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By Robert Pratt | Broker in Chicago, IL
  • Breaking Bad: Homeowners face Bank Break-Ins

    Posted Under: Market Conditions in Chicago, Financing in Chicago, Foreclosure in Chicago  |  November 15, 2013 10:38 AM  |  464 views  |  No comments
    Did you know that lenders and property managers can break into your home without permission? A recent article in the Chicago Tribune pointed out how banks only need to prove that you’re foreclosed and that your property has been abandoned in order to break in. Many lenders are not even waiting until homes are abandoned. Some break into homes before the foreclosures are even finalized.

    Homeowners and their lawyers are fighting back. One attorney in the Tribune article said that banks are going too far: "There are clauses in many mortgage contracts that allow a lender to secure its property, but there's no enforceable clause that lets a bank come into your home willy nilly."

    Banks hire companies to do the break-ins. One such company is Safeguard. They look for signs of “unmown grass, utilities turned off or mail piled up,” according to the article. Managers are paid 15 dollars to drive past, and 400 to 500 dollars to break in.

    Why are they doing this? Banks want to turnover foreclosed homes quickly. Since the recession, there has been a big business of turning over such property. The quicker the homeowners leave, the faster banks can sell the property and make a profit.

    Illinois Lawsuit

    Complaints are especially bad in Illinois. The state attorney general has even sued Safeguard – the only attorney general to do so. According to Nancy Bauer, a spokesperson for the attorney general, there have been over 400 complaints in Illinois.

    "We think this is happening all over the country, where property managers are illegally breaking into people's homes," said Bauer. "It's a homeowner's worst nightmare," she told the Tribune.

    Foreclosure Decline in Illinois

    So how does the foreclosure market look in Chicago? According to Chicago Now, foreclosures are steadily decreasing. They tout a decrease of 43.5 percent, in fact. Even that shadow inventory of forclosed properties is steadily decreasing.

    According to RealityTrac, "U.S. foreclosure starts in the third quarter were at a seven-year low."
    Remember to protect yourself if something like this happens to you. Contact your lawyer, and always remember that you have rights. But with the market rebounding, hopefully such break-ins will become less frequent as foreclosure numbers decline.
  • Painting a Better Picture of Chicago’s Foreclosed Homes

    Posted Under: General Area in Chicago, Home Buying in Chicago, Foreclosure in Chicago  |  September 23, 2013 11:20 AM  |  640 views  |  No comments
    Our world isn’t always filled with rainbows and butterflies.  Just a week ago on a late-night variety show, Mayor Rahm was asked about “Chiraq” – an unfortunate nickname regarding Chicago’s crime rate and gun violence.  Yet, the Neighborhood Housing Services of Chicago (NHS) and the programs they’ve executed paint Chicago neighborhoods in a far better picture.

    NHS was established to help revitalize neighborhoods since 1975.  The non-profit organization’s goal is to help homeowners and strengthen the community.  Often the work is focused on the South and West sides of Chicago where there are concentrated amounts of low and moderate income neighborhoods.

    The organization’s mission is to provide Chicago and Elgin residents the necessary resources to buy, fix, keep and avoid foreclosure of their homes – mostly consisting of educational classes and consultative programs. 

    NHS recently partnered with Chris Toepfer of a fellow nonprofit - Neighborhood Foundation, Mays Academy and Safe Passage to create “artistic board-ups.”  According to an article in the Sun Times, the board-up program revitalizes abandoned Chicago homes through the integration of decorative painting. The program’s goal is to safely secure the home without the total look of abandonment that depresses a community. 

    Toepfer began his work in 1995.  Over the course of eight years, he estimates visiting more than 3,000 vacant buildings over 17 cities in the US.  In Chicago alone, Toepfer has boarded over 100 buildings including 25 larger commercial sites, according to the Sun Times article.  Notably, some of the most acclaimed work is the Ramova Theatre in Bridgeport, the Muddy Waters home in North Kenwood, the Charles Comiskey home, and 5131 S. King.

    Residents are positive about the program.  The aesthetic board-up has a way of making a vacant building blend into the community and gives community members hope for progress, change and optimism.  The artistic technique preserves the buildings and allows many homes to be saved from demolition – giving hope to return to its original spender.
  • Chicago Foreclosure Filings Drop Dramatically From Last Year

    Posted Under: Market Conditions in Chicago, Foreclosure in Chicago  |  August 28, 2013 10:12 AM  |  834 views  |  No comments
    The Chicago real estate market is improving with encouraging evidence of recovery within virtually every facet of the Chicago housing market.

