Increase of Foreclosures in Chicago
There has been a dramatic increase in foreclosures in Chicago during the first quarter of 2009. The sub-prime mortgage crisis is not connected with this new flood. The reason is massive job losses that have compelled borrowers to default in their mortgage payments and suffer foreclosures. In the first quarter of the current year foreclosure postings spiked and increased from 25% in the last quarter of 2008 to 70% this year. The data has been compiled by Woodstock Institute. It showed foreclosures jumping in the counties of DuPage, Kane, Lake and Will.
In Chicago metropolitan region the foreclosure postings have gone up by 6% touching 17,819 – the highest since the start of the foreclosure crisis from the latter half of 2006.
Geoff Smith of Woodstock said that sub-prime is no longer the prime reason for the mortgage delinquencies. The borrowers are failing because of loss of jobs and the recession.
When the sub-prime mortgages were the main factor, the foreclosures were mostly noted in the poor localities of the city. Here predatory lending had been rampant among the vulnerable residents. But now foreclosures are targeting the middle class where the borrowers had mostly taken prime mortgages.
Pundits of the mortgage industry believe that the foreclosure list in Chicago will continue to grow if the unemployment issue remains unsolved. More foreclosures mean more trouble for real estate market in the metropolitan zone of Chicago. This in turn will see more vacant and derelict houses dot the suburbs causing dislocation of social and family life.
Dona McQuade of Realtor Association of Fox Valley said the foreclosure problem has been allowed to grow unchecked in Chicago. But it is gaining such proportions that the residents and administration has to bestir themselves if they want to survive. Statistics indicate that one out of every five homes has been listed for short sale. It indicates that the mortgage has gone underwater with the borrower owing more than the worth of the house.
The counseling agencies are also complaining that the numbers of cases they have to handle have sharply increased. Most of these deal with financial problems.
The shift in focus from sub-prime mortgage to unemployment does not bode well. The administration has been trying to change the banks alter interest rates and other terms of mortgages but without jobs the borrower cannot pay under any condition. Thus unemployment is the prime issue if any serious attempt is to be made to solve the housing crisis.
