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Courts provide benefits but take longer to complete foreclosures

Illinois residents who have gone through the foreclosure process know that the court system handles the foreclosures. But it may come as something of a surprise that Illinois is in the minority of states in that regard. Twenty-nine states deal with foreclosures outside of their courts, and those states typically move properties through foreclosure much faster than states that involve the courts.

According to data collected by the Mortgage Bankers Association, fewer than 3 percent of mortgage loans are in foreclosure in so-called "nonjudicial" states. By contrast, judicial states had a rate of 6.9 percent in the first quarter of 2012, which represents a new high water mark. Illinois was worse than the average, with mortgages on single family to four-tenant residences currently in foreclosure at a 7.5 percent rate.

Indeed, that figure is the third-highest of all the states at the moment and is much higher than 4.39 percent, the mean of all foreclosure rates across the country. The problem is that the foreclosures take much longer to finish when going through the courts, said an economist working for the Mortgage Bankers Association.

But using courts to handle foreclosures does not necessarily entail lengthy delays. About half of the judicial states beat the national average of mortgages currently in the foreclosure process. In addition, the court system has its benefits, say supporters. The slower pace in judicial states can be seen as a price to pay for the increased rights that the courts offer to property owners in foreclosure, which may not be available to the same degree in nonjudicial states.

Source: Chicago Tribune, "Illinois third in foreclosures despite national improvement," Mary Ellen Podmolik, May 16, 2012.

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