Illinois Foreclosures Reflect Challenges and Opportunities

by Donald Hanz on States

The still high number of Illinois foreclosures is a reflection of current economic and social challenges faced by the state, but it also presents investment opportunities. The pace of foreclosure slowed and the unemployment rate dropped, but the resulting numbers are still high.

In May, the number of housing units that became bank foreclosures for sale dropped by 14 percent to 4,093 from 4,754 in April and the number of overall foreclosure filings fell by 20 percent to 15,061 from 18,870 in April, but the May numbers are still high. Illinois is still eighth in the country in percentage of foreclosure.

The 7,692 homeowners notified of default in May and the 3,276 notified of auction home foreclosures would eventually lose their homes to repossession if they are not helped by state agencies and nonprofits.

All in all, there were 23,836 Illinois foreclosures completed in the first 5 months of 2010, accounting for 30 percent of the nearly 80,000 foreclosure actions filed throughout the state during the same period.

Of these almost 80,000 distressed owners, it is expected by local analysts and realtors that a bigger portion would be able to avail of the Home Affordable Foreclosure Alternatives program of the federal government, in which homes become distressed properties for sale instead of becoming foreclosures for sale.

With short sales, homeowners avoid foreclosure, which cuts down their credit score sharply and which prohibits them from making home loans for three to seven years. The HAFA helps facilitate distressed sales as there are cash incentives for homeowners, servicers and lenders.

In May, the unemployment rate in Illinois was still high at 10.8 percent, despite falling from the April rate of 11.2 percent. The total number of jobs in May was lower by 44,600 than the 5,672,800 total in May 2009.

Illinois foreclosures are among the clear indications of the current challenges faced by the state, but they also represent opportunities for real estate investors who focus on lower-priced foreclosure properties.