McHENRY – Maria Rebenda worries she might be part of the next wave of foreclosures.
The 61-year-old McHenry resident lost her full-time job when the homebuilder she worked for went bankrupt. She recently missed a mortgage payment for the first time. And after two years on the market, she hasn't had a single offer on her home.
At first, many of those facing foreclosure were people who had taken out adjustable rate mortgages with little or no money down. But many foreclosures now are those who have lost jobs during the Great Recession, real estate experts said. Others are unable to get a loan modification or unwilling to part with all of their equity in a short sale.
In the fallout of the robo-signing debacle, the pace of foreclosures has slowed several times, only to pick up again a few months later. And across the country, millions of homes remain in the foreclosure pipeline.
"This is an unprecedented situation," said Evan McKenzie, an associate professor of political science at University of Illinois at Chicago. "It's like a python that swallowed a pig; everything has to be worked through."
As of August, there had been 10,703 foreclosures filings in McHenry County since 2008, according to court records.
So far this year, the pace of foreclosures is lagging behind 2010. There have been 2,007 so far this year, about 17 percent behind the 2,427 foreclosures seen during the same time period in the previous year. But the lag is likely due to procedural delays rather than an actual drop in the number of foreclosures, experts said.
But statistics show only part of the housing crisis.
"Behind each foreclosure is a family that is being displaced – that's the real tragedy," said Thomas Lys, a professor of accounting information and management at Northwestern University's Kellogg School of Management.
The impact of foreclosures can be felt throughout McHenry County and the nation. Foreclosures have pushed down home values and left unkempt, rotting houses scattered throughout neighborhoods.
Like many others, Rebenda bought her home during the peak of the market. She paid $400,000 for her home in the 7200 block of Burning Tree Drive in 2006. She used the bulk of her life savings, $263,000, as a down payment. Having watched real estate prices steadily increase for much of her life, Rebenda figured it was a safe investment.
After being laid off, she put the house on the market in 2009 for $399,000. She has steadily lowered the list price, which now stands at $295,000.
"I'm losing all my life savings watching my equity deplete," Rebenda said. "If I would have put down 10 percent, I'd just walk away. Now, I can't walk away."
In June, foreclosures in McHenry County dropped to their lowest level in 23 months. There were 198 foreclosures filed in July, the fewest since June of 2009.
But in August, the figure jumped back up to 289 foreclosure filings. The temporary lull was likely due to the lingering effects of the robo-signing scandal and subsequent lawsuits filed by attorneys general against the nation's largest lenders.
"If banks are slowing down, it's because of the negative publicity related to robo-signing," Lys said.
Robo-signing is a catchall term used to describe shoddy mortgage paperwork done by banks inundated with foreclosures. In some cases, bank officials improperly signed and notarized documents without reviewing them.
In addition, banks may be putting the brakes on foreclosures to avoid flooding an already saturated market with cheap homes.
"The supply is depressing housing prices," McKenzie said. "The more [homes] the banks put on the market, the more they lose."
Nearly a quarter of the country's homeowners owe more than their house is worth, an indication of more foreclosures ahead.
"This is a temporary slowdown in completed foreclosures, but it won't change anything in the long run," McKenzie said.
In other words, banks will continue to foreclose on homes as long as there are people not paying their mortgages.
"Banks can't carry non-performing loans," Lys said.
The affect of such a large supply of foreclosures can be seen in the continued slide of area housing prices, said Rob Schaid, broker and owner of RE/MAX Plaza in McHenry.
In August, McHenry County's median home price stood at $150,000, down nearly 22 percent from $191,500 during the same time period in 2009, according to statistics put together by Schaid.
"We're selling houses at 2000 prices," said Mike Collins, of Century 21 Sketchbook in Cary.
Telling someone who bought a home for $330,000 that the property is now worth $210,000 is a difficult task. And the realities of the local market have forced real estate agents to take on the role of "counselor," said Tony Bellino, broker and owner of RE/MAX Superior Properties in Huntley.
"There's a very vicious foreclosure cycle in the McHenry County area," he said.
In what might be the only positive housing trend, the number of homes on the market appears to be declining. In August, McHenry County had about an 8-month supply of residential homes available. That was down 54 percent from a more than 17-month supply in August 2010, Schaid said. A six-month supply is considered a balanced market, he added.
Months supply of inventory is calculated by dividing the total number of homes for sale by the total number of homes under contract to be sold. There were 3,162 homes on the market on the last day of August and 396 homes under contract to be sold that month. During the same month in 2010, there were 3,854 homes on the market and 221 were under contract to be sold.
But if banks pick up the pace of foreclosures, that could add more homes to the county's list of available properties. As it stands now, the potential for more foreclosures is seen as a "shadow inventory" looming over the market, several real estate agents said. That could further unbalance the market.
With little hope of a quick turnaround in housing prices, many homeowners may continue to struggle.
"There are good people here who were told they didn't have to put money down and they would always have equity," said Keith Sloan, an attorney with the Madsen, Sugden and Gottemoller law firm in Crystal Lake who helps clients fight foreclosure. "The biggest gripe I hear is: 'Where is my bailout?'"
Short sales and loan modifications are often longshots, Sloan said.
For Rebenda and many others like her, it's hard to be optimistic.
"Trying to sell this house proved to be the worst experience I've had," she said.
Rebenda recently applied for the Illinois Hardest Hit Program, which provides eligible homeowners up to $25,000 in mortgage aid. But it's not yet clear if she will be accepted.
"I feel like there is no help," she said.