A few years ago, we worked with Illinois residents who faced losing their home every. single. day.
Today, the economy has bounced back enough so that people aren’t struggling as much, but many still risk losing their home to foreclosure. If you’re among that group, this post is for you!
We’ll take a look at a few common questions, along with a few of the more obscure questions we get about foreclosure and real estate law.
Let’s dive in!
1. Can Loan Modification Can Save You From Foreclosure?
When you are faced with the possibility of foreclosing you may feel helpless and alone. This is a very overwhelming time, but with help from a foreclosure attorney you may be able to save your house!
Anyone who is at risk of foreclosure but has always had a great record for paying on time, a decent credit score and maintains a steady job could have options.
A loan modification may save your home. To try and modify your loan you should have your attorney reach out to your mortgage lender and discuss the option of adjusting the terms of your loan or your interest rate. If you’ve been a solid customer until recently and seem able to make modified payments then they are likely to agree.
If they adjust your loan or lower your rate your monthly payment will decrease making it more manageable to pay. Loan modification is still in the best interest of the mortgage company because if you do foreclose they stand to get far less from the sale than they would by lowering your payments and keeping your loan.
Discuss the possibility of loan modification with your attorney. It could be a great fit for you and thus allow you and your family to avoid foreclosing on your home.
2. Should You Contact Your Mortgage Lender Before Defaulting On Your Loan?
When money becomes tight people will often try to find solutions for the payments that they cannot make. A common solution is to pay a portion of the monthly payment owed.
In many cases you can send a partial payment and keep your services up to date. For example a cable or electric bill will allow you to get a certain amount behind in your billing before threatening to disconnect. Many also allow you to make weekly payments if that’s more convenient for you.
This will not be accepted by a mortgage company though. It is commonly thought that if your mortgage is $1,500 and you only have $1,000 to send it will be better than sending nothing. If a lender receives partial payment for a home loan they will often send it right back to you. This is because anything except a full mortgage payment is considered delinquent.
Once you missed enough payments for your lender to mark you as defaulted on your mortgage they are likely to start the foreclosure process.
If you find yourself on a tight budget don’t try to rewrite the terms of your mortgage alone. Contact a real estate attorney to help you work with the mortgage lender. Your mortgage lender will probably be willing to adjust the terms of your loan in order to keep your mortgage current rather then foreclosing.
3. Should You Deal With Foreclosure Right Away?
Receiving a notice of foreclosure in the mail does not mean that someone will come and move you out of your house tomorrow. However as soon as this notice arrives you will want to get some help from a real estate attorney.
Your attorney can educate you about the timeline of foreclosure along with your options for reversing the process. This will differ depending on what state you live in. Illinois residents may be able to keep their home if they pay the delinquent amount as late as 7 months after entering into the foreclosure process.
Once you receive that letter from your lender threatening foreclosure you will have 30 days to pay the balance before they start the foreclosure proceedings. In Chicago, if you do not make the payment within those 30 days you can still save your home.
The next opportunity will be to reinstate your loan. You have 90 days after the notice of default to reinstate your mortgage. In order to reinstate your loan you have to pay all back payments as well as interest that is owed. There may be additional fees including late fees and attorney fees.
In Illinois if you miss the window to reinstate your loan you can still qualify to redeem your loan. The redemption period is 7 months long. In order to redeem your loan you will have to pay all back payments, late penalties, late interest, and attorney and administrative fees. Due to the delay it will cost a lot more to redeem your loan then to reinstate it. Attorney fees alone will be much higher after 7 months then it would be after 90 days.
Illinois law gives significant opportunity for a home owner to save their home from foreclosure. An attorney can help you navigate this process and save your home. Hiring an attorney early, even before receiving notice of default, will increase the chances that they can help you.
4. Should You Let Your Underwater Home Go?
We all work hard to pay our bills and to be able to buy cars and homes. Despite having a steady income and successful career, financial crisis can happen to any of us. Perhaps you unexpectedly lose you job, take on high medical debt or have another major life change. These things can happen suddenly and they can change your financial profile enough that you may no longer be able to afford your monthly loan payments.
Our initial reaction is to do everything we can to save our assets. No one wants to give up their home or car. Once you’ve defaulted on your loan your best chance of saving the property is to scrape together the overdue balance with a little extra to cover late fees and possibly attorney fees.
Some may have the option to dip into savings or retirement accounts to get the money or they may borrow the money from family or friends. This brings you to an important decision. Unless the missed payments were due to temporary unemployment and you have a new job now then you need to make sure you are going to be able to afford the payments going forward.
It makes no sense to borrow money and drain savings just to default on your loan again in a couple months. If you decide to take action to save your home you need to make sure it’s the right choice and that your income can cover your bills.
If you decide to let your house be foreclosed on you can take the money you would have put into trying to save it and invest it in a rental deposit. At that point, moving forward and fixing your credit score and financial standing will be the most important thing.
Key Takeaway: Always consult with an attorney before making these types of big decisions!
