Oftentimes, it is possible for homeowners who want to save the equity they have invested in their homes to avoid foreclosure, even if they have missed multiple payments. Speaking with an attorney about their options is usually a good place to start “fighting back” against the risk of foreclosure. Yet, there are times when fighting back against this risk might not be in a homeowner’s best interests. Due to the nature of their circumstances, engaging in a so-called consent foreclosure may be preferable.

Safeguarding the Interests of Homeowners in Specific Ways

In the event of a “traditional” judicial foreclosure, a home is sold by a lender that is owed repayment for a home loan that is in default. The former owner of that home is usually responsible for repaying any outstanding amount owed to the lender. If the lender does not receive this repayment, it may seek a deficiency judgment. To enforce that deficiency judgment, the lender may seek to garnish the former owner’s wages or even seize the contents of their bank account.

If a homeowner no longer wants to be burdened by their mortgage obligations or simply cannot avoid a foreclosure, they may be able to avoid the risk of a deficiency judgment and the challenges of repaying the amount they still owe their lender through a consent foreclosure.

During this time of economic uncertainty, foreclosure activity is up 57 percent nationwide. If you find yourself financially strapped, it may be necessary to do away with what you own and that includes property. Selling your home for less than what it is worth through a short sale is one way to avoid foreclosure. But will your entire mortgage debt be wiped clean after a short sale?

What is a Short Sale?

When your home is sold for a lower price than the amount remaining on the mortgage, it is considered a short sale. Many mortgage lenders will accept less than they are owed to avoid the paperwork involved in the foreclosure and then having to turn around and sell the home.

A short sale is a bit more complex than a typical house sale. Not only is the home sold for a lower amount than what you see on your mortgage loan, but the remaining amount of the loan needs to be considered in your decision because it may still be owed after the sale is completed. A short sale is one way to avoid foreclosure and possibly maintain your credit score, depending on the circumstances. However, some homeowners earn too much money or have too much value in their assets to qualify for a short sale. 

“Zombie foreclosures” in Illinois are haunting homeowners well into the holiday season and  Illinois has the fourth overall number of zombie foreclosures in the United States. Perhaps you are facing this situation and need a real estate attorney to avoid losing your home to foreclosure. Or worse, maybe you already lost your home to foreclosure and are just finding out that outstanding debts on the property are still your responsibility. At Newland & Newland, LLP, we work tirelessly to keep you from losing your home in the first place by finding solutions to try to prevent foreclosure.

What is a Zombie Foreclosure?

Zombie foreclosures tend to stick around because the title of the house was never transferred from the original owner to the bank or the new homeowner. Some residents in Illinois are being billed for overgrown weeds and demolition costs on properties they thought they no longer owned. It is always good practice to check public records to make sure the deed is transferred to the new owner, even if you moved out of your home due to foreclosure.

Prevent a Foreclosure of Any Kind

In Illinois, foreclosure involves a judicial process that takes more than five years to complete. Here are two ways to prevent foreclosure:

Buying your home is probably one of the biggest investments you have made. As life would have it, things happen, and you have fallen behind on your mortgage payments. You may be in default or foreclosure proceedings are underway. You should seek out help to protect your home and your credit.

Foreclosure Spike

The foreclosure process often starts when you receive a default notice from the lender after missing three mortgage payments in a row. In just the last quarter, lenders have started the foreclosure process on 67,249 properties across the United States. That is a 167 percent jump from a year ago. A foreclosure can trigger a lower credit score and make it harder for you to get financing in the future.

For many of us, being able to buy our own home came with hard work and sacrifice. That is why there are federal regulations in place to help homeowners keep their homes. It can be a very complex process. Here are the three key phases of the process: 

While the specifics of mortgage loans—and the associated paperwork—can be quite complicated, one thing is easy to understand: If you do not make your scheduled payments, your lender will eventually file a foreclosure action and take back your home. Just to be clear, foreclosure is the legal process that a lender uses to take possession of a property from a borrower who did not keep up with their obligations as specified in the mortgage loan agreement. Other things could cause a lender to initiate foreclosure, but the vast majority of foreclosures stem from borrowers defaulting on their payments.

The process of foreclosure can be overwhelmingly difficult for many homeowners, and it is extremely easy to make expensive mistakes under such stress. An error in the process could cost you a great deal, but if you are aware of where most people make mistakes, you can be sure to avoid them. A qualified foreclosure defense lawyer can also help.

Do Not: Ignore Your Lender

Under the law in Illinois, your lender cannot start a foreclosure action until you are at least 120 days delinquent on your mortgage payments. More than likely, however, your lender will start calling and sending you letters within a few days of your first missed payment. As you inch closer to defaulting, your lender will probably reach out more often—possibly every day.