BLOOMINGTON — The housing market is on the mend and more help is available for those struggling to keep their homes in McLean County, but foreclosed and abandoned houses continue to hurt neighborhoods.
There were 122 foreclosures filed in the first quarter of 2013, down slightly from 130 in the first quarter of 2012, according to data from the McLean County Recorder’s office. Annual filings have steadily declined since 2010, when there were 586, the most in a single year over the last decade. The county had 481 filings in 2012 and 508 filings in 2011.
“We’re seeing continued improvement in the foreclosure situation in McLean County,” said Ken Springer, director of research and client services at the Economic Development Council of the Bloomington-Normal Area. “From a financial standpoint, growth in the housing market fuels quite a bit of additional economic activity ... and helps keep our businesses here healthy in the Twin Cities.”
Part of the reduction in new foreclosures may be that the subprime mortgages that hobbled the housing market leading up to the recession have largely been resolved, Springer said.
But homes already in the midst of foreclosure are still working through the system, and neighborhoods must put up with the often abandoned and unkempt properties waiting to be resold. Bloomington’s west side has a number of them, said Valerie Dumser, a board member of the West Bloomington Revitalization Partnership and resident of the area.
“It doesn’t do much for the values of our homes,” Dumser said. “It doesn’t say much for the neighborhoods. People don’t want to move into a neighborhood that looks empty and neglected.”
Some of those empty homes have been sitting for years, Dumser said. That may be because McLean County foreclosures now take an average of 20 months to be resolved — twice as long as before the housing crisis, according to an ongoing study by Diego Mendez-Carbajo, associate professor of economics and chairman of the Department of Economics at Illinois Wesleyan University. Though fewer new foreclosures are being filed, the ones held over from previous years are still numerous.
The process begins when a homeowner falls behind on mortgage payments. Banks file an order to foreclose on a house in the courts, which a homeowner may contest. If the mortgage remains unpaid and the court finds in favor of the bank, the property is put up for sale by the McLean County Sheriff’s Department. Later, it’s often bought back by the bank that issued the loan.
A backlog of foreclosure cases working through the court system from previous years contributes to the longer process, said Fred Drake, chairman and CEO of Heartland Bank in Blooming-ton.
“Certainly the court schedules are crowded … plus there’s been increased scrutiny, and there should be,” Drake said. “There are a lot of protections that are in place and the courts are serious about that.”
Just as the long waits hurt neighborhoods, they also increase costs for banking customers, Drake said. Homes that have been abandoned or poorly kept will be worth less, and the costs to banks of pursuing foreclosure are passed on to consumers.
“The more costly (foreclosure is for banks), the more costly credit becomes, and in some cases it may be-come harder to grant those kind of loans,” Drake said.
The good news is that those facing foreclosure now have more help available. In March 2012, the McLean County Circuit Court began mandatory mediation in all foreclosures cases in an effort to avoid foreclosure and better educate homeowners on their rights, said Chief Judge Elizabeth Robb. Before, such matters were settled with lawsuits.
Mediation gives homeowners access to pro bono legal advice from law students, and can help homeowners broker a deal with their lender to deed back their house in lieu of foreclosure; improve loan terms; or “short sell” a home at a loss under an agreement with their lender to settle the out-standing debt.
“For a lot of (homeowners in foreclosure), that’s their first opportunity to get legal ad-vice,” Robb said. “They have that chance to talk … about what their legal rights are.”
The court’s mediation process also tries to steer homeowners toward state and federal aid that wasn’t available before the housing crisis. Some are referred to groups like Mid Central Community Action for fore-closure counseling.
“We’re trying to help people stay in their homes who want to stay in their homes and who can afford to stay in their homes,” said Angela Frazier, director of finance with MCCA. “Depending on the route they choose, we lay out what they need to do and what they can expect.”
MCCA and groups like it draw from resources like the state’s Foreclosure Prevention Network, and programs like Illinois Hardest Hit Funds. Since April 2012, Illinoisans facing foreclosure who can show they have lost 20 percent of their income may qualify for either a one-time payment of all mortgage arrearage, fees and penalties, or 18 months of mortgage payments.
That program helped keep Gayle Boop, 64, of Chenoa in the two-bedroom home she bought three years ago for $33,000. When she lost her job last year, she couldn’t make her mortgage payments and faced foreclosure. She connected with MCCA, and after a battery of questions and paperwork, found she was qualified for the Illinois Hard-est Hit Funds program.
“It’s hard when you’re a 64-year-old woman with no husband and you’re just living off your Social Security,” Boop said. “(The program) gave me hope that there’s somebody out there who’s willing to help you, that you don’t have to be alone.”
The hardest part of connecting people with that aid has been getting the word out, said Kathy Shubert, MCCA homeownership coordinator. Workshops haven’t been successful, possibly because people are seeking more confidentiality.
“With foreclosure intervention, people are embarrassed,” Shubert said. “They don’t want family and friends to know. They don’t know where to go.”
Mid Central Community Action Inc. provides foreclosure counseling — 309-834-9242
The Illinois Foreclosure Prevention Network connects Illinoisans facing foreclosure with local resources. — www.keepyourhomeillinois.org.
The Illinois Hardest Hit Funds program provides mortgage payment assistance — www.illinoishardesthit.org.
Illinois Legal Aid has a video series explaining foreclosure on its website — www.illinoislegalaid.org.
McLean County foreclosures
2003 - 316
2004 - 328
2005 - 358
2006 - 447
2007 - 484
2008 - 500
2009 - 538
2010 - 586
2011 - 508
2012 - 481
2013 - 198*
* Data available as of June 11.
Source: McLean County Recorder’s Office.