Illinois is now one of the slowest states when repossessing homes, with an average process time of 494 days, compared to 242 days in 2007.
According to ChicagoRealEstateDaily.com, New York, New Jersey, Florida and Connecticut have also sailed their way to the top of the rankings—which measures the states that take the longest, from notice of default to final repossession.
Daren Blomquist, director of marketing communications for Irvine, California based Realty Trac, explains that Illinois is especially slow because it is one of the few states that traditionally handles foreclosures thought its court system.
“It’s just an extra layer of bureaucracy that they have to go through,” Blomquist says. “The five states with the longest foreclosure times are all judicial states.”
Illinois was also ranked 12th in foreclosure filing in April which means judges already have heavy caseloads.
While this lengthy period may be great for borrowers who remain living rent-free after their home is foreclosed, Geoff Smith, senior vice-president of Woodstock Institute, a local advocacy firm, explains that the longer this process takes, the longer it could take for home prices to rise.
“The lag time is definitely really one of the big factors that is preventing a recovery of the housing market,” Smith said.
This lengthy foreclosure time has become problematic when homeowners enter into a “strategic default,” knowing they can continue to live in their home for over a year even if they stop making mortgage payments.
Another problem are the “walk aways,” when lenders realize the lengthy process isn’t worth the outcome and walk away from the property and what needs to be done.
Over 40 percent of “red flagged” homes in Chicago have been in the foreclosure process for more than a year and a half meaning lenders decided not to complete the process. Many of these homes end up vacant and a liability to the City of Chicago.