Greenwich Court is a short lane of cozy but luxurious homes in the western suburbs of Chicago. You would never know from the well-manicured lawns and brick facades that one of the eight homes on the block was bought as a pre-foreclosure and a second foreclosed last month.

For at least one homeowner here, the story of a pre-foreclosure ended happily. David Field, business owner and managing broker for Home Field Realtors in Naperville, went through a lot of headaches to finally own the 2,800-square-foot, four-bedroom home on Greenwich Court, where he now he lives with his wife and three children.

Greenwich Court is a short lane of cozy but luxurious homes in the western suburbs of Chicago. You would never know from the well-manicured lawns and brick facades that one of the eight homes on the block was bought as a pre-foreclosure and a second foreclosed last month.

For at least one homeowner here, the story of a pre-foreclosure ended happily. David Field, business owner and managing broker for Home Field Realtors in Naperville, went through a lot of headaches to finally own the 2,800-square-foot, four-bedroom home on Greenwich Court, where he now he lives with his wife and three children.

"Our children have a good home to grow up in, and with a little bit of work it is a really beautiful house," Field says.

Field’s saga started early last summer when he decided to move back from Seattle — where he co-owned a previous real estate brokerage — to Naperville, where he has family in the area. The Fields rented a house in the suburb, waiting for the perfect opportunity to get a good deal on a home.

The house on Greenwich caught Field’s eye and he noticed that it had stayed on the market for a long time. As time went on, the weeds in the yard grew longer. Weeks passed before Field couldn’t wait any longer for fear of losing the deal. He called the listing broker, Jean-Paul Eskenazi, to set up a showing.

"Every 15 to 20 days the price would drop again," Field said. "I thought it was definitely going to be a short sale."

The couple who had been living in the home had gone through a bitter divorce. There was no equity left in the home and a lien had been taken out by one of the couple’s attorneys for legal fees.

The husband had relocated to France and the wife to Florida, both knowing that they would not profit on the home’s sale. The home was listed in June of 2007 and sat on the market for more than a year before Field moved in on it.

"It was right at the beginning of the fall of the real estate market, and there was so much more inventory in the Naperville market that people tended to overlook this one," Eskenazi said.

Field put in an offer, but before closing the home went into foreclosure proceedings with the notice of default filing. The foreclosure process in Illinois begins with the issuance of a notice of default (NOD) after the first missed payment. The homeowner then has 90 days in which to reinstate the mortgage by bringing payments up to date.

If the homeowner fails to do so, there is a three- to seven-month redemption period to pay off the entire amount due on the mortgage before the property goes to a foreclosure sale. The average Illinois foreclosure takes six to nine months to complete.

The owners were not going to have enough funds to close on the sale, and a short sale was imminent — thus the deal had to be renegotiated. The home would become a bank-owned property (also known as a real estate-owned or REO property) if Field couldn’t work out a deal. But the Fields liked the home and didn’t want to see it bought by an investor and possibly torn down. …CONTINUED

"David had to decide if he thought it was worth it to pay part of the old owners’ closing costs to get the house," said Field’s lawyer, Mark Rodriguez. "In his mind, it was."

During the negotiation process, Eskenazi and Field collaborated with both parties of the divorced couple and their lawyers, as well as real estate lawyer Scott Walthius, on the deal. Sometimes this meant five phone calls just to negotiate a few small points. Walthius said the negotiations were lengthy but everyone was willing to try.

"Neither of them (the previous owners) wanted to have to make out a check for even $1," he says. "But they didn’t have the money to pay for the liens, so this ended up being an acceptable solution."

Field said he knew a short sale would be a lot of work, but was willing to do so for the payoff. Home Field Realtors works with foreclosures, REOs and short sales, so Field had seen the process in action before.

"I wanted to make sure that everyone got the deal they wanted. And I knew, after being in the business for five years, I was going to have to negotiate (and) not give up," Field said.

