Bank owned foreclosed house for sale inventories are still rising in multicultural areas in Chicago and these foreclosed properties are staying on the market longer, according to a study by the nonprofit Woodstock Institute.

The study showed that 33 percent of all single family homes foreclosed in the past 3 years remained unsold as of December last year, leaving a lot of vacant properties in multicultural neighborhoods.

Whenever some of the foreclosed properties are sold, they are sold 30 percent below their home loan amounts, indicating that lenders have been accepting bargain prices to cut their loan losses.

The researchers also found that single-family foreclosures have been occurring mostly in Chicago’s African-American communities.

During the first quarter of this year, a total of 2,099 single-family houses in Chicago were foreclosed by banks and nearly 50 percent of these foreclosures occurred in neighborhoods where more than 80 percent of all residents are African Americans. In these areas, most foreclosure properties have also remained unsold for over 18 months.

Woodstock vice president Geoff Smith said he is concerned about the rising inventory of bank foreclosed house for sale not being purchased and the soaring number of abandoned foreclosures.

One multicultural working class neighborhood that illustrates the level of foreclosure problem in culturally diverse Chicago neighborhoods is Chicago Lawn. In one block at South Rockwell, half of all single-family homes and multifamily properties are boarded up while the rest are bank-foreclosed and vacant.

Based on the Woodstock study, the number of days to sell a foreclosure property in Chicago Lawn in 2007 was 274 days, a significant rise from 180 in 2005.

Almost all buyers of the properties were investors who planned to keep the properties vacant and just recoup their investments when property values go up again. Other properties were held by banks which have not decided to sell them.

Analysts said that it would take two years for Chicago Lawn to sell its current inventory of vacant homes, assuming that the number of new foreclosures is negligible.

However, based on foreclosure filings in Chicago from January 2008 to June this year, current foreclosure inventory will soar. Over 1,800 housing units in the zip code that covers Chicago Lawn went into foreclosure over the 18-month period ended June.

Recently, Bank of America agreed to work with community nonprofits to reduce the number of bank foreclosed house for sale in Chicago Lawn. The bank apparently realized it can cut its loan losses through aggressive loan modifications.