Chicago Foreclosure Activity Rises As Moratorium Ends

ATTOM issued their August Foreclosure Market Report last week and it has begun to show the expected increase in foreclosure activity since the moratorium ended on July 31. As I pointed out last month there are various speed bumps standing in the way of an all out foreclosure frenzy but, nevertheless, US foreclosure activity was up 60% from last year’s artificially depressed level.
As Rick Sharga, Executive Vice President at RealtyTrac, explained:

As expected, foreclosure activity increased as the government’s foreclosure moratorium expired, but this doesn’t mean we should expect to see a flood of distressed properties coming to market. We’ll continue to see foreclosure activity increase over the next three months as loans that were in default prior to the moratorium re-enter the foreclosure pipeline, and states begin to catch up on months of foreclosure filings that simply haven’t been processed during the pandemic. But it’s likely that foreclosures will remain below normal levels at least through the end of the year.

Chicago foreclosure activity is also on the rise as you can see in the graph below. August was up a whopping 174% from last year but last year was so low that we’re still well below pre-pandemic levels. As you might expect most of the increase is in the defaults.
Illinois had the highest foreclosure rate among states and the Chicago area had one of the highest metro area foreclosure rates. It could be because we’ve experienced slower price growth than the rest of the nation so we might have a few more people who are still underwater on their mortgages.

Chicago Foreclosure Activity
Chicago foreclosure activity has declined dramatically since the housing crisis. However, the recent plunge is the result of the moratorium placed on foreclosures in light of the Covid-19 crisis.

Meanwhile, the nation’s delinquency rate continues to provide some good news. According to Black Knight’s July Mortgage Monitor Report it’s reached another pandemic low of only 4.14%. That’s still above where it was before Covid but it’s now at the lower end of the historic range. That should help keep a lid on foreclosures.
US Mortgage Delinquency Rate
The nation’s mortgage delinquency rate continues to improve, though it remains higher than it was pre-pandemic.

Chicago Shadow Inventory

Although the number of Chicago homes winding through the foreclosure process remains historically low it did tick up in August by 85 units from July. That’s not surprising, given that foreclosures are making a comeback, but that’s a pretty small number in the grand scheme of things.

Chicago homes in foreclosure
The number of homes in foreclosure in Chicago continues to decline during the pandemic.

#Foreclosures #ChicagoForeclosures #Coronavirus
Gary Lucido is the President of Lucid Realty, the Chicago area’s full service real estate brokerage that offers home buyer rebates and discount commissions. If you want to keep up to date on the Chicago real estate market or get an insider’s view of the seamy underbelly of the real estate industry you can Subscribe to Getting Real by Email using the form below. Please be sure to verify your email address when you receive the verification notice.

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