The first wave of foreclosures that hit Chicago in 2008 could be attributed to questionable lending practices that have impacted the entire country. In fact, in 2008 alone, more than 20,000 homeowners in the Chicago city limits lost their homes to foreclosure. This could have been predicted because almost 75 percent of those homeowners had purchased their home by securing an Adjustable Rate Mortgages (ARMs) or other high-risk loan products to finance their purchase.

But as we roll into the second quarter of 2009, it’s Chicago’s suburbs that feeling the foreclosure pinch. This was highlighted in Crain’s with new data from the Woodstock Institute, a Chicago-based housing advocacy group. One stat that really stood out was the fact that across the six-county Chicago metropolitan area, foreclosure filings rose 6% in the first quarter to 17,819, the highest one-quarter total since the housing crisis began in mid-2006.
This is especially concerning because unlike the problems within the Chicago city limits where it was just a matter of time till the ARMs reset, most of the suburban middle-class borrowers actually secured conventional mortgages with no crazy resets. So what’s the problem?

Money or lack of is probably the best answer. Job losses and the overall economic recession are wrecking havoc on families living in the Chicago suburbs. And with declining savings and rising unemployment, families are having a harder and harder time keeping up with their mortgages. The effects can be seen in the foreclosure cases filed in the first quarter of 2009. They jumped between 25% and 70% from the fourth quarter in DuPage, Will, McHenry, Lake and Kane counties, according to data from the Woodstock Institute.

So as with many parts of the country, the Chicago suburbs are experiencing a chicken vs. egg scenario. They have people that really would love to stay in their homes but due to the current economic landscape, they are unable to keep up. Let’s hope the economy turns around before it’s too late.

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