How Much Longer Will Chicago Foreclosure Activity Remain Depressed?

The July Foreclosure Market report from ATTOM came out last week and it continues to show extremely low levels of foreclosure activity across the nation. However, it’s been the foreclosure moratorium that has been depressing activity and that technically ended on July 31. For those on the wrong side of a foreclosure the end of the moratorium is a bit depressing but all is not lost.
As Rick Sharga, executive vice president of RealtyTrac, an ATTOM company, said:

The end of the government’s moratorium won’t result in millions of foreclosures, but we’re likely to see a steady increase in default activity for the balance of the year. Much of the foreclosure volume will come from the reinstatement of foreclosure proceedings on properties that had already been in default prior to the pandemic, and new foreclosure activity on vacant and abandoned properties.

We might see an uptick in foreclosure activity starting in August but it’s not like people are going to lose their homes overnight. Forbearance is still an option for many who can enter the program through September 30 if they have government backed loans. They might have that option for non-government backed loans, depending on the mood of their mortgage servicer.
There is also some kind of weird CFPB rule out there that says that mortgage servicers need to review your options with you and can’t really start the foreclosure process until January 1, 2022. So, effectively, the foreclosure moratorium is really in effect until January 1 ?!?!?! I’m so confused.
Anyway, here is the latest Chicago foreclosure activity data and you can see how low it is. After we get the August data it will be interesting to see if there is a significant rise.

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.

An even better indicator of what is going on is the delinquency rate. After the huge spike at the beginning of the pandemic it’s been falling pretty fast. The chart below comes from Black Knight’s June Mortgage Monitor report and it shows the delinquency rate down to 4.37%, which is about where we were 6 years ago and again earlier this century.
US Mortgage Delinquency Rate
The nation’s mortgage delinquency rate continues to improve, though it remains higher than it was in the mid-2000s.

Chicago Shadow Inventory

The number of Chicago homes in some stage of the foreclosure process remains low and has been slowly trending down for some time now. I guess this could be heading up soon for the first time since I’ve been tracking the data.

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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