Illinois bank-owned foreclosures double in first quarter
Almost 15,000 Illinois homeowners lost their homes to foreclosure in the year's first three months, twice as many as the number that went back to lenders during 2009's first three months, new figures show.
The grim statistics, derived from data scheduled to be released Thursday by RealtyTrac, follow two reports from Washington on Wednesday that paint very different pictures of the government's response to the nation's mortgage foreclosure crisis.
One, the monthly Treasury Department report on the progress of the administration's Home Affordable Modification Program, showed that loan servicers are stepping up efforts to convert delinquent borrowers into more affordable mortgages.
The other, from the Congressional Oversight Panel, said that despite several measures taken by the Treasury to improve HAMP's chances of success, it will fall far short of its goal of helping 3 million to 4 million homeowners.
Last month, overall foreclosure activity in Illinois fell 18 percent from February and 8 percent from March 2009, according to RealtyTrac, an Irvine, Calif.-based company that tracks foreclosure filings. During the first quarter, however, foreclosure filings in Illinois were up more than 17 percent, largely because of an increase in the number of properties that have been taken back by lenders.
In January, nearly 6,000 Illinois homes became classified as real-estate owned, or bank-owned. That compares with 2,641 in January 2009. In February, it was nearly 5,000 properties, compared with nearly 3,000 homes in the same month a year ago. Last month, it was another 4,424 properties, compared with about 3,300 homes in March 2009.
HAMP, detailed a year ago, was implemented to slow foreclosures. In the Chicago area in March, 39,914 homeowners were in active trial modifications and another 11,333 homeowners had received permanently modified loans since the program's start, according to Wednesday's Treasury report. But although the number of homeowners whose trial plans were made permanent increased 40 percent in a month's time, the number of consumers was down from 43,215 in February. A drop in active trial modifications was expected nationally. Beginning June 1, the government said consumers applying for a trial modification would have to provide full documentation of their income, but many lenders began applying that requirement in March.
The number of canceled trial modifications across the nation rose to 155,173 last month, compared with 88,663 cancellations in February.
Nationally, the Treasury Department said of the 1.2 million HAMP trials begun since the program's inception more than a year ago, 230,801 of them have been made permanent. That compares with almost 169,000 permanent loan modifications in February. A loss of income was cited as the predominant reason for almost 60 percent of permanent modifications.
The Congressional Oversight Panel, which last looked at the administration's foreclosure programs in October, said it was concerned that the Treasury's various tweaks to HAMP, designed as an incentive to loan servicers and investors to make modifications, might cause them to delay modifications as they wait for an even better deal. The panel also expressed its concern that more taxpayer funds were being set aside for foreclosure programs than were being set aside to ensure that more homeowners didn't fall into foreclosure.
"For every borrower who avoided foreclosure through HAMP last year, another 10 families lost their homes," the panel's report states. "It now seems clear that Treasury's programs, even when they are fully operational, will not reach the overwhelming majority of homeowners in trouble."
The report also noted that loan servicers typically do not reduce mortgage principal balances, so even with a loan modification, borrowers would owe more money on their homes than the homes are worth. That might cause them to re-default on the modified loans
chicagotribune.com
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