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McHenry County continues to suffer from the effects of the housing crisis, four years after the bubble burst. In this special project, the Northwest Herald offers a guide through these tough times.

Day 1: How a boom went bust

How did we get here?

In over their heads

To the bank agent, Sue Rose looked like any other homeowner seeking to refinance six years ago.

Sue Rose, community service director with the McHenry County Housing Authority, looks over a client's documents Thursday. In her 16 years at the housing authority, Rose saw the recent increase in homeowner foreclosure firsthand. (Photo by Lauren Anderson)

Series serves as a housing crisis guide

Four years after the U.S. housing bubble burst, the ripple effects continue to touch almost every facet of life in McHenry County.

Anybody who had anything to do with the housing industry was opposed to touching anything.

Don Manzullo
U.S. Representative, R-Egan

Many warnings of bust ignored

A local congressman, a Woodstock housing expert, and a Harvard banker each had front-row seats to the housing crisis as it unfolded over years.

TARP Funds

Money distributed from the U.S. Treasury through the Troubled Asset Relief Program, designed to buy up toxic assets from banks.

A lifeline that became a scarlet letter

As the financial crisis took a steady grip on the banking world in the fall of 2008, officials at the U.S. Treasury were devising a plan to rescue the sector.

At that point, they were only giving [TARP money] to healthy banks - if you didn't take it, the market would think there was something wrong.

Ed Wehrner
Wintrust Financial CEO

A sword that cut both ways

It wasn't that long ago when families saved much of their lives to afford a down payment on their home. Not their first home. Their only home.

Day 2: A wave of foreclosures

Who is facing foreclosure?

"An unprecedented situation"

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.

How do short sales work?

LaRae Alvarado, 30, of Woodstock looks over her foreclosure papers. LaRae and her husband, Carlos, have been fighting a foreclosure for more than a year. (Photo by Jenny Kane)

A long and perilous road

Carlos and LaRae Alvarado were served with foreclosure papers at their Woodstock townhouse on Valentine's Day. The couple are fighting the foreclosure in court while exploring the possibility of a short sale.

When fighting foreclosure, watch out for mortgage scams

More than 3,800 homeowners files residential mortgage complaints with the Illinois Attorney General's Office in 2010.

A short sale is typically not as bad as a foreclosure, but you're really splitting hairs at that point. A short sale is going to have a very negative effect on your credit score.

Rod Griffin
Director of public education at Experian

Where can I turn for help?

Looking for a lifeline

Laura Prada tells her clients that helping with their housing issues is like a new part-time job.

Most people think they need to be way behind to see us. The earlier you get in here, the better, so you have an idea of where you stand.

Laura Prada
Certified credit counselor

Keep a close eye on your entire financial picture. That means studying what you're spending your money on.

- Consumer Credit Counseling Service of McHenry County

Children need truth, not details

It's not a conversation any parent wants to have with their child. But if the bank's taking the family home, children need to know, area counselors say.

Rebuilding credit hard, but doable

There's hope for home ownership after foreclosure. According to Freddie Mac, a foreclosure can impact credit for as long as seven years, but owning a home again is still possible.

Day 3: Construction collapse

How are builders coping?

Caught in a bursting bubble

Of industries hit hardest following the housing bubble burst, the construction sector experienced the largest national decrease in employment.

Steve Anderson is a third-generation electrician who owns his own company, Lantern Electric. Since 2007 he has had to cut back his staff and lost hundreds of thousands in contracts for subdivisions that fell through when the housing bubble burst. (Photo by Jenny Kane)

Agents adapt to challenging market

With the downturn in the housing market, it has become harder for agents to finalize sales and earn their subsequent commisions.

If we're paid in direct proportion to the sale price of the house, and the houses have dropped arguably 30 percent in the last three years, you've got to do a lot more business to maintain your income.

Don Prigge
Branch Manager, Baird & Warner, Crystal Lake

Townhouse buildings located next to finished and occupied homes on Condor Circle in Lakewood have been left unpaved and incomplete for years. (Sarah Nader photo)

Towns wrestle with abandoned houses

Grass that needs to be mowed, overgrown shrubs - these are signs of vacant houses that need to be monitored.

Agencies respond to financial drain

As the economy continues to sputter and construction work remains slowed, local agencies that provide financial assistance have their hands full.

Many local agencies are here to help. Habitat for Humanity will fix up your home through their 'Brush with Kindness' program. The Neighbors Food Pantry in Wonder Lake serves 250 families a month. And many townships, such as McHenry, offer general assistance aid.

Why are property taxes rising?

Lower value, rising costs

When Henry Mueller moved to Spring Grove in 2004, he bought a new, two-bedroom ranch home for $217,000.

Unemployment leaves lasting financial scars

Jo Anne Minerly and her husband, Dave, both lost their jobs in 2009. Nearly three years later, money is still an issue.

Has government helped?

Guide to Obama's new mortgage-refi plan

WASHINGTON - Two big questions loom over the Obama administration's latest bid to help troubled homeowners: Will it work? And who would benefit?

