Foreclosures could intensify as Illinois tops national rate

ILLINOIS- Foreclosure rates are up 185% nationally from a year ago, and Illinois is leading the pack.

As of May, one in 2,000 homes had foreclosures in Illinois, and Chicago had the third-worst rate among metro areas with at least 200,000 residents, according to a report from the data provider. real estate ATTOM.

Things aren’t as bad as they look, however, according to Illinois Housing Development Authority executive director Kristin Faust, who said foreclosure rates are actually at historic lows.

“Overall, unemployment rates are low, people are working again, a lot of people have been able to take advantage of forbearance,” she told The Center Square.

Most people have started making mortgage payments again, Faust said, and things are getting back to normal after COVID-era moratoriums.

“Banks, lenders and mortgage managers, they were prohibited from … continuing foreclosure in any meaningful way, and so last year’s numbers are going to be extremely low,” she said.

Now that the moratoriums have been lifted, lenders are starting to file and the numbers are going back to their usual level.

“There’s still, unfortunately, a certain rate of foreclosures, but what we don’t want is for it to get high and a lot of people losing their homes,” Faust said.

Over the previous month, foreclosures rose 1% in May, the report said.

With the highest number of foreclosures, Illinois recorded 1,757 foreclosures last month, second only to three of the largest states: Florida, California and Texas.

Faust notes that the current economic climate is extraordinary, pitting very high employment rates against equally high inflation.

Illinois also has some weak spots.

“We have some vulnerability because Illinois has a high percentage of underwater mortgages, and that remains from the last housing crisis,” she said.

In fact, Illinois has the third highest rate of underwater mortgages, and if the economy declines, those would be more likely to be foreclosed, Faust said.

The data indicates that a bigger increase may be ahead.

“Now we have high inflation and there are fears of recession, and if a recession comes people could lose their jobs, and there’s definitely a correlation,” she said.

Still, with low unemployment and real estate capital gains, Faust holds out hope for Illinois.

The state government has also planned another round of aid through the Illinois Emergency Property Relief Fund for the fall.

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