Foreclosures continue to spike in Illinois, nation

Foreclosures in Illinois spiked again in May to about 42 percent compared to a year ago, according to data expected to be released today by RealtyTrac.

The Irvine, Calif.-based research firm said that month-over-month, Illinois also saw 15 percent more foreclosures on average compared to the national average of 7 percent. The dubious figures placed Illinois at No. 11 nationwide for the most foreclosures, up from No. 13 the month before.

"Illinois isn't quite out of the woods yet," said RealtyTrac spokesman Daren Blomquest.

RealtyTrac said foreclosure filings -- including default notices, auction sale notices and bank repossessions -- were reported on 261,255 properties during May nationwide -- a 48 percent increase from May 2007. That means one in every 483 U.S. households receive a foreclosure filing during the month.

Illinois saw a total of 9,670 total filings, a 15 percent jump over April and a 42 percent increase over a year ago. That means one in 538 households received a foreclosure filing.

While the numbers remain grim for now, trends are indicating that the crisis will ease later this year. More homes are starting to sell now, which is a positive, said Marve Stockert, executive director of Lombard-based Illinois Association of Mortgage Professionals.

"We need to get rid of the inventory of homes on the market, which is about 18 to 22 months, now," said Stockert. "We should get that down to 12 to 14 months."

He said some of the roadblocks remaining are adjustable-rate mortgages that can see interest rates soar, declining property values and tougher qualifications for those seeking to obtain mortgages.

"Everyone needs to keep in mind that this is like a chicken-and-egg concept," said Stockert. "Property values are dropping and people here are finding it very difficult to re-finance. Some are buying a second home and say they'll lease their present home. But as soon as they close on the new one, they let the other go into foreclosure. This way, they already got the mortgage on the new home before their credit was wrecked."