All too often, homeowners are under the impression that there is no way to respond to a foreclosure notice effectively. They assume that if their lender has announced its intention to foreclose upon a property, nothing more can be done. In truth, the foreclosure process involves a complex series of steps. At virtually any point during the foreclosure process, a specific kind of response from a homeowner has the potential to yield positive results.

This is one of the reasons why it is so important to seek legal guidance if a homeowner’s investment is in jeopardy due to non-payment of mortgage obligations. There are so many checks and balances built into the system that there is almost always a way to remedy a foreclosure risk, regardless of how many steps forward a lender has taken in pursuit of repossessing someone’s home. Some of these opportunities exist because of safeguards within the legal system. Others exist simply because most lenders like to avoid foreclosure whenever they can.

Why Reaching a Solution Is Ideal for Everyone

Obviously, avoiding foreclosure is an ideal outcome for homeowners who wish to remain where they live and to protect the investment they have made by building up equity in a particular property. Thankfully, avoiding foreclosure is usually the outcome preferred by lenders as well.

When a homeowner is at risk of foreclosure, there are a number of ways that they can potentially respond. If their finances are solid but repayment could be made more manageable via a loan modification, this adjustment could mitigate the issues that led to missed payments in the past. Other homeowners file for bankruptcy to catch up on missed payments or pursue short sales to avoid foreclosure when they can no longer afford to remain in possession of their property.

Under a very specific set of circumstances, there is one additional opportunity that makes sense for some individuals who can no longer afford to remain homeowners. This opportunity is referred to as strategic default. It involves intentionally halting payments on a mortgage tied to a home that is worth significantly less than what the homeowner owes their lender.

Important Considerations

One of the reasons it is critical to seek professional guidance before engaging in a strategic default is that the consequences of this action are significant. While committing to a short sale will affect a homeowner’s credit score for a time, a strategic default will affect it significantly because this opportunity serves as an abdication of responsibility for the mortgage debt.

The economic downturn could force many homeowners into foreclosure as many people continue to struggle with inflation and the impacts of the pandemic. Some homeowners may be able to fall back on equity or sell their homes and pay off their mortgages. However, we have already seen a decline in the sale of existing homes for nine consecutive months. In just the third quarter of 2022, there were nearly 93,000 foreclosure filings and parts of Illinois had some of the greatest numbers of foreclosures filed.

Missed Payments

Foreclosure judgments in 2023 could increase and if you do not take action your home could slip away. A late payment made during the grace period is not cause for concern. But repeated missed payments are more serious and bring you a step closer to foreclosure. 

Two Options to Avoid Foreclosure

If you are behind on your mortgage you cannot afford to ignore the situation. It would be a good idea to consider the assistance of real estate attorney to help you with these two possible options to avoid foreclosure:

Since the housing bubble burst over a decade ago, the thought of foreclosure has become a near-constant concern for homeowners across the country. Those dealing with financial struggles may be worried that late or missed mortgage payments will lead to them losing their homes. For those who have refinanced or obtained a second mortgage on their homes, things are often uncertain, especially as it pertains to what happens if they default on a second or additional mortgage. If you are in such a situation, a qualified foreclosure defense lawyer can help you understand your available options.

What You Should Know About Second Mortgages

Any loan that qualifies as a mortgage is considered a secured debt. This means the loan is secured by collateral, and in the case of a mortgage loan, the collateral is the home itself. If you default on your mortgage, the lender can foreclose on the home and take the house. This applies to the mortgage that allowed you to buy the home as well as any subsequent mortgages. It also applies to home equity loans taken out with the home as collateral.

In the event of a foreclosure on a home with multiple mortgages or home equity loans, the initial mortgage takes precedence. Any subsequent lenders will only get paid if the sale of the home nets enough proceeds to satisfy the initial mortgage and there is money left to distribute.

Buying a home can be a dream come true for many people. Even if you worked hard and saved a substantial amount for a down payment, you will likely still need to take out a loan, which is known as a mortgage. If you fail to make your monthly mortgage payments, you could be at risk of losing your house. Foreclosure is the legal process by which the lender or bank can repossess your house. This means you will have to vacate the premises within a certain amount of time.

If your house is worth less than the amount you owe on your loan, a deficiency judgment may be entered. Not only do you lose your home, but you may owe your lender additional money to make up the difference in value, and your credit score will go down. The global coronavirus pandemic has impacted many homeowners financially. Fortunately, there are ways you can avoid going through foreclosure.

Practical Steps to Keep Your House

There is no doubt that the COVID-19 pandemic has impacted our nation’s economy. Many businesses have closed their doors, leaving workers unemployed and without their usual incomes. This has led many homeowners to fall behind on their bills, including their mortgage payments, which are often their biggest expense. While most lenders have instituted a moratorium on foreclosure proceedings during the current health crisis, the moratorium will eventually be lifted. It is a good idea to start preparing now for that reality.