Despite recent efforts by the state and Cook County to improve the foreclosure process, Illinois and the city of Chicago are still plagued by abandoned residential buildings, not a hopeful sign for some neighborhoods as vacant structures attract transients and/or criminal elements, which, in turn, bring down local home values.
At the beginning of the summer, RealtyTrac, an on-line marketplace for real estate data, released a national report showing that of all the U.S. properties in foreclosure, 20 percent, or 167,680 individual residences, were abandoned.
Now, here’s where it strikes close to home. Of those vacated foreclosure properties, the state’s dominating that list were Florida with 55,503 homes and Illinois with 17,672 residences. Rounding out the top five were California, Ohio and New York.
On an urban level, Chicago documented the most owner-vacated foreclosures of any metro nationwide with 14,717 properties, representing 17 percent of all properties in foreclosures, way ahead of four other metros with similar problems, Miami, New York, Tampa-St. Petersburg-Clearwater and Orlando.
The main reason Illinois and Chicago rank so high on this list of limping residential markets is due to the lengthy foreclosure process in the state. Illinois used to have the fifth longest closing time in the country, behind New York, New Jersey, Florida and Hawaii.
I say “used to,” because earlier in the year Gov. Pat Quinn signed into law new legislation intended to fast-track foreclosure actions on abandoned and vacated single-family residences and multifamily buildings. The new bill is supposed to shorten the time for foreclosures to 90 to 180 days from the prior average of 600 days.
In addition, Cook County created a land bank that was also designed to attack the vacant property issue.
It’s taken a while for these changes to make a difference, which means Chicago and Illinois continue to be plagued with the problem of abandoned residences. It took two years for the state legislation to be enacted, which only embedded the situation.
“Policy makers recognize having these vacant homes sitting around with nobody claiming responsibility is not a good thing for the neighborhoods and overall markets,” Daren Blomquist, RealtyTrac’s vice president, tells me. “Despite that, we are still seeing a lot of vacant foreclosures. That is not a strong sign the lenders have fast-tracked a lot of these vacated residences yet.”
Part of the problem is that lenders may not want to foreclose; that thousands of properties are of such low value why foreclose and take responsibility. It would cost the lender more to maintain the abandoned home than to just take a loss.
The vacant foreclosure tumult is no longer due to a weak housing market, but to bad public policies that took too long to correct and of lenders cutting their losses.
None of this going to make today’s marginal neighborhoods better tomorrow, only worse, so the problem continues.