Chicagoland real estate purchases, real estate sales, short sales, foreclosures, first-time buyer representation, Illinois condominium association representation, estate planning for everyone, powers of attorney, quit claim deeds and more...

High unemployment and declining home prices continued to fuel the rising foreclosure rate statewide, said RealtyTrac spokesman Daren Blomquist.

"Unemployment is just one of the reasons Illinois was hit hard," said Blomquist. "Another is the fact that many people are under water (with home values) and it's less likely those people will fight for their homes."

Illinois continues to see layoffs in many of its business sectors statewide, which was clear in this week's report of the 11.3 percent unemployment rate for January, up from 11 percent in December.

Nationwide, foreclosure filings - including default notices, scheduled auctions and bank repossessions - were reported on 308,524 U.S. properties in February, down about 2 percent from the previous month but 6 percent higher than a year ago.

Illinois had another distinction of having 17,312 properties the subject of filings, the fourth-highest total nationwide.

California led the way with 68,562 properties in the foreclosure process, which actually showed a decrease of 5 percent from the previous month and was down 15 percent from a year ago, the report said.

More than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped only a small slice of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.

For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy’s tentative recovery — the last thing it wants in an election year.

Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.

“We want to streamline and standardize the short sale process to make it much easier on the borrower and much easier on the lender,” said Seth Wheeler, a Treasury senior adviser.

The problem is highlighted by a routine case in Phoenix. Chris Paul, a real estate agent, has a house he is trying to sell on behalf of its owner, who owes $150,000. Mr. Paul has an offer for $48,000, but the bank holding the mortgage says it wants at least $90,000. The frustrated owner is now contemplating foreclosure.

To bring the various parties to the table — the homeowner, the lender that services the loan, the investor that owns the loan, the bank that owns the second mortgage on the property — the government intends to spread its cash around.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”

Should the incentives prove successful, the short sales program could have multiple benefits. For the investment pools that own many home loans, there is the prospect of getting more money with a sale than with a foreclosure.

For the borrowers, there is the likelihood of suffering less damage to credit ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for an unpaid mortgage balance.

For communities, the plan will mean fewer empty foreclosed houses waiting to be sold by banks. By some estimates, as many as half of all foreclosed properties are ransacked by either the former owners or vandals, which depresses the value of the property further and pulls down the value of neighboring homes.

If short sales are about to have their moment, it has been a long time coming. At the beginning of the foreclosure crisis, lenders shunned short sales. They were not equipped to deal with the labor-intensive process and were suspicious of it.

The lenders’ thinking, said the economist Thomas Lawler, went like this: “I lend someone $200,000 to buy a house. Then he says, ‘Look, I have someone willing to pay $150,000 for it; otherwise I think I’m going to default.’ Do I really believe the borrower can’t pay it back? And is $150,000 a reasonable offer for the property?”

Short sales are “tailor-made for fraud,” said Mr. Lawler, a former executive at the mortgage finance company Fannie Mae.

Last year, short sales started to increase, although they remain relatively uncommon. Fannie Mae said preforeclosure deals on loans in its portfolio more than tripled in 2009, to 36,968. But real estate agents say many lenders still seem to disapprove of short sales.

Under the new federal program, a lender will use real estate agents to determine the value of a home and thus the minimum to accept. This figure will not be shared with the owner, but if an offer comes in that is equal to or higher than this amount, the lender must take it.

Mr. Paul, the Phoenix agent, was skeptical. “In a perfect world, this would work,” he said. “But because estimates of value are inherently subjective, it won’t. The banks don’t want to sell at a discount.”

There are myriad other potential conflicts over short sales that may not be solved by the program, which was announced on Nov. 30 but whose details are still being fine-tuned. Many would-be short sellers have second and even third mortgages on their houses. Banks that own these loans are in a position to block any sale unless they get a piece of the deal.

“You have one loan, it’s no sweat to get a short sale,” said Howard Chase, a Miami Beach agent who says he does around 20 short sales a month. “But the second mortgage often is the obstacle.”

Major lenders seem to be taking a cautious approach to the new initiative. In many cases, big banks do not actually own the mortgages; they simply administer them and collect payments. J. K. Huey, a Wells Fargo vice president, said a short sale, like a loan modification, would have to meet the requirements of the investor who owns the loan.

