banks have seized more than 909,000 homes through the first 10 months of the year and, even with the delays caused by the temporary foreclosure freeze, are on pace to take back more than 1 million homes this year.

“It’s almost impossible to imagine that we wouldn’t surpass that number at this point,” Sharga said.

Economic woes, such as unemployment or reduced income, continue to be the main catalysts for foreclosures.

In all, 93,236 homes were taken back by lenders in October, down from a peak 102,134 in September, said RealtyTrac, which tracks notices for defaults, scheduled home auctions and home repossessions — warnings that can lead up to a home eventually being lost to foreclosure.

Despite the sharp drop, October’s tally was still 21 percent higher than a year ago. Lenders have foreclosed on an average of more than 91,000 properties each month this year.

The number of homes taken back by banks fell sharply from September in many of the foreclosure hotbed states, including Arizona, California, Illinois and Nevada.

Florida bucked that trend, with repossessions rising 1 percent from September. They nearly doubled versus October last year.

“There were probably a whole batch of foreclosures that were already in process when the freeze was announced that led to Florida’s numbers being not affected as much in October as some of the other states,” Sharga said.

The number of properties receiving an initial default notice — the first step in the foreclosure process — slipped 2 percent last month from September, and was down 19 percent versus October last year, RealtyTrac said.

Initial defaults have fallen on an annual basis the past nine months as lenders have taken steps to manage the levels of distressed properties they have on their books.

All told, 332,172 properties received a foreclosure-related warning last month, down 4 percent from September and essentially flat versus the same month last year, RealtyTrac said. That translates to one in 389 U.S. homes.

Among states, Nevada posted the highest foreclosure rate last month, with one in every 79 households receiving a foreclosure notice. That’s nearly 5 times the national average.

Rounding out the top 10 states with the highest foreclosure rate in October were: Florida, Arizona, California, Michigan, Utah, Georgia, Idaho, Illinois and Colorado.

– The Associated Press contributed to this report

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  1. jobs jobs jobs Nov. 11, 2010 at 11:16 a.m.

    So what’s new? Things won’t get better unless we get jobs…

  2. ChicagoK Nov. 11, 2010 at 11:48 a.m.

    Democrat controlled states have a much higher unemployment rate and anti-business reputation than red states. There should be no surprise. Blue states are screwed by their their incompetent leaders! The news media told the entire country this fact – unless you watch MSNBC, CNN, ABC, CBS, NBC, …- For those networks you would have to deduce the profound grasp of the obvious. California and Illinois are held up to the world to see. They are two US government bodies on the list of top ten world governments likely to default on debt! The US has two states that are worse off than Lebanon, led by terrorists! You Democrat vote is a vote for failure, for death, for terrorism, for poor education, for … anything that is wrong in the world.

  3. romeotybalt Nov. 11, 2010 at 1:49 pm

    I am so glad that I strategically defaulted on my 400K albatross! I will move out in another 7 months after I am done fighting the court case. When the banks come after me for the deficiency or sell it to a collection agency I will simply file a BK. If they give me a 1099 I am expempt until 2012 since it is my primary home.

  4. Edward Norton Nov. 11, 2010 at 7:07 pm

    Right on romeotybalt! Screw these banks!