There are many ways to measure the overall health of the housing market in the United States. For example, you could look at trends in home sales, sale prices, and other considerations linked with individuals and families buying new homes. On the other side of the coin, however, it is also important to look at the rate of foreclosures around the country, as foreclosure rates are often indicators of people struggling to afford their homes.

Earlier this month, ATTOM Data Solutions released a report that examined foreclosure filings across the nation in January 2020. The report looked at total foreclosure filings, which include default notices, bank repossessions, and scheduled auctions, as well as foreclosure “starts” and overall foreclosure rates. As it turns out, Illinois homeowners did not fare particularly well in January, as foreclosure continues to be an issue for many throughout the state.

A Look at the Numbers

According to the report, there were just over 60,000 total foreclosure filings nationwide last month—a 13 percent increase from December of 2019 and a 7 percent increase from January of last year. New foreclosures, also called foreclosure starts, however, were down by about 1 percent from December and about 9 percent from last January. Last month, lenders initiated foreclosure for the first time on 26,858 properties in the United States.

There are so many avenues for buying a home that deciding what route is best for you can sometimes be overwhelming. While researching your home-buying options, you may have found information about foreclosed properties. When a homeowner cannot make his or her mortgage payments, the mortgage lender may foreclose on the property and put the home up for sale. These homes are often sold at foreclosure auctions, so it is possible that you could buy a foreclosed home for price much lower than it would otherwise be.

If the home does not sell during the auction, the home returns to the lender and becomes a “real estate-owned” property, also called an REO property. The institution will then look for ways to sell the home and recoup the money lost due to the foreclosure. If you are thinking about buying an REO property, make sure you fully research the potential advantages and disadvantages associated with this option and discuss your plans with a real estate attorney.

What to Expect With REO Sales

Real estate-owned properties are sold in a similar manner as other homes. The bank lists the property and potential buyers have the opportunity to visit and inspect the property. An REO sale will typically involve assistance from a real estate agent just like a non-REO sale. There are several advantages to buying an REO home. Buying a property that is owned by a bank instead of a homeowner often involves less competition. These properties are also often priced below market value and may also involve lower interest rates and smaller down payments.

If you are behind on your mortgage payments and you owe more than your home is worth, you may be wondering what will happen next. One option which may be advantageous to you and your family is a “short sale.” A short sale occurs when a home is sold for an amount of money that is less than what the owner still owes on the mortgage. Short sales are often used to avoid foreclosure. Having your home foreclosed on is not only extremely stressful but can also result in significant damage to your credit score. Some people who experience foreclosure are even forced to file for bankruptcy. A short sale is not right in every situation, but there are several advantages to short selling of which you should be aware.

Avoiding the Stigma of Foreclosure and Remain in Control of Who Gets Your Home

Life does not always go according to plan and foreclosure can happen to anyone. One out of every 2541 residences in the United States is in some stage of the foreclosure process. In Illinois, that number is one out of every 1381 residences, nearly double the national average. Dealing with foreclosure on is not necessarily something to be ashamed of, however many people who experience foreclosure do feel embarrassed when friends and neighbors find out about it.

Short selling your home is a one way to avoid the stigma associated with foreclosure. Furthermore, because you are selling your home, you maintain control over the sale. You ultimately get to decide who gains ownership of your home instead of the bank making this decision.

It has been almost a full decade since the housing market crisis was at its lowest point. In late 2009, nearly 25 percent of homes with a mortgage were underwater—meaning that the value of the home was less than the amount remaining on the mortgage. Millions of homeowners across the country were forced to deal with the reality of foreclosure.

Now, it is 10 years later, and across the country, the situation has largely improved. Today, less than 4 percent of the nation’s mortgaged homes have negative equity. In Illinois, however, things have been much slower to recover, and about 8 percent of the mortgaged homes in the state are still underwater—approximately twice the national average. At least one expert believes that the state’s foreclosure laws have contributed to the slower recovery.

High Property Taxes, Slow Foreclosures, and Oppressive Red Tape

The aforementioned numbers were compiled by CoreLogic, a leading provider of property, consumer, and financial analytics. Frank Nothaft is the chief economist for CoreLogic, and he acknowledged his concerns about the health of the Illinois housing market. In the last year, home equity did increase by an average of $1,300 per mortgaged home, but that increase just barely kept pace with inflation, Nothaft said.

Facing a possible foreclosure can be a terrifying ordeal. You may worry that you will have to immediately leave your home or even become homeless. The good news is that the foreclosure process takes several months. Although even one missed mortgage payment could technically be enough to violate a mortgage contract, missing one or two mortgage payments will generally not initiate foreclosure proceedings. The majority of lenders will not start taking actions to foreclose on a home until the borrower is three or more payments behind.

Furthermore, just because foreclosure proceedings have begun does not mean you must immediately vacate your home. Illinois law considers the borrower to be the lawful occupant of the home until a judgement of possession is entered. The process of gaining a judgement of possession in Illinois usually takes nine months or more.

Illinois Homeowner’s Rights Act Gives You Certain Protections

A lender cannot simply choose to foreclose on a home out of the blue. The Illinois Homeowner’s Rights Act was passed in 2009, and it requires certain procedures to be followed before the foreclosure proceedings can begin. First, the lender will send you a notification of its intention to foreclose. Next, the lender will file a lawsuit which explains the grounds for the foreclosure request. At this point, you will have 90 days to pay the outstanding mortgage payments in order to reinstate your mortgage. If you are able to become current on your mortgage payments and resume the agreed-upon payment schedule, you will be able to keep your home.