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Published On: Wed, Apr 12th, 2017

Big Cities Remain Under Foreclosure Pressure as Nationwide Levels Hit 11-Year Low

The subprime foreclosure crisis continues to wane as the ten-year mark passes. Foreclosure levels in many cities have fallen to pre-crisis levels, with Chicago being one of the hardest-hit cities. Foreclosures in the city hit a peak in October 2011, with 6.6% of the region’s homes at some point in the foreclosure process at the time.

The Chicago area’s foreclosure rate in February dropped to 1.39%, with just 5,290 homes reported in the foreclosure process. The figure is down from 5,844 homes a year prior.  Statistics show that just 0.06% of homes were in foreclosure as of February 2017, marking an 11-year low.

Chicago area zip codes had 98 out of 230 zip codes without foreclosure in February.

There are nearly 3 million pre-crisis subprime mortgages outstanding, with a lot of homeowners delinquent on their mortgages. Approximately 6.7 million foreclosures were completed since the foreclosure crisis began, with total home losses around 8.7 million when considering short sales.

Subprime mortgages accounted for a nearly 2 million of the foreclosures, with many first-time homebuyers between 2000 and 2007 losing their home in the process.

HAMP programs allowed nearly one million loan modifications with reduced payments and interest rates for a period of five years. These mortgages, many of which will have their payments and interest rates increased, resulted in a possible uptick in foreclosures in the short-term.

The HAMP program helped over 8 million homeowners modify their loans, with many of these homes going into foreclosure.

Urban Institute states that 3.1% of homes in 2016 were 90 days delinquent or in foreclosure. Just 1.5% of homes were in the foreclosure process in 2016, far below the near 5% mark in 2009.

New York homeowners have encouraged Governor Andrew Cuomo to allot $30 million of the state’s budget to rescue foreclosure prevention programs in the state. Legal Aid Society, a program offered to New York residents, helped many homeowners find a new plan to modify their loans and afford to stay in their homes.

photo Alina Ku-Ku via Shutterstock

Reports suggest New York foreclosures are still high, with 100,000 homeowners currently in the pre-foreclosure status. Pre-foreclosure status homes are deemed at “severe risk” of going into foreclosure. State courts are handling 72,000 pending foreclosures, with 34,000 foreclosure filings in 2016.

Detroit’s foreclosure crisis continues to weigh on homeowners, with the city reporting more renters than homeowners in the city. Tens of thousands of homes in the city that went into foreclosure have been purchased and turned into rental properties.

Many of the renters live below the poverty line.

The 2015 Census found that 53% of residents in the city were renters and not homeowners. The city, once known for being the “place” for working class residents to buy a home, saw more than 100,000 homeowners lose their homes in the past 10 years.

Estimates suggest that 130,000 homes in Detroit are occupied by renters and are not owner-occupied.

Renters in the city often pay 30% to 50% of their income on housing.

Foreclosure levels may be at an 11-year low nationwide, but big cities are still feeling the crunch. Foreclosure starts increased in 10 states in February, with New Jersey foreclosure starts increasing by 17%. Houston’s foreclosure activity increased by a staggering 97% between 2016 and 2017. New York experienced a 25% increase during the same time span.

Author: Jacob Maslow

 

On the DISPATCH: Headlines  Local  Opinion

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