5. Can a Deed in Lieu of Foreclosure & Cash-For-Keys Prevent Foreclosure?
When presented with the reality of foreclosure you may need to accept the fact that you are going to lose your house. This does not mean however that you should just sit back and wait for foreclosure to happen to you.
Foreclosure proceedings are very expensive for a creditor. They typically hold foreclosure as a last resort. When you know you can no longer make your mortgage payments you can hire a foreclosure attorney in Chicago and try to get out of your home in an alternate way than foreclosure.
- A deed in lieu of foreclosure (DIL) is when you negotiate with your lender that you will simply vacate your home and turn the deed over to them. This keeps everyone from having to go through foreclosure proceedings and the end result is virtually the same for the lender. They will agree to this only if they are confident that there is no way you will be able to make anymore mortgage payments.
- Cash-for-keys negotiation is very similar to DIL except it typically pertains to more disgruntled debtors. With cash-for-keys the lender would actually pay the homeowner to move out of the house with as little difficulty as possible. No holes in walls, no damage etc. They would also be required to move out of the home quickly. The lender would benefit by avoiding the costs associated with evicting a difficult homeowner.
Deed in lieu of foreclosure could be a way for a proactive debtor to avoid foreclosure and get on with their lives. Make sure you discuss these potential options with your foreclosure attorney first before proceeding.
6. What Should You Do If The Mobile Home Park You Live In Forecloses?
Mobile home parks offer a nice, affordable place for people to live without the aggravations that go along with apartment life. There is no one living above or below you and you might even have your own yard depending on the layout of the park.
But for residents of parks like Sunset Village in Glenview, Illinois their mobile home life was in jeopardy and they may not have ever missed a mortgage payment. The way mobile home parks are set us is that you buy or rent a mobile home and then you pay a monthly rent for the land on which your home is sitting. For the residents of Sunset Village, the owner of the park went into foreclosure. This means that all the mobile home owners may have to find somewhere else to move their homes to.
Unfortunately this is easier said than done. It can cost $10k to move a mobile home and there are no other mobile home parks in the Glenview area which means that the proximity of children to their schools and adults to their jobs may be too far if they moved to another park. For some the only solution would be to find an apartment to rent in Glenview but if they have a mortgage on a mobile home they will still be responsible for it even if they are unable to live there.
That means monthly mortgage and rent payments which could be more than some people can afford. It doesn’t take long when you’re over extended financially to need to file for bankruptcy in Chicago. Those filing chapter 7 in Chicago could potentially lose their homes and cars before being discharged of their debt.
The same thing can happen at any time to those living in mobile home communities.
Speaking to a bankruptcy attorney in those instances is an improtant first step to keep your mobile home!
7. Should You Use Leasebacks and Straw Buyers to Stop Foreclosure?
When a homeowner is being threatened with foreclosure they may consider anything that offers to stop foreclosure. Unfortunately an offer that sounds too easy is likely to be a scam.
Scammers have ways of finding out that you are at risk of foreclosure on your home. They will approach you with all kinds of opportunitiies to help you keep you home but in most cases they intend to take advantage of your situation.
An article in the Chicago Tribune recently explained two scams that you should watch for, straw buying and lease back.
Straw buying – Straw buying isn’t always bad. In fact, when done correctly it really can help someone save their home. However there are a lot of cases where people end up worse off after receiving help from a straw buyer.
For a flat fee the straw buyer helps you refinance your home and get a new loan. They bring good credit to the table making a loan possible that otherwise wouldn’t be. The owner of the home would also be on the refinance documents. The owner would continue to make mortgage payments until their credit got back on track and they could qualify to refinance on a loan without any help. The scam happens when the straw buyer drains the home of all equity. When they do this is makes it un-affordable for the owner.
If your straw buyer is honest it really could save your home but the risk is too great to take a chance.
Leaseback – A leaseback is when someone buys your house and takes over all financial responsibility. You then lease the home from them for a set period of time. After that time you have the opportunity to buy your house back from the investor.
There are two ways to be scammed with a leaseback. The first is when the new owner pulls all the equity out of the home so it becomse impossible for the previous owner to buy it back. The other scam is when the leaseback contract allows all agreements to be cancelled if they were late or short on a payment. A minor payment error can cost a family the rights to their home.
No matter your situation, talk with a foreclosure attorney and get a free legal consultation to discuss how they can help you stop foreclsoure.
Get The Legal Help You Need With Real Estate and Foreclosure Issues
There is a lot more to dealing with foreclosure than what we’ve discussed above. Due the complexities of the process, it’s a good idea to get some assistance from an experienced attorney. The bankruptcy lawyers at Suburban Legal Group PC are sensitive to the difficult time you may be facing and offer real estate services to help you through this tough time in your life.
If you’re facing other debt issues, you can also download our book on the 12 Things You Should Know Before Filing For Bankruptcy. You’ll learn all the essentials on filing for bankruptcy in Illinois.
DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Suburban Legal Group PC shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.