“This is not an opportunity for the customer to just walk away,” Ms. Huey said. “If someone doesn’t come to us saying, ‘I’ve done everything I can, I used all my savings, I borrowed money and, by the way, I’m losing my job and moving to another city, and have all the documentation,’ we’re not going to do a short sale.”

But even if lenders want to treat short sales as a last resort for desperate borrowers, in reality the standards seem to be looser.

Sree Reddy, a lawyer and commercial real estate investor who lives in Miami Beach, bought a one-bedroom condominium in 2005, spent about $30,000 on improvements and ended up owing $540,000. Three years later, the value had fallen by 40 percent.

Mr. Reddy wanted to get out from under his crushing monthly payments. He lost a lot of money in the crash but was not in default. Nevertheless, his bank let him sell the place for $360,000 last summer.

“A short sale provides peace of mind,” said Mr. Reddy, 32. “If you’re in foreclosure, you don’t know when they’re ultimately going to take the place away from you.”

Mr. Reddy still lives in the apartment complex where he bought that condo, but is now a renter paying about half of his old mortgage payment. Another benefit, he said: “The place I’m in now is nicer and a little bigger.”

If you are looking for office space in downtown Chicago, these are wonderful days, David Roeder of the Chicago Sun-Times reported today. Vacancies are rising and probably will grow more this year, and several buildings with high-floor premium space need occupants.

Last year, more empty space hit the market than any time since 2001. Rental rates, which held out for a long time against the recession, are falling.

Real estate firm Jones Lang LaSalle Inc. is out with its 2010 Chicago Skyline Review, which drives home those conclusions. Many firms publish market analyses, but the genius of the Jones Lang effort is its graphic approach. It covers the 53 skyscrapers it considers as the core of the downtown market and shows floor by floor where the vacancies are.

If it's views you want and a large amount of contiguous space you need, the report shows that the options include 500 W. Monroe, the recently opened 155 N. Wacker, the Aon Center at 200 E. Randolph, the former IBM Building at 330 N. Wabash and even the old Prudential Building at 130 E. Randolph, enjoying new prominence with its proximity to Millennium Park.

But the report draws a balanced portrait, showing that few buildings are in dire straits. The biggest example is Willis Tower, where most of the best space is spoken for now that the air carrier UAL Corp. is moving 2,800 employees into the building later this year. If you fancy an office in Chase Tower at 21 S. Clark, or the trophy towers at 111 S. Wacker or 35 W. Wacker, forget it. They are almost completely full.

Overall, the 53 buildings Jones Lang highlights report an average vacancy rate of 14.9 percent, five percentage points higher than a year ago. Steve Smith, managing director at Jones Lang who advises landlords, said it'll probably be 2011 before more ten- ants enter the market. There's usually a lag between the start of an economic revival and when employers feel confident enough to add space and staff.

In time, Smith said, landlords who can hang on will enjoy a market with no new competition. Downtown got three new office towers in 2009, but it's unlikely to get another for at least three years.

Rents are down about 25 percent from a year ago, once landlord freebies are considered, he said. "One free month of rent for each year in the deal is pretty standard," Smith said. Tenants also can get money for space improvements and concessions on rent escalations, termination rights or other factors.

In 2010 and 2011, the downtown market has 25 properties with maturing debt worth $2.4 billion, Jones Lang said. Some of those owners could be sweating, as the value of their buildings is down 25 percent to 40 percent from 2006.

But Bruce Miller, managing director for capital markets at Jones Lang, thinks most lenders will extend terms rather than foreclose. After a year in which only one downtown building sold, more of them will be marketed, he said.

"Locally and nationally, there is a lot of investment capital that's been raised to buy high-quality core buildings, or distressed properties that are in foreclosure," he said. "So far, the supply of that money has greatly exceeded the demand for it."

In the meantime, downtown is still basking in the glow of corporate decisions to centralize jobs there, sometimes at the expense of the suburbs. Oil giant BP and brewer MillerCoors found downtown to their liking. Jones Lang reckons that UAL's move of its operations center from Elk Grove Township to Willis Tower will be the largest one-time jobs infusion in Chicago history. Smith said financial trading firms are a growing part of the market and six out-of-town law firms established beachheads in Chicago last year.

Everybody from Mayor Daley to downtown coffee shops needs those jobs to keep coming.

Jones Lang will provide its report to clients who e-mail it at Chicago.info@am.jll.com.