Chicago Tribune: Cook County Foreclosures up 47.8%
The Chicago Tribune investigates what is going on on the 28th floor of the Daley Center- where foreclosure cases are heard.
It’s no surprise to most of us that foreclosures are spiking. We’re seeing it even in the most prestigious high-rise buildings in the city.
Cook County’s foreclosure court is so busy with the wreckage of the sub-prime mortgage crisis that the number of judges has been increased from 10 to 14, and they begin their new schedules Monday.
Foreclosures in Cook County were up 47.8 percent in the first half of this year and are expected to pass 42,000 by year’s end. But the increase in judges is not just a sign that things are bad; it’s a sign that things are likely to get worse.
“These cases take at least 10 months to work their way through the system,” said Dorothy Kinnaird, the presiding judge of the Chancery Division, which handles mortgage foreclosures. “We haven’t even felt the full brunt of 2008. We’re still feeling last year’s foreclosures.”
The article states that 80% of the foreclosures go uncontested (i.e. the homeowner is not fighting it.)
The view from foreclosure court [Chicago Tribune, Oct 20, 2008]
And this is only the beginning. The infamous ARM reset chart shows foreclosures will continue through at least 2012 or 2013. Affordibility here we come!
Those who lost their home early in the foreclosure process have plenty of time to repair their credit so they can purchase an affordable home 2014 and beyond.
Unfortunately our government is taking a side on this issue and will do everything and anything to try to avoid the natural correction in the RE market and the ensuing return to true equilibrium.
Watch as our government increasingly throws taxpayer money at the problem, stealing from the very people who have been priced out of affordable real estate in order to prevent them from being homeowners.
Nothing to see here, please disperse.
Bob, I agree totally. Nature must take it’s course. However, restructuring loans for the amount the banks would get in foreclosure and short sales seem to be better alternatives.
“restructuring loans for the amount the banks would get in foreclosure and short sales seem to be better alternatives.”
As long as the banks stop dragging their feet and start taking these losses quicker.
If it’s my tax money taking the immediate loss, how ridiculous. If the gov. is gunna bail out the banks on this, they should just give me a tax credit so I can buy a condo since I’ve been responsibly saving my money for a DP.
“restructuring loans for the amount the banks would get in foreclosure and short sales seem to be better alternatives.”
BBUUZZZZ. Wrong answer.
You do you know what the bank “will get in foreclosure?” In foreclusre, they get the property and a judgment for the amount of the loan (plus costs and interests.) I say let it ride….
I don’t think there is much if any value in that judgment. With a foreclosure more money just gets funneled to the courts and the attorneys. That can’t be good for the economy.
The government will certainly try to prop up home prices as they have been doing, but it will be like using a bucket to bail water after a flood. All they will do is fatten up the national debt even more, as home sellers continue to get bitchslapped by Adam Smith’s invisible hand.
As a general rule the foreclosure courts don’t give deficiency judgments on first mortgages in Cook County. But home debtors and banks are getting burned on the second mortgages. A lien for a second mortgage is extinguished after judgment is entered on the first mortgage.
However, the promissory note still exists and the second will hound the home debtor for payment. The banks have a 10 year statute of limitations on second mortgages. They’ve turned $40,000 second mortgages into $150 a month garnishments. Ask HSBC – they’re all over the 11th floor filing collection cases for charged off 2nd mortgages. I’m sure there is much more to come. I hear through the grapevine the paper sells for pennies on the dollar. Yeah that’s right, pennies on the dollar, the same as charged off credit card debt.
I agree hoemdelete
Like anyone is going to bother chasing down a 150/month garnishment from frequent job hoppers. What a joke. Unlike child support the courts aren’t going to jail you for non-payment as its a civil matter too.
Darn right this will be selling for pennies on the dollar. After administrative costs to chase down these people its probably not worth the effort unless they win the lotto or fall into money somehow, which we all know very few will.
The 11th floor has become a debt collector’s wet dream. Banks used to sell off bad (primarily credit card) debt years after the charge off. Nowadays a handful of banks have figured out they can get more money if they file the lawsuit themselves and take a garnishment from the debtor’s paycheck. There are 6 courtrooms on the 11th floor and there are well over new 100 cases per courtroom every day of the week for well over two or three years now. Garnishment, garnishment, garnishment. That’s all they care about at this point in the game.
