Foreclosures up, but situation is improving

AREA FORECLOSURES

Total number of Homes in Homes in Homes in Homes in

Housing Units Foreclosure Foreclosure Foreclosure Foreclosure

County 2010 2006 2010 2011 2012

Kendall 40,321 316 — 1.1% 2,612 — 7.5% 1,542 — 4.4% 2,306 — 5.7%

Kane 182,047 1,763 — 1.1% 9,041 — 5.2% 6,134 — 3.5% 8,564 — 4.7%

Will 237,501 3,154 — 1.5% 11,027 — 4.8% 7,387 — 3.2% 9,591 — 4.0%

DuPage 356,179 2,151 — 0.6% 10,646 — 3.0% 6,999 — 1.9% 10,443 — 2.9%

DeKalb 41,079 301 — 0.8 % 1,207 — 3.1% 952 — 2.4% 1,033 — 2.5% 

Foreclosures are up in every county in the area, but experts say that things aren’t as bad as they perhaps appear.

Year-end figures detailing the foreclosure crisis for 2012 are out, and the picture remains grim, it seems.

One in 34 homes in DuPage County had foreclosure paperwork filed against them in 2012, according to statistics compiled by RealtyTrac. That’s about 2.9 percent, up from 1.9 percent of homes in 2011. The numbers in Will County also show a rise in foreclosures.

Numbers are also bad in other nearby counties. In Kendall County, one in 17 homes faced foreclosure last year, and Kendall ranked first in the state for foreclosure filings — which include default notices, scheduled auctions and bank repossessions. Out of Kendall’s 40,321 homes, 2,306 faced foreclosure last year.

Kane County didn’t fare much better. It tied with McHenry County for the second-most foreclosures in Illinois last year, at a rate of one in 21 homes.

Though the numbers look bad, experts say the 2012 figures don’t really represent another downturn for the housing markets. Instead, the dismal 2012 numbers reflect paperwork delays that have slowed the foreclosure process.

 “In large part, it’s a technical issue of when the foreclosures were processed,” said Geoff Smith, executive director of the Institute for Housing Studies at DePaul University. He said that slow processing of foreclosures a couple years ago, made worse by the robo-signing scandal in which banks were found to be improperly filing foreclosure paperwork, created a glut of foreclosures in the courts.

“That really reduced the number of new foreclosures filed in 2011, which were fairly lower than expected,” Smith said. “All those foreclosures were then rolled over into 2012.”

Smith said that he expected to see the number of foreclosure proceedings start to stabilize in 2013.

David Field, owner of Home Field Realtors of Naperville, said the figures showing that foreclosures are rising don’t accurately portray the current market.

“These figures are up due to ‘shadow inventory’ as there were a number of homeowners that were going through the foreclosure process that the bank hadn’t caught up with yet,” Field said. “Banks have an extensive loss mitigation process they have to go through, and it takes time to process the paperwork. There were houses in foreclosure months ago, but they didn’t show up on the ‘books’ because the paperwork wasn’t complete. There’s been a huge backlog.”

Field argues that the economy is actually improving based on new jobs and companies starting to make investments and believes that it’s only a matter of time before the housing industry reflects the recovery as well.

“Foreclosures are also opening up more opportunities for short sales, as banks are finding it’s incredibly expensive and also a very involved process when it comes to foreclosures,” he said. “I read recently that banks spend about $50,000 on any given property, given the paperwork, the resources needed to sell the property and the commissions. Banks understand that foreclosures are not good for anyone and so this is creating more opportunities for short sales.”

Jack Persin, managing broker with Naperville’s Ryan Hill Realty, said he just returned from a meeting with the Illinois Association of Realtors in Peoria where the issue of short sales was discussed. Persin said reports from the Peoria meeting said banks are encouraging options other than foreclosures.

“There are more foreclosures in Chicago and other areas of the state, but here in the Naperville-Lisle market where I work, I wouldn’t say that was the case last year,” Persin said. “The 2011 and 2012 foreclosure figures were about the same.

“Throughout the year, you’re going to see foreclosures constantly, but also banks working hard to extricate these properties.”

Persin adds that the absorption rate — or the number of days it takes to sell a home once it is placed in the market — has dropped dramatically.

“Last January, the absorption rate was 11.8 months and now a year later it has dropped to 5.3, while list prices are up 1.1 percent and the median price of homes is also up,” Persin said. “Foreclosures in the state and in Chicago are definitely up, and it’s true some of that comes from the backlog of inventory. But I don’t think those figures reflect what’s happening in the western suburbs.”

The U.S. total was 2.3 million filings on 1.8 million U.S. properties, down 3 percent from 2011 and down 36 percent from the peak of 2.9 million properties with foreclosure filings in 2010.

The RealtyTrac report shows that 1.39 percent of all U.S. housing units had at least one foreclosure filing last year, down from 1.45 percent in 2011.

In Illinois, 2.58 percent of the housing units were affected last year, ranking the state fifth in the nation, and foreclosure filings were up almost 33 percent in Illinois from 2011.

RealtyTrac’s report also noted that:

In January 2013, 10.9 million homeowners nationwide — representing 26 percent of all outstanding homes with a mortgage — were seriously underwater.

2012 foreclosure filings increased mostly in states that use a judicial foreclosure process and they decreased more in states that use a streamlined non-judicial process.

Foreclosure filings in December dropped 10 percent from the previous month and 21 percent from December 2011. December’s total was the lowest monthly total since April 2007 — a 68-month low.

Florida, Nevada and Arizona had the highest foreclosure rates in the nation.

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