Local foreclosures drop dramatically in February

The rate of foreclosures in the area dropped dramatically in February, but experts warned that the troubled housing market may not be turning around just yet, according to data released today by Irvine, Calif.-based RealtyTrac.

Illinois settled into the No. 11 position nationwide with a 44 percent drop in overall foreclosures, the lowest rate of foreclosure since November 2008. Local counties also showed decreases ranging from 28 percent in McHenry County to 52 percent in Cook County, the report said.

Foreclosures dropped 31 percent in Will County, 35 percent in Lake County, 45 percent in Kane County and 47 percent in DuPage County, the report showed.

Whether that gives new hope to troubled homeowners remains to be seen as experts said numbers could be skewed by the ongoing controversy involving lenders accused of automatically signing approvals for foreclosures without proper documentation.

“The robo-signing has really been lingering longer than we anticipated ... It's given us an artificial low,” said RealtyTrac spokesman Daren Blomquist.

The RealtyTrac report said foreclosure filings, including default notices, auctions and bank repossessions, were reported on 225,101 U.S. properties in February. That was a decrease of 27 percent compared to February 2010, the biggest year-over-year decrease since the firm began tracking foreclosures in 2005.

The robo-signing controversy caused many large lenders to hit the “pause button” on their foreclosures due to uncertainty about whether their claims on borrowers' properties had been adequately registered, said Phil Ashton, University of Illinois at Chicago assistant professor of urban planning and policy.

“That has meant many fewer foreclosed properties in the pipeline moving toward auction,” said Ashton. “I suspect that's why we saw such a large change in foreclosure filings from January. There was a blip in the numbers as lenders hit ‘play' again toward the end of the year.”

Also, with a drop in unemployment and a recovering economy, Realtors said they were seeing more sales activity in their local markets, said Christine Chase, president of Downers Grove-based Mainstreet Organization of Realtors. She also is a Realtor based in Naperville.

“We're seeing some encouraging signs,” she said.

Still, experts want to see some resolution to the robo-signing controversy and other economic indicators that would show a continuously steady decline.

“We're expecting to see a rebound, but we're not sure how long the robo-signing controversy will linger,” Blomquist said.