    Even Chicago foreclosures are becoming less of an issue as fewer homeowners are filing them. Judging by the numbers from the early months of 2012 to the beginning of this year, the number of foreclosures has dropped significantly – by more than a third, an article in the HousingWire said.

    Filings have decreased by over 36% with 34,978 Chicago foreclosures at the beginning of 2012 compared to 22,342 filings in the early part of this year.

    Citing a recent U.S. Foreclosure Market report from RealtyTrac, YoChicago reported a total of 130,888 foreclosure filings in the United States during the month of July. This is 2% percent higher than filing in June but nevertheless lower by 32 percent if you’re looking at figures from July of last year.

    Comparatively, the Chicago real estate market had a much steadier progress. The amount of Chicago homes where owners had to file foreclosure decreased by just under 27% month to month and by about 44 % every year.

    Daren Blomquist, who serves as Vice President of RealtyTrac, explained the situation to YoChicago: “While foreclosures are continuing to boil over in a select group of markets where state legislation and court rulings kept a lid on foreclosure activity during the worst of the housing crisis, the foreclosure boil-over markets are becoming fewer and farther between.” Blomquist went on to attribute this to lenders throughout the country who caught up foreclosures that were filed in states which require an exceptionally long judicial processes.

    This is great news for the Chicago real estate market as well as the economy as a whole. If the recovery keeps going as it has, we’ll soon be back to the prosperous times before the housing bubble burst and the stock market crashed.
  • Delinquent Borrowers Could Get Lower Mortgage Payments

    Posted Under: Financing in Chicago, Foreclosure in Chicago  |  July 10, 2013 10:10 AM  |  904 views  |  No comments
    Illinois rate of delinquency on mortgage payments for Chicago homes is 5.32% – slightly higher than the national average of 4.56%.  Starting this week, however, thousands of homeowners struggling to pay their mortgage in Chicago and nationwide are in for a pleasant surprise.

    New provisions in place by the Federal Housing Finance Agency’s Streamlined Modification Initiative will allow delinquent borrowers lower mortgage payments in an effort to avoid foreclosures.

    Based off data from the Mortgage Bankers Association, there are an estimated 1.1 million borrowers behind on their loans by three payments or more.

    Lenders will begin offering lower mortgage payments to those with mortgages backed by Freddie Mac and Fanny May and who are at least 90 days delinquent. As reported by CNNMoney, delinquent borrowers will now move from a traditional 30 year payment schedules to 40 year schedules.

    For example, borrowers moving from a 30-year $200,000 loan with a 5.5 percent rate to a 40-year term with a 4 percent rate will reduce their mortgage payment to $835 from $1,135 — a $300 monthly difference.

    The program is scheduled to last through December 2015 and to qualify, the loan must be at least one year old and borrowers cannot be more than twenty-four months behind payments. Principal balances must also be 80% or more of the value of the home.

    As a bonus, the FHFA Modification Initiative will not require borrowers to complete or file any additional paperwork to take advantage of the new foreclosure prevention act.  Rather, those who qualify will only need to make the new payments for a three month trial period and then the adjustment will become permanent.

    In past efforts, FHFA’s extensive paperwork and procedures restricted getting people the help they needed.

    Do you think the new policy will help or hurt Chicago real estate?

  • How Zombies are Taking Over Real Estate

    Posted Under: Foreclosure in Chicago, Investment Properties in Chicago  |  May 10, 2013 11:50 AM  |  984 views  |  1 comment
    Even if you don’t follow AMC’s “The Walking Dead” or have an affinity for horror movies, the zombie theme has inundated popular culture. What you probably didn’t realize is that this trend has carried over to real estate. Check out the phenomenon now known as “zombie foreclosures”.

    A recent national survey found 301,874 “zombie” properties across U.S. markets in which homeowners in foreclosure have vacated the premises. Many residents abandon their homes thinking that the banks have taken over and are going through the foreclosure process and have assumed responsibility of their home. But often times banks sit on their hands and let the properties sit in limbo. 

    These properties quickly become eyesores in their neighborhoods as they deteriorate; homes are susceptible to vandalism and consequently the surrounding property values plummet. Unfortunately for many foreclosed homeowners, they find out years later that they were still on the hook to pay property taxes as the bank dragged its feet. 

    Currently, there are 302,000 zombie properties in the U.S. according to RealtyTrac, a housing data company that studies foreclosure activity. Florida is the state hit hardest by an influx of “zombie” properties with over 90,000 units currently on the books. Illinois and California rank 2nd and 3rd respectively with 31,000 and 28,000.