“Watch as our government increasingly throws taxpayer money at the problem, stealing from the very people who have been priced out of affordable real estate in order to prevent them from being homeowners.”
I’m not sure the gov. can really do anything to prop up prices. Even if they are succesful at keeping them at these artificully inflated prices now that the banks are returning to more traditional lending standards it will essentially lock out people, especially first time buyers, from buying because they can no longer get the toxic loans that were used to shoehorn people into homes. That will further surpress demand which will eventually effect prices in a downward fashion.
“I agree totally. Nature must take it’s course. However, restructuring loans for the amount the banks would get in foreclosure and short sales seem to be better alternatives.”
One, we don’t know what the banks would get in FC. Second, if you have bancruptcy judges stepping in and renegotiating the terms of both the interest and the principle for distressed homeowners, as Sen. Biden offered during the VP debate, we essentially have the govt. setting market value for homes.
If the govt allows say Cook County judges to do this and they start telling Harris Bank, for example, to award 1% mortgage rate I’ll walk into Harris and demand that rate and if I don’t get it I’ll bring suits against both the bank and Cook County for that rate.
“Like anyone is going to bother chasing down a 150/month garnishment from frequent job hoppers. What a joke. ”
They do. They’re not necessarily frequent job hoppers. The banks weren’t giving loans to unemnployed people (ok maybe they were but that’s a different topic). Most of these home debtors had a job but they fell behind because of a medical reason, the car being repo’d, the juggling of bills, an unexpected life expense, etc. They’re still working today too – they have to eat you know. But they probably make less. Someone who takes home about $1,000 every two weeks is looking at a $150 a week garnishment, max, which is about $300 a month, and in some cases that more than they would get under the terms of the original mortgage.
“If the govt allows say Cook County judges to do this and they start telling Harris Bank, for example, to award 1% mortgage rate”
The belief that this could happen (and be upheld on appeal–there are some crazy, crazy judges) is on par with belief in the validity of tax protester arguments about “true names” and the like.
**IF** anything happens on this front, it will take the form of writing down the amount of the lien (aka “lien stripping”). There was an attempt to include lien stripping (in bankruptcy) in the bailout bill, but it failed. I would expect it to be proposed again, and I would NOT be surprised to see a state (Florida, Georgia and Arizona being most likely, imo) pass a out-of-bankruptcy-court lien stripping law, but it could NOT apply to national banks (as made clear by a OCC decision regarding a Georgia law passed in 2005 (i think)).
““If the govt allows say Cook County judges to do this and they start telling Harris Bank, for example, to award 1% mortgage rate”
Sen. Durbin wanted the bankruptcy i.e. federal court judges to cramdown mortgage principal and the strip liens like they did with car notes and other secured debt. it works like this: you buy a house with an 80k 1st and a 20k second. After 3 years you file chapter bankruptcy. The house is now work only 75k. The bankruptcy judge turns the 2nd lien and $5k of the 1st mortgage into unsecured debt to be repaid at 10 cents on the dollar over 5 years. The new mortgage balance for the 1st is 75k. If the judge doesn’t like the interest rate on the 1st mortgage he will lower it i.e. from like 12% mortgage to 7% or something. However, the borrow has to afford the new mortgage payment. The guy who bought the $1,000,000 option arm mortgage on a strawberry picker’s salary won’t qualify. If I had to guess it would help out the household that bought in ’06 with a 50% housing payment and reduce it down to 32% or maybe 38%, because that’s what affordibilty is really about.
It’s pretty universally agreed that it would
disrupt the mortgage market. The car market has the cram down provision too but I think it has to be at least 900 days after purchase before you qualify for the cram down. however, with the mortgage market, we’re talking potentially hundreds of thousands of dollars per house. Regular families with would file just so they reduce the principal balance of the mortgage. Hell, I’d take a hit to my credit so I could wipe away $100k of mortgage principal. Fortunately it didn’t pass.
I would foul up my FICO score for a lot less than 100k. Good thing it didn’t pass. I think McCain’s plan is similar: have the government and the lender share the writeoff so stupid people could be bailed out of the loan terms they signed up for and remain in their house.
Everyone knew that it is not guaranteed that real estate goes up forever. There were a whole bunch of people who factored future appreciation into their purchasing decisions at the peak. This is called mis-timing the market and in any other market your broker calls you with a margin call and its toast. In real estate we’re supposed to feel bad for these people and give them a HUGE government handout?