After the negotiations concluded, Field bought the home for $425,000, including the closing costs from the previous owner. He sometimes wonders if he might have been able to get a better deal, but he didn’t want to risk losing the home to the bank or to someone who was willing to pay more of the closing costs. The former owners didn’t make any money off of the deal, but were satisfied to be rid of the house since neither had lived there for more than nine months.

Walthius, who is also a divorce lawyer, said he sometimes advises couples not to split up because of the expenses associated with selling and splitting costs of the home.

"It used to be that you either sold the home and split the proceeds or one person bought out the other," He says. "In the last few years, as homes are losing equity, you might lose money doing something like that. So I sometimes ask people if they think they can work it out or just be roommates for a while."

After the deal closed, Field faced yet another challenge. While neighbors had tried to care for the home in the time that it had been on the market, some weeds had grown 6 feet tall and the interior was layered in dust.

"They had been gone for months, so it wasn’t trashed like a lot of homes that people have lost all the value in, but there were a lot of little things that needed fixing," he says.

Field said that within months of moving into the Greenwich Court home, little things in the house went wrong. The microwave broke; the sump pump overflowed; and the garage doors stopped functioning. But Field said he took it all in stride, knowing such trials are just part of homeownership. The house, which was built in the 1960s, was reaching a certain point in its life where certain things needed repairs.

And although Field said he is happy with the purchase, misfortune has struck just next door. The 2,200-square-foot raised ranch that previous owners had rented out went into foreclosure last month. Field says the house recently went under contract — he has shown the house a few times and it is in good condition.

Prices in the area are generally down right now, he noted, and many other homes are available. …CONTINUED

"If even a few houses on the block go into foreclosure, it can affect the value of the whole block," Eskenazi says. "Some of the neighbors might see their home value go down. But because David’s house was never owned by the bank, that may not happen here."

As of March 13, the once-booming Naperville market was starting to see a lot of homes with equity problems. According to RealtyTrac, a foreclosure data company, there are about 165 REOs, 351 pre-foreclosure properties and 147 additional homes scheduled for a sheriff’s sale or auction in Naperville, which has a population of about 148,000.

The home value of the last 30 homes sold in Field’s area was around $488,000, although just three homes have been sold in his subdivision this year.

The Fields’ home was previously sold for $402,500 in 2002 and again for $500,000 in 2005 to the most recent owners before their purchase. The home was listed for sale at $549,900 when it returned to the market on Aug. 31, 2007, and the Fields bought it for $425,000 last fall — 22.7 percent under the starting list price.

In some market areas, the price boom-to-bust price swings have been far more substantial, with prices in some cases doubling and tripling during the housing boom before being cut back down by half or more during this downturn.

The National Association of Realtors reported that the median single-family resale home price for the Chicago-Naperville-Joliet metro area dropped 16.6 percent year-over-year in the fourth quarter of 2008, to $217,800. The fourth-quarter median price is down 21.3 percent from the metro area’s median price in 2007, NAR reported.

RealtyTrac reported that Illinois ranked seventh in the nation for its rate of foreclosure in February. One in every 369 properties in the state had a foreclosure filing, RealtyTrac reported, which compares with a national average of one in every 440 properties. Also, the state ranked fifth for total foreclosure volume that month — at 14,218 total properties with foreclosure filings.

Foreclosure filings activity in the state rose 62.3 percent in February compared to the same month last year, while sinking 1.6 percent from January 2009 to February 2009.

Eskenazi, who works for Coldwell Banker in Naperville, reports that 340 homes were on the market in Naperville at the beginning of 2005, compared with 834 in the beginning of 2009. Just 69 homes have sold in Naperville over the last year.

But despite the dismal statistics, both Realtors agreed that the first-time homebuyer tax credit (see Inman News) offered in the recent federal stimulus package, paired with low home prices, will bring back property values soon.

"I think the tax credit will bring back some confidence for people; maybe things will get better by fall or next year," Field says. "Overall, though, I’m happy with my purchase."

Maureen Wilkey is a freelance writer in Illinois.

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