A Foreclosure Snapshot from Chicago
Chicago has the highest inventory of bank-owned (REO) homes of any large city in America.
It also has the most homes in the foreclosure process.
We tend to use state numbers, and that usually means Florida, California, Nevada, and Arizona make the headlines.
But when you drive around these South Side Chicago neighborhoods, like I did today, you really see one city's plight and blight.
I'm here today doing a story on Bank of America's new program to demolish some of these homes and donate them back to the city. They expect to do a mere 150 over the next two years, which is really a drop in the bucket when you go on foreclosure websites and see thousands of these properties for sale, with many more coming.
A bright side to this is that Bank of America is also "deconstructing" some of these homes. They are taking them apart and giving the still-valuable parts to a non-profit which then sells the pieces back to the community at deep discounts. It's kind of like selling an old car for parts.
"The significant thing about using a deconstruction process is 70-80 percent of the material in those homes can be re-used," says Bank of America's Rebecca Mairone. "Those all go to non-profit and those also serve an employer in the local community."
Mairone claims most neighbors of these abandoned homes want to see them bulldozed, but in talking to folks out here, the reaction was mixed. One man wearing a bold Cubs tee shirt said that while the whole situation is sad, it's better to have these run-down homes gone than have to walk by them every day. But another woman who asked what we were doing and then promptly said she was going to call city hall, remarked, "The banks should be building these communities up, not tearing them down."
A new report out today from RealtyTrac notes overall foreclosure actions are still downdue to the continuing lags in paperwork and problems in states where foreclosures must go before a judge. Properties foreclosed in Q3 took a record 336 days to make it through the process nationally, but in New York the average was 986 days and in Florida 749 days.
New notices of default, however, the first stage of foreclosure, are rising, up 14 percent from the previous quarter. Banks are clearly ramping up the process where they can, which will mean more distressed properties coming to market.
In Chicago, with an already over-bloated stock of bank-owned properties, we are likely to see more demolition. The banks make a calculation on each home and each neighborhood. These are calculations, of course, that should have been made long before handing out all those bad loans.