“In real estate we’re supposed to feel bad for these people and give them a HUGE government handout?”
Yes, and if these same people have plenty of children out of wedlock the government gives the children and parents food and healthcare until they’re 18. When the children graduate high school the government should give them a free college education too. And if they buy a home they cannot afford the government should give them a mortgage cramdown to a price they can comfortably afford. And if your credit is so bad you weren’t able to get a mortgage the government will subsidize your rent at a price you can afford. And if they’re an illegal immigrant, pretty soon the government will give you citizenship too. Personally I think the next thing the government should do is give people free cars and gas. Except for selection population centers, it’s difficult to get around this country without a car. Freedom of mobility is a right and the government should give everyone a free gas card. Liberty = freedom = getting around and that’s difficult to do without a free car and free gas.
HD,
I will assume you are joking….
Again right about the 11th floor.
The scary thing about homedelete’s post is that there are people who really do think that way. The even scarier thing is that they have the right to vote and sometimes actually use that right. How else do crooks like Durbin, Blago, Stroger and Daley keep getting reelected?
“How else do crooks like Durbin, Blago, Stroger and Daley keep getting reelected?”
Please. If the repubs ever run a decent candidate, Blago and Stroger would be gone. Durbin could lose, but it would require a good candidate with a LOT of money. Daley’s a tougher case, but he and his babysoft hands are getting old.
Of course, the guy that’s 200 lbs overweight wants free health insurance, the woman with 2 illegal and illegitimate children wants citizenship, the family took took out an option arm mortgage to buy a new car and redo the basement wants to keep his house, the guy who bought a home he couldnt’ afford wants a mortgage cramdown, the student in the private college wants college tax credits, the guy with the low paying job and the child support payments wants subsidized rent, the people who choose to live in bad neighborhoods want better schools, the seniors who ride the CTA want to ride for free, seniors on fixed incomes don’t want to pay taxes, the mothers of children in gangs want to ban guns. That’s the whole point – everybody wants something for free and we should use the resources of the ‘rich’ to pay for it. And to some extent, both presidential candidates have promised to provide it all. They’ll take it from the people who make $250k a year or more (3% or less of all households in America). They have enough resources and money to fulfill every need of the poor, hungry and tired masses. They want to spread the wealth around and share it with those who ‘need a little help’. McCain too wants to buy bad mortgages and rework them to be affordable so both guys are equally responsible of this socialistic nonsensical rhetoric.
No, Jason, I think homedelete really is that loathesome.
And you guys want the heads of the heads of the IBs on a platter. And those who (stupidly) overextended themselves to suffer. Everyone wants something from somebody else and thinks that what they want should have higher priority. BOR-ing.
America is a country with a warped sense of entitlement at almost every level. It will not be financed by others indefinitely. When it stops the proverbial Sh*t is going to hit the fan.
HD is actually dead on target..
My answer as always…Who is John Galt 🙂
“anon (tfo) on October 21st, 2008 at 1:04 pm
And you guys want the heads of the heads of the IBs on a platter. And those who (stupidly) overextended themselves to suffer. Everyone wants something from somebody else and thinks that what they want should have higher priority. BOR-ing.”
Agreed.
The anon’s are confuisng me,,,which one are ou?
“The anon’s are confuisng me,,,which one are ou?”
The first one–(tfo)–which might not be accurate but too bad. I think I post more than all the other anons (Anon, anon1, any other anon) combined. I changed it last week. I’m the one that calls Stevo Stevo. I talk to Margo. I’m HD’s (the hd who’s a valet and impressed by Stevo’s beemer) roommate. The one who defends CPS.
Funny since it was my analogy can’t we think of HD as the waiter? Maybe across the street from the big one bedroom by the McDonalds. This way I can visit when I get the munchies… Speaking of which.. Time for a little walk upstairs 🙂
“can’t we think of HD as the waiter?”
Sure, but I was going off of the “you’ve impressed the valet” and HD’s being “impressed” by Stevo’s beemer.
I call Steveo Steveo too.
Yeah, but you’re not an anon, Bob. And I don’t use the second e–just Stevo.
I still love that advertisement. Sometimes I mention it and people don’t believe it. I should have kept it. Maybe Gary did the copy for it.