Kendall Co. Plan Consortium Minutes 2010 03-29-10
United City of Yorkville
800 Game Farm Road
Yorkville, Illinois 60560
Telephone: 630-553-4500
Fax: 630-553-7575
KENDALL COUNTY PLANNING CONSORTIUM
MS
EETING UMMARY
Monday, March 29, 2010
7:00 P.M.
United City of Yorkville
City Hall
800 Game Farm Road
Impact of Foreclosures on Your Community
Speakers:
Anne Lucietto welcomed all guests to the Yorkville City Hall, Kendall County Planning
Consortium. She spoke of issues for 2010 meetings were discussed at the January
meeting, and what planning efforts the consortiums would like to have discussed.
The subject of foreclosures, specifically how they are affecting the community, is the
topic for this first meeting.
Guests were introduced: Barbara Hogan from Castle Bank, Ted Wilkinson and Michele
McComb from Coldwell Banker.
Banking Representative - Barbara Hogan
Ms. Hogan has been a mortgage officer for 16 years with castle bank, and worked on
loans for 11 years before her current position.
There are 6 parts to a foreclosure process:
1)Default – meaning that something is past due; no taxes, no insurance, etc. If the
homeowner is 30 days late on any payment, the bank will send out letter, upon
which the homeowner has 30 days to get in contact with a HUD counselor to
amend problem. HUD counselors are free and available to public, and you do not
have to be in foreclosure. They will help you before it gets to the foreclosure state
if you call.
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HUD counselor contact information is available on the Castle Bank website;
under HUD counselors, go to HUD mortgage assistance.
Foreclosures now take over 1 year; used to be 6-9 months for foreclosure process.
2)Complaint – if a property is in default, the owner is given an opportunity to fix the
problem. There is a 60 to 90 day late point which can vary case by case. It is
important to keep communicating with your lender. A hardship modification can
be done (option for bank), but it is very difficult to modify a loan in default.
Payment modification for 3-6 months for due diligence while trying to sell
property is an option.
3)Short sale – this is when a resident owes more on the loan than they can sell the
home for. Through updated financials, either write off debt or roll into new loan,
but this has to also be approved by others who have a lien on property.
Deed in lieu of foreclosure – the homeowner can sign the property over to the
bank, but it is not an option if there are any other liens on property. The primary
emphasis is to work through it. If the default is not cured in 60 days, then file
complaint against borrower, lease penance is first notification, checks for liens,
taxes, HOAs, etc., all notified if deed in lieu is used.
4)Service of complaint – this is served to the borrower. It is a hand delivered
complaint, done within 30 days. The person who delivers the complaint is only
the messenger, if the homeowner has questions, you must contact the borrower.
All cases must go before judge.
5)Judgment - have to cure default, or go to court, judgment entered against
borrower. The homeowner can have a period of time to pay off the debt, from 60
days to 6 months, which will allow them to redeem the debt and pay off the loan.
If they can sell home and pay the amount off, then judgment is satisfied and
homeowner has achieved redemption.
Castle bank monitors property, may go in and keep property out of disrepair, will
maintain properties.
6)Share of sale – if all else has failed, the share of sale is reported in the local paper.
The local sheriff’s office conducts the sale on behalf of the court. The sale goes to
the highest bidder. When the sale is confirmed, the owner takes possession. The
bank can bid on the property, but will have an appraisal and will only bid to that
appraised value or loan balance.
A homeowner that has gone through foreclosure can get a loan – 48 months after
declaring bankruptcy, 36 months after a regular foreclosure, after deed in lieu of it is 24
months.
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If the homeowner has lost their home due to financial mismanagement – it is 60 months
until they can get a loan, deed in lieu of is 48 months.
FHA is more lenient – 24 months after bankruptcy, 36 months after foreclosure with deed
in lieu of
Foreclosure will drop your credit score 200 points, deed in lieu of drops it 100 points.
You have to have a minimum credit score of 620 for a loan.
Appraisers do have to use foreclosures as comparable housing prices. It is projected that
we haven’t hit the bottom yet, foreclosures will go up through next year.
Ultimately, the bank wants to be paid, foreclosure is how bank loses most money.
Coldwell Banker - Michele McComb
Manager
Ms. McComb has 13 years experience in real estate.
RealtyTrac complies foreclosure statistics. As of March 11, foreclosure filings are up 6%
over last year, which means 1 of every 418 housing units has received a foreclosure
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filing. Six states account for over 60% of foreclosures, IL ranks 4, with over 17,000
foreclosures throughout the entire state.
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The Illinois Association of Realtors, as of Feb 10, stated that total home sales are up
14% over last year (January 2009). McComb is thrilled to see the increase. Median prices
for homes are at $145,300, which is up only 0.2% of $145,000 (Jan 09).
