Most people are familiar with at least the basic idea of foreclosure. They know that if a homeowner falls behind far enough on his or her mortgage payments, the proverbial “bank” will eventually take the home. Far fewer people, however, understand the reality that foreclosure is a fairly involved process and that, according to Illinois law, the process must be handled through the court system. As such, all foreclosures in the state of Illinois are considered judicial foreclosures.

Non-Judicial Foreclosures in Other States

Illinois is one of 16 states in which the law requires court participation in the foreclosure process. Five others generally use judicial foreclosures as a matter of custom or convenience. In the remaining 29 states, non-judicial foreclosure is the method of choice, either as an available option or because judicial foreclosure is prohibited by law.

When judicial foreclosure is not required, the mortgage agreement may include a clause that gives the lender the “power of sale.” A power of sale clause grants the lender the ability to foreclose on the property on its own. If the borrower fails to keep up with the payments prescribed in the mortgage contract, the lender has the right to sell the property to recover the balance of the loan. Power of sale clauses are not enforceable in Illinois.

Over the last several years, the nation’s economy has shown steady signs of improvement, but there is still a long way to go in many areas. When people go through tough financial times, some may find it necessary to sell what they own for far less than those assets are worth. In some cases, even applies to residential real estate in some cases. When a property is sold for a price that is less than the amount remaining on the mortgage, the transaction is known as a short sale.

Four Requirements for a Short Sale

A short sale is often a complex undertaking for several reasons. First, selling a house is almost always complicated. Next, since the sale price in a short sale is less than what the owner owes on his or her mortgage, the remaining amount of the loan must be taken into account. Finally, a short sale can only work if each party involved is on the same page regarding the transaction. The most difficult part of the process is often convincing the lender to allow the sale.

Obtaining a lender’s permission to allow a short sale usually requires four particular items, including:

At first, the term “strategic default” might sound like an oxymoron. You know that defaulting on your loan is a bad thing. Or at least, you have been taught to believe it is a bad thing. But sometimes, it actually makes financial sense to default on your loan.

The first question to ask yourself when you are considering a strategic default is whether the value of your property is higher or lower than the amount of money you owe on your loan. If the property is worth less than you owe, you have what is known as “negative equity.” Having negative equity does not necessarily mean that a strategic default is your best option, but it can.

Purchasing your first home can be exhilarating, a bit frightening and, at times, overwhelming. Buying a home is often rated as the most important financial decision of your adult life, and being fiscally responsible should be your number one priority.

Often, first time home buyers will fall in love with a house that may put them at risk for financial troubles, including foreclosure down the proverbial road. To avoid the pitfalls of trying to get out from under upside down mortgages, or when the collateral that secured the loan is now lower in value than the balance owed to the lender, takes careful planning. By calculating your income, assets, liabilities and possible property taxes and insurance, you will avoid possible financial distress in the event of a life change or disability. Consider having a financial cushion on hand to cover any unexpected financial disturbances before signing on the dotted line.

Before beginning your search for the perfect home, the following strategies will provide you with a better estimation of where your finances can take you.

Facing an upside down mortgage can literally turn anyone's financial stability upside down as well. An upside down mortgage or when the collateral that secured a mortgage loan is considerably worth less than the balance owed has secured prominent standing in the U.S. real estate market in the past seven years. Unfortunately many homeowners are at a loss and have fallen victim to foreclosure and long-term damage to their credit rating but have often overlooked the option of a Deed in Lieu of Foreclosure.

For those seeking this form of debt relief, it is often in their best interest to contact an experienced foreclosure attorney, especially if you reside in Illinois where the laws regarding Deed in Lieu of Foreclosure can be complicated and add even more stress to an already frustrating situation.

This type of economic relief by which the borrower conveys all interest in real property to the lender to satisfy the loan agreement, currently in default, to avoid a full foreclosure of said real property. The majority of states follow guidelines set forth by the U.S. Department of Housing and Urban Development or HUD and include: