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Libertyville foreclosure defense lawyersFalling behind on your mortgage payments can lead to serious trouble. If you are far enough behind that you are in default, the lender could initiate foreclosure and eventually seize your home. During the foreclosure process, however, you as the borrower have certain rights, even though you are in default on your loan. One of these rights is the right to negotiate a reinstatement of your mortgage, which will stop the foreclosure proceedings.

Initiating Foreclosure

A single missed mortgage payment is probably not going to be a serious problem. Your lender will more than likely work with you to get your missed payment caught up, even if it means paying a little extra on each of the next few payments. Likewise, two missed payments can usually be taken care of in a similar manner. Once you reach a third missed payment, however, and venture into the period of 60 to 120 days late, your lender is likely to notify you that your mortgage is in default. The lender will also send you a notice of intent to foreclose.

After you have passed the point of being 120 days late, you will probably be served with a summons and a copy of the civil complaint indicating that your lender has initiated foreclosure proceedings. In most cases, you will be served personally, but avoiding process servers or sheriff’s deputies will not stop the case from moving forward. If you cannot be served in person, your lender can file a public notice in the newspaper to serves as your formal notice. Once you have been notified, you have 30 days to respond. You also have 90 days during which you have the right to reinstate your loan.

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Grayslake Real Estate AttorneysIf you are a homeowner, there is a good chance that you bought your home with a mortgage loan and that you make payments on your mortgage every month. If you are a renter, you make rental payments each month, but instead of making payments to a bank or lending institution, your rent goes directly to your landlord. Presumably, your landlord is using your payments to make payments of his or her own on the mortgage for the property in which you live.

You are most likely aware that failing to make your mortgage payments on a home that you own could result in foreclosure, with the bank seizing your home. Similarly, you know that failing to make your rental payments could result in eviction, with the landlord taking possession of his or her property. So, what happens when you make your rental payments each month but your landlord does not make his or her mortgage payments?

Continue to Make Payments

While it might be concerning to live in a building that is being foreclosed on, Illinois and federal statues provide protection for renters in such a situation. It is unlikely that your landlord will be forthcoming about his or her finances, so by the time you discover that he or she is facing foreclosure, the process could be well underway. Once you learn about the situation, however, your best options will probably be to continue making your rental payments in accordance with your lease.

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Libertyville foreclosure defense attorneysIf you financed the purchase of your home with a mortgage loan, you probably signed what seemed to be mountains of paperwork. Buried in each document and hidden in confusing language were the terms and conditions of your loan and what would happen if you failed to make the required payments. Off the top of your head, you might not be able to recall all of the specific details, but you probably realize that if you do not keep up with your mortgage, the loan will go into default. If you stay in default for long enough, the lender will initiate foreclosure proceedings and eventually take your home.

With this in mind, it would seem that defaulting on your mortgage is something that should be avoided at all costs. In some situations, however, a strategic default could help you find a way out of a difficult situation.

Understanding Strategic Default

By definition, a strategic default occurs when a borrower intentionally allows his or her mortgage to default despite having the money to make the payments. The terms “strategic default” and “strategic foreclosure” are often used interchangeably, but they are not really the same thing. It is possible for a person who decides to use a strategic default to completely walk away from the property and allow the bank to foreclose, but not every strategic default ends in foreclosure.

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Lake County foreclosure lawyersRegardless of who you are, how much money you have, and the types of property you own, the word “foreclosure” is likely to generate feelings of fear, anxiety, and stress. If you are struggling to make the mortgage payments on your family home, the idea of foreclosure is likely to be especially frightening.

Most people understand the basic steps of foreclosure, even if they do not know all of the details. In short, they know that the lender will eventually force a homeowner who is in default to leave the property. Then, the lender will reclaim possession of the home and attempt to sell it in an effort to recoup some of the losses incurred. What many people do not realize, however, is the effect that a foreclosure will have on the borrower’s credit score.

Your Credit Score

Your credit score is a statistical rating that lenders and other institutions use to evaluate how well you manage debt. Credit scores can range from 300 to 850, and higher scores indicate stronger creditworthiness. A credit score above 740 is considered to be “Very Good,” and above 800 is considered “Excellent.” Between 670 and 739 is “Good,” while 580 to 669 is “Fair.” Anything below 579 is considered “Poor.”

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Lake County foreclosure defense attorneysIf you are facing the possibility of foreclosure, you probably have many concerns. You are likely to be worried about the details of the foreclosure process in addition to more personal considerations such as where you are going to live and how you will repair your credit in the years to come. It is not unusual for homeowners in foreclosure to believe that they will be lucky to get through the proceedings without owing anything additional on their home. Depending on the circumstances of your situation, however, your lender might actually owe you money when everything is all said and done.

Balancing the Numbers

As a homeowner, you probably know that foreclosure is the process that a lender will use to reclaim your home if you fail to make your agreed-upon payments. During foreclosure, you will be given notice to vacate the property, and the home will be sold at a sheriff’s auction. The proceeds of the sale are then used by the lender to satisfy the remaining balance of the mortgage loan. What happens next will depend on the situation.

If you currently owe more on your mortgage than what your home is worth, the proceeds of the sheriff’s sale are unlikely to be enough to cover the full remaining balance. The amount remaining after the proceeds of the sale are applied is called a deficiency. Unless you have negotiated with the lender in advance, you will almost certainly be responsible for paying off the deficiency amount.

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