Kendall County – (data from MLS) residential property and vacant lots, impact of
foreclosure and short sales, has resulted in lower overall sale prices and inflated
inventory. Average ‘sold’ price of February 2008 was $262,000, as of February 2010:
$196,000, which is a 25% loss.
How much inventory is available? In February 2008 there was a 22 month supply, in
February 2010 there was a 12 month supply. The closer we get to 6 months of inventory,
the healthier the market gets. In December 2008 there was 29.4 months of inventory in
Kendall County – those high levels of inventory affect prices and values. The February
2010 inventory is the lowest supply we’ve had in 2 years, and McComb hopes it has
continued to drop in March. Ultimately McComb thinks it is good news that inventory
has decreased.
Upper tier properties are struggling because smaller homes and first time homebuyers
aren’t moving up in house, instead staying where they area at.
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How does the current market impact us? Communities are suffering economically,
families are losing their homes.
Six major areas foreclosures are impacting our communities:
1)Crime – vacant homes are being robbed of appliances and copper pipe and
furniture is being stolen; vandalism; sites for crime (vacant lots and homes)
2)Community and neighborhood budget crisis – reduction of annual budget, smaller
tax bases, loss of community jobs and schools, social and public service cuts –
from children to elderly to special needs, SSA and HOA’s suffer loss b/c vacant
properties
3)Predatory scams – go to your mortgage bankers to provide reliable resources,
check out websites
4)Youth – kids have lack of stability when family’s home goes into foreclosure, 2
million youths are affected, growing up in environment with tremendous stress,
no routine, school and friends change
5)Displaced residents – where do they go? 76% are moving in with relatives –
boomerang families, rental property need increases, not much rental property
available, greater price increases, now there because of credit issues, might have
trouble with renter
6)Community blight – garbage, pests, building deterioration, mowing complaints,
general lack of upkeep, makes rental properties or houses look bad, people don’t
want to purchase in that area, unfinished homes or half built properties are safety
issues, crime, health issues, tons of flooded homes, animal and pest infestations,
structure incidences, mold, flooding, gas leaks
If the broker or bank ends up with the home, they will clean up issues before goes on
market.
Coldwell Banker - Ted Wilkinson
Licensed broker
Ted has spent 38 years in real estate, and he has seen a “cycle”. It starts with the first time
home buyer, they live there 7-10 years, then they outgrow the property once they start a
family, purchase a bigger house after a few children, live there for 7-10 years, buy a
bigger house for their teenagers, 7-10 years, then once they become empty nesters they
buy a smaller house. This cycle has come to a complete stop.
Any one of houses has to be sold as a short sale or foreclosure, that person doesn’t have
to move onto another house, that is impacting sales. In the first half of 2009, only 40,000
short sales were completed of the 8-12% of all that requested a short sale. Even a loan
modification may not work, and the government has a new plan – home affordable
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foreclosure alternative – April 5, 2010.
Banks lose 50% of their money on foreclosures, and lose 30% of their money on a short
sale. This also has an effect on surrounding properties and their value.
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Short sale – more dignified for homeowner, may be financial assistance in relocating, can
return to home ownership sooner, in short sale or deed credit restored faster.
Question: What percent down does homebuyer need for short sale? Ted: Same as usual
for loan, but in purchasing a short sale, banks have been overwhelmed. The response time
from bank should be 4-6 months, still have no answer from the bank, buyer will say
forget it! And move on. He hopes they extend the credit again, but no guarantee. As long
as the home is under contract by end of april and close within 60 days
Benefits to neighborhood with Short Sale: home stays occupied, keeps utilities on,
maintains properties, multi-family units COULD affect neighbors (for example if pipes
freeze and flooding with water damage in townhomes), very small blight issues on short
sales, new homeowners provided tax revenues for communities.
Future expectations: in a report issued on February 17 from U of I – forecast indicates 1-
14% sales increase in homes, month to month 5 - 31% across entire state, median prices
are expected to climax in march and drop slightly in April. April 2010, median price
could rise to $147,303. Many analysts predict that there is a large shadow inventory – not
in foreclosure, but headed that way. Nationwide 3.5 million properties are more than 90
days in arrears. Chicago 11% in arrears. Shadow inventory can be something to be afraid
of - would like to convert to short sales and not go into foreclosures, which will help
solve problems.
Key is to get involved early in the situation – don’t ignore it, contact lender, discover
options, enlist trusted attorney, consult tax advisor for ramifications of short sale. A
Lender can put liens against other things you own, contact a licensed realtor to help find a
reasonable solution.
Question/Answer (T-Ted, M- Michele, B- Barbara)
Q: Validity to program that administration (White House) is putting out 30% off of equity
if 20% underwater (HAFA program) A: You can’t do that and stay in the house –
designed to help the bank make a decision with in a month or two and allow the short sale
instead of taking 4-6 months and the owner already be in foreclosure.
