The foreclosure process is a vicious cycle that not only leaves homeowners and renters in its wake, but it seems that lenders are also not getting their properties’ worth. It’s inevitable that the first casualties in Chicago foreclosure, or any foreclosure for that matter, are the homeowners. Whether they were victims of predatory lenders or they themselves were irresponsible with paying their loans, the final outcome is always eviction unless they were able to refinance their loan before the foreclosure ax fell.
It doesn’t seem like a big deal if you were just looking at one family or two. But when it’s a good portion of the neighborhood falling into the hands of eviction, it’s a different story. The number of households that have to look for alternative housing may double or triple depending on how bad the Chicago foreclosure situation is. Lenders will find themselves with an onslaught of vacant houses that are in danger of neglect, looting and vandalism all of which just adds to the cost of maintenance that they’ll have to shell out in order to sell their stock. Yes, it bodes well for buyers to have a good supply of homes to choose from at affordable prices but they may not even take the bait if the houses are in a state of disrepair. Which is the reason why the federal government is giving Chicago $55 Million for its lenders to have enough funds for fixing up their properties to make them more attractive for buyers.
The rental housing market is also affected by Chicago foreclosure given so many people looking for alternative housing options. The problem worsens when even more if the landlords themselves are also victims of foreclosure which then leads to a dearth in the supply for rental homes. When the landlords lose their buildings, renters will find themselves in the streets with dwindling sources of alternative housing. Now, both former homeowners and renters end up looking at the same supply with nothing new coming into the market.
The only solution to this worsening Chicago foreclosure crisis is for homeowners and mortgage lenders to negotiate and come to a better working payment system to forestall more housing vacancies.