The foreclosure crisis in Chicago is somewhat a tale of two different cities. One half is made up of a highly successful, affluent and economically stable population, and the other is still struggling mightily to recover from the housing crisis and loss of jobs in the area. This post looks at several articles that outline the situation in the less fortunate side of Chicago.
5 Articles on the Foreclosure Crisis in Chicago
A big portion of Chicago’s urban neighborhoods and suburban districts are simply not recovering from the housing bust a few years ago. In fact, the roots of the cities struggles with de-population, blighted neighborhoods and economic desolation go back much further than the last few years.
“Basically what we're seeing are the effects of something much larger than the Great Chicago Fire,” says architect and urban planner Marshall Brown an assistant professor at the Illinois Institute of Technology. “It's just happened over 40 years or something. It's like we are standing there on the day after (the fire) and everyone's waking up and saying, 'OK, how do we rebuild in this new world in a way that's smarter, knowing what we know now?' “
This article by Alby Gallun in Crain Magazine chronicles the current situation and the city’s recent ideas and attempts to solve the problems on a citywide level. If you’re interested in a look at the current state of real estate and foreclosures in Chicago, this is the article for you!
The concept of banks donating foreclosed homes to non-profit organizations, who in turn would renovate them and provide low-income homes, sounds amazing. However, in Chicago, the reality of practice has come up short in a number of ways.
“By turning foreclosed homes over to nonprofits, financial institutions reduce their inventories of blighted properties, accrue tax benefits, pay down penalties imposed by government regulators for years of abusive lending practices and avoid the costs of maintaining, marketing or demolishing the homes.”
This article chronicles the saga of a Chicago squatter who occupied a newly built five-bedroom, five-bath home in Wicker Park that had an in-home theater, a sauna, and a rooftop deck with views of the downtown skyline. She was able to live there for 2 years before being evicted prior to the sale.
According to Melanie Giglio, one of two Sergio & Banks agents who sold the home for MB Financial, “she was living there; she had keys and she decorated [outside] at Halloween and Christmas. The neighbors knew her, but they didn’t know she was a squatter.”
According to RealtyTrac’s U.S. Home Equity & Underwater Report, 1 in 5 mortgages in the U.S. are worth at least 25% less than the combined loans secured by the property. While this is down from the high water mark of over 1 in 4 homes in May of 2012, it’s still enough to show that homeowners have a ways to go before a more complete recovery is achieved.
Chicago made the list of major metro areas with the highest percentage of deeply underwater residential properties in the foreclosure process, coming in 3rd at 62%, just behind Las Vegas and Tampa Florida.
Daren Blomquist, vice president at RealtyTrac notes, "The longer these homeowners remain in a negative equity position without relief in the form of a principal loan balance reduction, the more likely that foreclosure will become the path of least resistance for them."
Another victim of the housing crisis has been Condominium Associations. These associations, typically made up of owners, levy monthly fees on al members for general repairs and property maintenance. According to the article, “about 70 percent of association-governed communities are underfunded, up 12.5 percent from 10 years ago, according to Association Reserves.”
This lack of funding has lead many associations to aggressively pursue litigation when fees are not paid. The article provides a number of interesting situations where this has happened, and generally outlines an issue that you should certainly be aware of if you live in or are considering buying into an association.
If you’re struggling with debt, the best thing you can do is to understand the reality of your situation and inform yourself about your options. Doing nothing can really hurt your financial future, and you may feel like there’s nothing you can do, but the reality could be more hopeful than you’d think.
This article looks at the entire foreclosure process in Illinois, showing you what happens from the time you’re 30 days late to the point of eviction from your home.
Need Foreclosure Help in Chicago, Illinois?
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