HAFA – is being put in place for those who don’t qualify for loan modification, will help
to move process along in more timely manner so ready buyer will get property approved
faster. With all industries overwhelmed, this will help.
Q: Is it good for the economy? How does it help the person who made their payments?
A: The person will still lose their home. If they can do loan modification, bank can make
payments lower for a time period. Ted’s opinion is that unemployment is single biggest
badger in this whole thing! Started in 2006, will be gradual progress to get better.
Smaller banks can maximize efforts, larger banks dealing with hundreds of thousands of
loans, and bought smaller banks and took on their loans as well.
It is necessary to educate sellers and buyers and give them resources to go to. Real estate
agents are learning along with the public.
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Q: Unemployment put us there, any numbers on how unemployment will affect future of
buyers? A: Could get worse or better, but no data numbers to back up.
Q: In Oswego, the developer is being foreclosed on, are you seeing banks do anything
with those properties? Are taking care of properties? Selling off? A: Trying to find other
developers to sell to, hard to find developers, until cycle gets started again. Mayor Burd:
She is seeing people finally starting to come in again to buy developments. T: Those
buyers that want the market of first homebuyers that is what is going to start market
again. Many people in his age group want smaller houses, but can’t get out of their house.
M: There are a number of developers who left development and had spec homes, have
marketed properties, great buy for new buyer.
Q: Handle on how many mortgages are held locally? Versus Chicago banker? B:
Personal experience, low on local level, sell many loans off to larger lenders. Have to get
in touch with larger lender, become worst thorn in their side for them to work with you.
M: Encouraged homeowners to work with experienced attorney b/c know ins and out and
paperwork.
Q: People who have lost jobs and homes, who should they talk to if they have no money
to pay someone? HUD has free counselors, is there free legal advice? A: YES, many
times attorneys in short sale process can work fee into the short sale. The short sale fee is
far worth far more than the loss of the house (foreclosure). Talk to lenders and agents,
just is a difficult question for people to ask.
Q: Castle bank – what sell to other banks A: 90% of loans sell off, keep in house short
term loans (15-20 year loans).
Q: Banks maintain homes after foreclosure process, once worked for a bank cutting grass,
what have noticed in my subdivision, bank in Indiana owned it, killed the power, water
pipes froze, lawyer from Ottawa bought it and fixed. There are 497,000 people that need
ComED to turn power back on, but can’t get into basement to turn on power b/c of water.
B: Castle bank is checking properties for maintenance, when get into big banks, 1 person
controlling 500 loans, can’t handle it all.
M: Larger banks have a field services property, home may have been vacated a year
before bank may have received it in foreclosure, field services may take care of some
issues. First item is to assess condition of property, have to send photos to be eyes of
bank. The company is putting utilities in name, has to check utilities once a week, heat
on, driveways shovels, etc. Local realtors have better opportunities to check properties.
Q: Short sale is less harmful to the bank’s bottom line, didn’t say if a short sale can result
in a higher selling price? A: Some cases, yes, but generally a short sale is in better
condition than an entire foreclosure, a vacant property still deteriorates.
Q: As we see our cities developed, I can see support of keeping community as high
standard, as we read the paper and see what is brought into community, when higher
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authority is making loans for entire community, people that are approving subdivisions,
as I read the paper, people are being foreclosed on are from the housing authority,
national builders, hurts people in there, but lowers value of good homes. A: A lot of
homes were made that shouldn’t have been made, but we didn’t stop building in 2006,
foreclosure and short sale is not specific to one income level AT ALL, affected most
inexpensive housing to the most luxury estates, nobody is immune, all economic levels,
one commonality.
Q: Are any ways an HOA can take responsibility for a home that is vacant in the
neighborhood? A: They could impose a lien on the property, but the bank usually ends up
paying it prior to closing.
Q: When a neighboring homeowner mows a lawn does that help? A: Although it seems
great, it is a liability because you are trespassing.
Q: What about comparable sales? A: Comparable sales for appraisals, comparable are
foreclosures and short sales, there was a timeframe where there were more traditional
sales available for comparables, but now they must include all sales.
Q: What percentage of your sales were short sales and foreclosures? A: 35% from
Coldwell banker.
Q: So homes are just going to be vacated for 4 or 5 years? Would someone have to plow
the house down?
A: In FL and CA, not uncommon, 5 out of 10 home the banks are going in and bulldozing
houses down to get rid of them. There were a few here, such as those south of town on
route 71. At least we do not board up things around here, helps to not make area look so
bad.
Q: If a developer comes to Plan Commission, what questions should we ask? A: What is
your overall concept? What price range are you going to build in? Are you going to build
a comparable property to what is already existing? If I’m the homeowner who bought the
big beautiful home, and I see the new homes for the first time homebuyer, it will affect
the property values. Stay with continuity, value, CCR’s, sticking with or asking for
modification.
Meeting minutes submitted by Laura Schraw.
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