Thousands of abandoned foreclosures, unregistered vacant homes may be costing Chicago as much as $36 million
Thousands of vacant homes in the City of Chicago are likely poorly maintained, lack clear ownership, and threaten to destabilize neighborhoods, says a report released by Woodstock Institute.
The foreclosure crisis has exacerbated ongoing concerns about the impacts of vacant homes on communities. The loan servicer, who is the typical steward of a property throughout the foreclosure process, may choose to reduce the costs associated with a long-term vacant home by walking away from the foreclosure process instead of completing it or may avoid maintaining a vacant home up to local code standards. In both cases, the vacant home is subject to limited or no oversight and poses a substantial risk to the surrounding community, such as lowering property values, attracting criminal activity, and causing blight.
The new report, based on an analysis of data on City of Chicago vacant properties, foreclosure filings, foreclosure auctions, and property transfers, examines the scope of two kinds of vacant homes that likely are negatively impacting their communities:
1. “Red flag” homes that are vacant properties where a foreclosure has been filed but has not reached a clear outcome, raising concerns that the loan servicers have decided to abandon the process.
2. Likely-vacant lender-owned homes that are not registered with the City of Chicago, potentially in violation of its vacant property ordinance.
A closer examination of these two types of homes found that:
• There are 1,896 “red flag” homes in the City of Chicago, causing significant concern for communities. Over 40 percent of these red flag homes have been in the foreclosure process for more than a year and a half, which means their loan servicers have likely decided not to complete foreclosure.
• Red flag foreclosures are disproportionately concentrated in Chicago’s communities of color, often on particular blocks—even more so than typical foreclosures or all classes of vacant properties. Over 71 percent of red flag homes are located in highly African-American communities, compared to only 6.5 percent in predominantly white communities. African-American communities are 11 times more likely to have a red flag home, while they are 3 times more likely to have a foreclosed property and 6 times more likely to have a vacant building than are white communities.
Communities with the most red flag homes include West Englewood (176 properties), Roseland (137 properties), Englewood (137 properties), and Austin (110 properties).
• There are 2,558 lender-owned single family homes that likely are vacant but not registered with the City of Chicago. This represents over 57 percent of the inventory of lender-owned single family homes in the City as of the third quarter of 2010. These homes likely are not secured and maintained to the standards required by the City of Chicago and may be in an advanced state of disrepair.
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