In Chicago area neighborhoods gripped by foreclosures, it is becoming alarmingly apparent that everybody loses.
Communities are seeing more homes fall into foreclosure and become vacant. Once reclaimed by lenders, it is taking longer to sell them. At the end of 2008, 33% of single family foreclosures remained unsold, leaving many communities with boarded-up, unsafe eyesores on their streets.
The Chicago suburb of Chicago Lawn is typical of such communities. According to reports, the median number of days for a foreclosure to sell in Chicago Lawn was 274 days in 2007, compared to 180 days in 2005. If no other homes went into foreclosure, it would take Chicago Lawn almost 2 years to shed its vacancies. This is a clear indication that more needs to be done. Studies were undertaken before the federal government Home Affordable Modification Program began.
What is the solution? One thing that might help, is that banks need to offer more aggressive loan modification programs. These banks may take larger losses if they don't.
See www.chicagotribune.com/business/chi-chicago-lawn, for more details.