Too often, people who are in debt choose to ignore the problem at first. It’s understandable. The thought of losing your home is so overwhelming that many people cannot bear to face it. However, waiting to take action will just make the problem worse. It is better to speak with a lawyer as soon as you can.
Loan Modifications
Loan modifications can include government programs for refinancing, reduction of the principal, payment reduction plans and loan rate reductions, depending on whether the homeowners qualify for the modification in regard to their income and financial circumstances. The lender must approve the modification and will likely be harsh in the review process. In addition, the homeowners must determine whether the proposed modification will make a positive difference in their ability to keep the home long term.
Short Sales
If it’s not in your interest to remain in your home, and you don’t want to go through the foreclosure process, a short sale may be the most viable option. This is when you sell the property for less than the amount currently owed to the lender. This may be the right choice if there is a decent real estate market in the area. Of course, the lender must approve this option, and because you sell the home for less than the mortgage balance, you must first determine who is liable for the difference. As, the borrower you will want to avoid most or all of that liability, if possible. If the lender approves this option, it will help you avoid having a foreclosure on your record.
Deed in Lieu of Foreclosure
Deeds in lieu of foreclosure may be a good option if the market is not right for a short sale or if you want to walk away from your mortgage. It eliminates having a foreclosure on your credit report, but it can cause other problems, including the liability for the deficiency.
Many times, we are able to counter-sue lenders using foreclosure defense strategies. We have had considerable success with difficult cases.
Deeds in lieu of foreclosure and short sales both require qualification of the borrower under specified guidelines and approval from the lender. In our experience, we have found that even if the lender agrees to negotiate or accept a short sale or deed in lieu of foreclosure, it will continue to initiate foreclosure actions against the borrower. In both cases, your lender can sue you for the difference between what it sells the house for and what you owe on the mortgage. These are not attractive options unless you can get your lender to agree, in writing, to not forgive the difference or the deficiency.
Some lawyers also believe that filing bankruptcy is a good way to prevent foreclosure. Unless you have sufficient income to keep making mortgage payments though, the bankruptcy is likely to fail.
Additional steps you can take to avoid foreclosure in Illinois include:
- Review your mortgage with an attorney to make sure you understand the terms
- Contact your lender to learn what options it offers
- Consider loan modification
- Do not file bankruptcy before you learn about all of your options
- Do not sign any documents without reviewing them with an attorney or you could lose your home to a scam
Be wary of for-profit foreclosure prevention companies. They may simply charge exorbitant fees to perform services you could do yourself or with the help of a nonprofit or government agency. If you fall victim to a scam, you will likely lose a large sum of money and your home.
Get Foreclosure Assistance
When the bank is threatening to take your house from you, it’s difficult to think clearly about all of your options. By discussing them with a knowledgeable attorney you’ll better understand your choices, and the risks and benefits of each. There are also certain deadlines to meet during a foreclosure; Missing a deadline can cause you to lose your chance to fight the lender.