One-Third of Local Homes Sold in 2012 Have Been Chicago Foreclosures, REOs
As predicted, foreclosure-related sales have been steadily on the rise in 2012 - especially in metro areas such as Chicago.
Nearly 31 percent of Illinois residential properties sold in the first quarter of the year were either in foreclosure or owned by a bank, according to data released last week by RealtyTrac.
That's 22 percent higher than the same period last year and 12 percent higher than the preceding quarter. It's also higher than the national average. Across the country, 26 percent of home sales involved foreclosures.
However, it may not mean that more homes are falling into foreclosure, point out Chicago bankruptcy lawyers. Rather, banks that have been holding onto properties are ready to move their inventory.
Real estate experts report that lenders are approving a greater number of aggressively-priced short sales, in which the lender releases the lien on a property, in order to get rid of homes quick.
But while banks may claim that short sales help people avoid foreclosure, the process often helps everyone except the homeowner. Realtors earn commissions, banks don't have to pay for a pricey foreclosure process, and a buyer gets your home for a steal.
But as a growing number of homeowners are finding out, short sales damage credit just as badly as a foreclosure while also leaving the borrower responsible for deficiencies that result from the sale.
In some cases, lenders may even count any forgiven debts as income, making the homeowners liable for taxes.
In the right situations - and with the right negotiations - a short sale or foreclosure may be the best option. But more often than not, homeowners who lose their homes to the bank one way or the other end up with new debts and disputes with lenders and creditors.
By filing for Chicago bankruptcy, many homeowners may be able to avoid foreclosure or short sales. Chapter 13 bankruptcy allows mortgage holders to reduce or eliminate unsecured debts while legally protecting their homes from foreclosure.
While bankruptcy will also lower credit initially, it's the only solution that also paves the way for homeowners to begin rebuilding credit - and their financial lives.
If you're struggling to pay the mortgage or in danger of losing your home to the bank, an experienced attorney can help you make the most beneficial financial decision for your situation.
More Blog Entries:
31 Percent of Q1 Illinois Home Sales Were Foreclosures, by Kelley Hoskins, Fox 2 St. Louis