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Conventional Mortgage Foreclosures Increase in Chicago

People may suspect that a balloon or adjustable rate mortgages represent a majority of Chicago foreclosure filings. In reality, although mortgages with ARMs and adjustable rates used to represent about half of Chicago foreclosure filings, that percentage is falling.

According to a recent report released by the Woodstock Institute, at the start of the current economic downturn, government-backed fixed rate mortgages and conventional loans were used in 50.1 percent of homes entering foreclosure. The riskier adjustable rate, ARMs and balloon mortgages were used in 49.2 percent of foreclosure filings.

Last year's numbers showed a different story. Only 29.4 percent of foreclosures were on balloon and adjustable rate mortgages, while 68.2 percent were on government-backed or conventional mortgages.

"These new data show that even buyers who took the less risky route of buying a home with a conventional mortgage are not immune from the impacts of the foreclosure crisis," stated the Woodstock Institute Vice President. He went on to explain that this tracks trends which show less affluent communities were hit by the foreclosure crisis early on, and now even more affluent homeowners are facing financial strain.

Additionally, Woodstock found that almost 25 percent of recent foreclosures were on loans that originated prior to 2005. This shows that the crisis in now impacting homeowners who made their monthly payments for a number of years, and have now reached a breaking point.

Overall, Chicago foreclosure filings in March of 2012 rose 18.5 percent compared to March 2011. They also showed a slight 1.8 percent increase compared to February 2012.

Source: Chicago Sun-Times, Foreclosure filings jump in Chicago in March, Francine Knowles, 12 April 2012

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