HARP

The Home Affordable Refinance Program lets homeowners refinance their mortgages at lower rates. Borrowers can bypass the usual requirement of having at least 20 percent equity in their home.

Day 4: The current market

What is the market like now?

A whole new ballgame

Longtime managing broker Don Prigge remembers a time, not too long ago, when home sellers were smiling. Now, homes can be bought for a bargain, interest rates are at historic lows, and an overabundance of homes have flooded the market.

The market is still dropping. It's a big black hole. Nobody knows how far down it's going to go.

Paul Hespen
Realtor with Prudential First

There are several tactics to employ to ensure your home sells:

  • Curb appeal is huge
  • Get rid of clutter
  • Touch up minor defects
  • Add a fresh coat of paint
  • Eliminate bad smells

- Kim Keefe, RE/MAX Plaza

How do you sell a home?

A Realtor shows a client a home in Crystal Lake in 2009. (Photo by H. Rick Bamman)

A minefield of a market

Choosing the right person to help you sell your home is one of the most important steps of selling your home. Therefore, choose wisely. It is recommended to, at a minimum, speak with two or three real estate brokers from different agencies.

Two sides of moving: downsize, ladder up

When his children and stepchildren moved out of the house, Jim Geiger and his wife decided to downsize. The empty-nesters sold their 2,800-square-foot home and opted for a smaller, cozier abode.

What about renters?

Foreclosure crisis boosts rental option

The aftereffects of the housing bubble aside, millions of Americans continue to cope with the recent recession. High unemployment and limited job opportunities are a couple of common struggles.

Why buy real-estate?

Opportunities amid chaos

When the housing market turns around, there are a select group of individuals who stand to make some significant cash. But it won't come easy, and it won't come without a cost.

Steps to buying a home

What you can afford depends on your income, credit rating, monthly expenses, the down payment you plan to make, and the interest rate.

Closing

Time in which a buyer and seller sign all documents with the title company. "Now, a quick closing is in 60 days," said Susie Covey, Coldwell Banker Realtor

A construction worker works Oct. 5 on a house that is having its siding remodeled in Crystal Lake. (Lance Booth photo)

Why renovate?

A way to stay in your house or boost value

To Helen Cyrwus, it seems more fellow homeowners are undertaking renovation projects for their properties given today's housing market conditions.

Remodelers are starting to see an uptick in interest from consumers who are considering future remodeling projects. Homeowners are also showing more willingness to undertake larger remodeling projects.

Bob Peterson
Chairman, National Association of Home Builders

Day 5: When will recovery occur?

How are builders coping?

A change of attitude

In the early 2000s, new Richmond residents Rose and Jerry Anderson were doing well. Like many Americans, they decided to buy a home.

Rose Anderson and her husband, Jerry, slowly move in boxes Oct. 10 to their new home in Richmond. The couple had to short sale their home in Antioch in 2009. To get a new home, they applied for and received a VA mortgage. (Photo by Jenny Kane)

People would refinance, pull money out of the house and use it for whatever - vacations, new cars, furniture. That behavior hurt lots of people as literally millions of people are underwater on their mortgage right now.

Mark Davids
Adviser, Dorion-Gray Retirement Planning

Tighen your belt. Limit purchases and eating out. Go on a weekly budget and limit your credit cards. Changing your lifestyle now will help you avoid future troubles.

- Rose Anderson

What needs to happen?

Awaiting the next boom

After a nation takes a beating like the one the United States has endured since the housing bubble burst, a couple of logical questions persist. When and how will we get out of the woods?

Projects coming on line despite crisis

The nation's recession and the housing bubble burst effectively stalled the housing market, leaving homes out the market for lengthier periods of time even as sale prices significantly dropped.

TIF District

A tax increment financing district gives municipalities authority to issue bonds and borrow money to fund improvements to entice new development into the area.

What is government's role?

Illinois' job climate hurting housing recovery

One of the key ingredients for a housing market recovery is jobs - no jobs, no mortgages, no homes.

Tale of two riverside developments

In 2006, government officials in McHenry and Algonquin approved plans for luxury condo and retail developments in their respective historic downtowns. Five years later, neither has turned out as planned.

Work on Riverside Plaza in Algonquin resumed this summer, two years after the initial developer filed for bankruptcy, halting construction. (Photo by Sarah Nader)

On the lookout for positive signs

Though outspoken billionaire Warren Buffett predicted at the end of February that the United States housing slump would be over by the end of 2011, many others aren't quite as optimistic.

One of the main problems is confidence. As a homebuyer, you don't want to make the biggest decision in your life with the idea that this asset will be cheaper next week.

Eric Landry
Morningstar

Credits

Web project by Adam Nekola, Senior Web Producer • "The Bubble" video series by Jenny Kane, Videographer • Articles by Brett Rowland, Kevin Craver, Joe Bustos, Chelsea McDougall, Hilary Gowins, Jane Huh, Chris Freeman and Katie Anderson • Editing by Kevin Lyons, Joan Oliver, Cyndi Wyss, Dave Lemery and Dan McCaleb • Photos by Jenny Kane, Lauren Anderson, Lance Booth, H. Rick Bamman and Sarah Nader