Growing areas not safe from foreclosures

Route 120 stretches its two-lane highway through Round Lake and Volo, two of many Lake County towns that yawn with a new day of more development.

This area is fast-growing. But gaps are obvious. No streetlights. No curbs. No Starbucks or McDonald's or Denny's. At least not yet.

Longtime farms give way to a mobile home park not far from a mansion around Fairfield Road. Such a contrast is echoed in housing along Belvidere Road with the haves and the have-nots.

Further west, billboards for new retail space spike acres of changing fields. A new Ryland Homes development rises in the midst of more lush land. Dozens of corporate flags mark the development and snap in the wind.

Yet amid these signs of booming development, Lake County is quickly catching up to its neighbors on another, darker front -- foreclosures.

Lake County saw a 36 percent increase from 2005 to 2006, according to the Chicago-based Woodstock Institute.

Rapid growth in population, a building frenzy and high taxes have defined this area as well as many others around Chicago. These factors, along with bad sub-prime loans, unemployment and others have bombarded the suburban region with some of the highest foreclosure numbers in recent years.

"Any number of foreclosures is bad news," Round Lake Mayor Bill Gentes said. "We've been having more because we're one of the fastest growing communities around."

Round Lake had about 5,400 residents in 2000. It nearly tripled to 14,500, according to a special census in 2006. With even more new homes being sold, Gentes believes his town's population has jumped to about 18,000 this year.

This leaves the door open for more homeowners who take riskier mortgages that could lead to more foreclosures, Gentes said.

Round Lake had 117 foreclosures in 2006, compared to 112 from January through September this year, according to data firm Kaneville-based Record Information Services.

Widespread worries

In the Northwest and West suburbs, 6,662 households have received foreclosure notices -- from January through September alone this year.

Foreclosure notices already have exceeded the full year of 2006, which was 6,428, according to the Record Information Services.

And some of the largest cities in the region are among the hardest hit because of their growing populations, socioeconomic diversity, building booms or rejuvenating neighborhoods, among other factors.

For example, Elgin so far this year had 529 homes in foreclosure, compared to 503 for all of last year, the data showed.

The foreclosure situation is a matter between lenders and borrowers, city spokeswoman Susan Olafson said.

The city doesn't get involved in "personal financial matters," she said.

However, Olafson said Elgin has a network of social service agencies that help people in need.

In Aurora, foreclosures have climbed to 327 so far this year, compared to 264 for all of last year. That increase has nudged city officials to plan an internal meeting to develop ways to help these people, said Mike Kamon, Aurora's director of neighborhood re-development.

"We're not unlike many other towns around here and know it's just not the sub-prime loans that are doing this," Kamon said. "We're also getting hit with a slow economy and life is a lot more fragile now than in the past."

In Carpentersville, foreclosures are edging up with 223 so far this year, compared to 247 filed all last year, the data showed.

Carpentersville village officials know more residents are in financial trouble, and suspect more foreclosures may be close behind, when they are behind or have stopped paying their water bills or other service fees.

From July through September, about 100 residents were in arrears of $100 or more -- about double what has been common. Such financially troubled residents are often the type who go into foreclosure, said Village Manager Craig Anderson.

"In the last few weeks, we've received three notices that we were defendants in three foreclosure cases," Anderson said. "That's a lot for us."

That doesn't mean the village's property is going into foreclosure. It means that when a resident is in arrears with their village fees, the village can place a lien on the property. Those who place liens have the right to be paid when the property is sold and have claim to the property until the bills are paid.

"Apparently, those banks consider us the 'property owner' as well," Anderson said.

The town often doesn't legally pursue the residents for back water bills, mostly because the legal fees could outweigh what's collected, Anderson said.

In addition, Carpentersville also gets stuck with the bill for cleaning up neglected property after families have abandoned a foreclosed property. Costs for cleaning up a property could be $100 to $900. That bill also is placed as a lien against the property until it's sold and the amount is paid.

"We try to work with the banks on these homes," said Anderson.

Causes vary

Schaumburg officials are also finding more residents behind on their water bills and other services, Village Manager Kenneth Fritz said.

Schaumburg foreclosures tally 307 so far this year, compared to 304 for all of last year, the data showed.

"Anytime someone loses their home, it must be devastating," said Fritz. "My heart goes out to them and I pray that they land on their feet."

The causes are as varied as the people who walk away from these homes. Job loss or underemployment, escalating medical or credit card bills, divorce, sub-prime and ballooning adjustable rate mortgages are among the top reasons. There also are investors who snap up multiple properties only to be stuck in a sagging market. The so-called "flipping," or quick turnaround to sell the property, then backfires.

Then there are people who bought a newly constructed home with a sub-prime loan, maybe borrowing 100 percent of the cost instead of making a down payment, and then getting blindsided by their first tax bill, said Jeff Metcalf, president and chief executive officer of Kaneville-based Record Information Services.

"In some high-growth areas, like Kane and Lake counties, you're going to see a lot of that," said Metcalf. "You have some subdivisions that literally go up overnight and people get misinformation on what their tax bill will be or they may not even see a tax bill for another year. By then, it's a whopper. Some taxes could be $11,000 or $12,000 a year."

All affected

Further east along Route 120, tiny Hainesville is nestled just east of Round Lake and shows just how fast a quiet community can grow. Its population has spurted from 134 in 1990 to 3,444 in 2003.

Hainesville Mayor Ted Mueller shakes his head when he hears that roughly 100 of his residents went into foreclosure proceedings last year.

"Do you really want to know what I think?" he said. "I blame it on the developers because they were quick to build and sell. And I blame it on the banks because they were quick to give loans to people with credit ratings who shouldn't have been able to borrow."

Mueller said he bought his first home with 20 percent down many years ago. "And I wouldn't even think of walking away from that," he said.

Today, his two grandchildren each bought homes with no money down. While he describes them as responsible adults, the no-money-down policy for others could be worrisome.

"People are entitled to affordable housing. But today, it's gone beyond that and many people are getting unaffordable housing," Mueller said.