Foreclosures here drop, but experts cautious
The number of foreclosures dropped dramatically across the suburbs in May, compared to a year ago, but experts believe it's too early to crack open the champagne.
Suburban counties showed decreases ranging from 15 percent to nearly 60 percent, while Illinois showed nearly a 30 percent drop in May, compared to May 2010. Nationwide, about 215,000 foreclosure default notices, auctions and bank repossessions were filed, indicating a 33 percent decrease in May, versus the same month a year ago, according to a report expected to be released Thursday by Irvine, Calif.-based RealtyTrac.
The online research firm said foreclosure processing delays have continued to mask the real rate. The so-called elephant in the room remains the robo-signing controversy, where banks have been accused of automatically signing documents to wrongly foreclose on homes.
That ongoing investigation by state attorneys generals, as well as high unemployment and negative equity in homes, have battered homeowners, said Phil Ashton, assistant professor of urban planning and policy at University of Illinois at Chicago.
“We cannot think of what else could be driving it down all of a sudden,” said Ashton. “It's not like homeowners feel safe and sound now.”
The robo-signing controversy certainly has changed the way lenders are processing foreclosures, both here and nationwide. Illinois has had eight months of dropping foreclosure numbers since that controversy erupted, said RealtyTrac spokesman Daren Blomquist.
“This still is not indicative of the market realities in Chicago or in Illinois,” said Blomquist.
Researchers with RealtyTrac have been seeing more attention made to document filings and recordings, and lenders are taking longer to complete a foreclosure, Blomquist said.
But when the robo-signing investigation is completed and the results put into place, you could expect a bump up in foreclosure numbers here and elsewhere. In fact, a slight increase can be found in foreclosures when comparing April to May. The month-over-month numbers locally, as well as statewide, indicate that the current is changing.
“We expect a bump up in foreclosures, but not a huge surge like a year ago,” said Blomquist.