Foreclosure Auctions Have Been Delayed in Illinois

Thanks to the recent passage of a new law foreclosure auctions in Illinois have been delayed but not cancelled. It is apprehended that the number of default notices will continue to increase.

During the past three months in the Chicago region the default notices had dropped because of decrease in the number of filings for a period of 30 days that started from last April. The default notice is the first step in the foreclosure process. But once more foreclosure numbers are rapidly rising.
In Chicago region the default notices in April shot up to 5,539. In May it dropped sharply to 1,694 default notices but again in June it went up to 3,468. Experts are opining that the trend of increase will continue.

In the early part of April Governor Quinn inked into law Homeowner Protection Act. It bans foreclosures from starting within the first thirty days of the loan becoming delinquent. It also stipulates lenders to communicate to the borrowers that they have a grace period of 30 days within which to work out the loan working through an HUD approved housing counselor.

Geoff Smith of Woodstock Institute said, “The 90-day window is good but only good if you can help the borrower get into a better loan and theoretically that would be through the (federal loan modification) program.” Referring to the grace period he noted that it “seems to have achieved its goal of delaying the foreclosure process. What happens next is where the big question mark is. Are those people, whose foreclosure was delayed, are they now getting the help they need?”

Earlier in August the Treasury had noted that merely 9% were eligible for reworking of loans. Delinquent homeowners are being asked to avail of a trial period of three months to show their capability of being current with the newly worked out loan terms as laid down in the Home Affordable Modification Program.
The Department of Financial and Professional Regulation of the state is getting about 2,000 calls per months from the borrowers who have received notices relating to the grace period from their servicers. They are trying to locate a bonafide counselor. The problem is that there are not enough counselors to handle the mounting requests.

In July there were 14,524 initial default notices, auction sales and bank repossession on properties in Illinois – 35% more than in June according to RealtyTrac. Of these 6,770 were default notices. In June there were 3,648, default notifications, 3,139 default notices in May and in April 6,407 default notices. The bank repossessions numbered 3,700 in July.