Illinois foreclosure activity rises more than U.S. in 3rd quarter Crains Chicago Business 10-15-2009

Illinois foreclosure activity rises more than U.S. in 3rd quarter
Crains Chicago Business
October 15, 2009

Foreclosure activity rose more in Illinois in the third quarter than in the country as a whole.

Foreclosure-related filings rose 13.7 percent in Illinois in the third quarter compared with the April-June period, according to a report released Thursday by Irvine, Calif.-based RealtyTrac Inc.

The increase was 5 percent nationwide in foreclosure filings, which include default notices and several other legal notices that homeowners and other property owners receive before they finally lose their properties.

Also, foreclosure activity in Illinois rose 30.3 percent in the third quarter compared with third-quarter 2008, a bigger increase than the 22.5 percent rise nationwide.

Illinois had the 10th-highest foreclosure rate in the U.S. in the third quarter, with one out of every 136 properties getting a filing, a total of 37,270.

The vast majority of properties in RealtyTrac's database are residential.

Nationally, the foreclosure crisis affected nearly 938,000 properties in the July-September quarter, compared with about 890,000 in the prior three months, according to RealtyTrac. That puts foreclosure-related filings on a pace to hit about 3.5 million this year, up from more than 2.3 million last year.

Unemployment is the main reason homeowners are falling into trouble. While the economy is likely out of recession, the unemployment rate — now at a 26-year high of 9.8 percent — isn't expected to peak until the middle of next year.

Mortgage companies sometimes allow unemployed homeowners to defer three to six months of payments while they are looking for a job. But there's little else they can do.

"The sheer scale of the problem is preventing the loan modification programs from having the kind of impact we'd all like" said Rick Sharga, RealtyTrac's senior vice-president for marketing.

Last week, the Obama administration hailed a milestone in its mortgage relief effort, reporting that 500,000 homeowners have received help since the program was launched in March. But new defaults are still exceeding the number of borrowers getting help.

Mortgage companies have slowed down the pace of foreclosures as they evaluate whether borrowers qualify for the administration's program. Analysts, however, forecast that many of those homeowners won't qualify, and foresee a new wave of foreclosed properties hitting the market next year. That's likely to further depress home prices.

Some homeowners are in such a massive financial hole that it's hard to design a modification that will actually provide lower payments.
According to the RealtyTrac report, there were nearly 344,000 foreclosure-related filings last month, down 4 percent from a month earlier but still the third-highest month since the report started in early 2005.

It was the seventh straight month in which more than 300,000 properties received a foreclosure filing.

Banks repossessed nearly 88,000 properties in September, up from about 76,000 a month earlier.

On a state-by-state basis, Nevada had the nation's highest foreclosure rate in the July-September quarter. Arizona was No. 2, followed by California, Florida and Idaho. Rounding out the top 10 were Utah, Georgia, Michigan, Colorado and Illinois.