    While many states are enacting legislation to hold banks accountable for following through with their foreclosures by levying fines if the banks homes aren’t cared for properly and expediting the entire process overall. The problem is that many banks don’t find it financially advantageous to work through the foreclosure process due to the holding costs. The foreclosure process is in itself quite lengthy and with the backload of cases on the books many cities are simply swamped and stuck with backlog.

    Investors are snapping up foreclosed properties left and right with the intention of rehabbing and renting out the homes in this heightened rental market. However, this doesn’t necessarily save many of the properties that are deemed too old to purchase. Investors are looking for properties as close to turnkey as possible. That means some homes that were built as early as 1990 are seen as too old and remain stranded in limbo.

    If you’re currently going through the foreclosure process make sure to consult with a real estate professional in order to protect yourself from falling victim to the system. Also, if you’re interested in acquiring and rehabbing a foreclosed unit, be sure to consult your Chicago real estate agent regarding best practices.   
  • How much does rock bottom real estate really cost?

    Posted Under: Market Conditions in Chicago, Home Buying in Chicago, Foreclosure in Chicago  |  April 9, 2012 12:52 PM  |  638 views  |  No comments
    For quite some time, people across the nation have been achatter about the plummeting costs of single-family homes and condos, marveling at just how low prices can fall. But the reality may shock some when we tell them this: most major US markets have an excess of residential properties available for just $10,000 or less. And that’s not a typo. 

    As you’d suspect, most of these are foreclosures, and plenty of them are less than ideal investments. But the majority are livable properties located in communities where housing-recovery plans are underway and the economy is stable. With properties like this, buyers who plan to renovate and rent are predicting a 25-30% return on investment.

    If you’re inclined to believe that these are throw-away properties in towns you’ve never heard of, think again.

    Some of the nation’s largest metropolitan markets–which include cities like New York, L.A. and Philadelphia–boast more than 100 properties at $10,000 or less. Atlanta, which is the ninth largest U.S. metro market, currently has about 230 listings at or below this price, while Chicago real estate, being the third largest metro market, has 165.

    Those numbers are just a drop in the bucket, though, when you consider that the number of homes listed for less than $10,000 has been growing in a variety of markets, including L.A., Greensboro (NC) and Wichita (KS). But don’t bide your time if you’re looking for an investment property–at least 15 metro markets, including Chicago and Atlanta, have seen a decrease in the number of bargain listings.

    People are seeing recovery unfold and they’ve been quick to take advantage of it.

    Still, you’ve probably heard the bit about not doing something just because everyone else is. The same goes here. If you’re going to give serious consideration to property investment, do your homework. Make sure the surrounding area is ideal for you and for tenants, that it isn’t run down and, instead, is showing true sign of life. 

  • Increase in Chicago Foreclosure Activity at the End of 2011 Results in Hot Foreclosure Market in 2012

    Posted Under: Market Conditions in Chicago, Foreclosure in Chicago  |  February 27, 2012 10:48 AM  |  579 views  |  No comments
    The last two months of 2011 witnessed a dramatic increase in the number of foreclosed homes in the Chicago area. This sudden uptick in the number of homes in foreclosure came at the heels of a year largely characterized by low foreclosure numbers, particularly in relation to the previous year.

    According to reports from the Illinois Foreclosure Listing Service (IFLS), the second quarter of 2011 had the lowest number of foreclosed homes since 2008, with the month of July alone seeing a 46 percent year-over-year decline.

    Starting in November, however, the IFLS reported a sudden upturn in Chicagoland foreclosure activity, greatly augmenting the overall numbers for the year. The penultimate month of last year observed some 2,700 homes in the area (roughly 95 percent of them real estate owned) completing the foreclosure procedure—an increase of over 98 percent from November 2010.

    November 2011 also saw a drastic increase in the number of Chicago-area bank-owned properties and homes that were sold at foreclosure auctions. Additionally, the number of new REO properties was higher than the number of homes that were sold at auction. The IFLS also reported an almost 50 percent increase in the number of Chicago-area homes purchased by investors—a trend that should bleed into the current year.

    While December did witness a dip in foreclosure activity in the Windy City, the number of bank-owned properties and homes sold at foreclosure auctions increased overall, thanks to November’s positive numbers. Though the figures dipped slightly in the last month of 2011, there was still a year-over-year increase of 81 percent and a month-over-month increase of 13 percent. In fact, foreclosure activity went up so much in the final two months of 2011 that Illinois ended up with one of the highest foreclosure rates in the nation.
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