Despite Moratorium Chicago Foreclosure Activity Hits A One Year High

The ATTOM Data Solutions Q1 2021 Foreclosure Market Report released yesterday provided a bit of insight into what is going on with Chicago’s and the nation’s foreclosure activity in the era of a perpetual moratorium on foreclosures. The latest extension of the moratorium moved it out to June 30 but it’s likely to get extended again, given past patterns. Yet, the nation’s foreclosure activity ticked up again in March and Chicago foreclosure activity, shown in the graph below, hit a one year high. Of course, we’re still at exceptionally low levels of foreclosures.

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.

Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company, explained what’s going on as follows:

The foreclosure moratorium on government-backed loans has virtually stopped foreclosure activity over the past year. But mortgage servicers have been able to begin foreclosure actions on vacant and abandoned properties, which benefits neighborhoods and communities. It’s likely that these foreclosures are causing the slight uptick we’ve seen over the past few months.

Sharga also commented that the foreclosure moratorium and forbearance program have added approximately one year to the timeline for completing a foreclosure, now taking about 930 days to complete.

Average days to complete a foreclosure
In the last year the timeline for completing a foreclosure has extended by about one year as a result of the moratorium.

Meanwhile the national mortgage delinquency rate continues to be our best indicator of what problems may lie ahead and it’s hovering around 6% after declining for several months. The graph below comes from Black Knight’s February Mortgage Monitor Report.
US Mortgage Delinquency Rate
The nation’s mortgage delinquency rate continues to slowly improve, though it remains higher than it was 7 years ago.

Chicago Shadow Inventory

The number of homes sitting in the foreclosure pipeline spiked up again, rising once again above 2000. There’s been a lot of noise in this data over time so it’s hard to tell what’s real or not. February dropped by almost 900 units but now March rose by close to 600 units. The important point is that the overall trend is down.

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

#Foreclosures #ChicagoForeclosures
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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