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lake forest foreclosure attorneyMany families in the United States face the threat of foreclosure due to financial difficulties related to the COVID-19 pandemic. Fortunately, most of these families have been able to avoid losing their homes thanks to the moratorium on foreclosures that was put in place in March of 2020. This moratorium has been extended several times, and while it was scheduled to expire on June 30, 2021, it has been extended once again. Homeowners may be able to make use of provisions that will allow them to maintain ownership of their homes.

Foreclosure Relief for Federally-Backed Mortgages

The federal foreclosure moratorium has been extended through July 31, 2021. This moratorium applies to homes financed through USDA Single-Family Housing Direct and Guaranteed loans, as well as single-family mortgages backed by Fannie Mae and Freddie Mac.

In addition to this extension, the Consumer Financial Protection Bureau (CFPB) has implemented a new rule that will provide protections for homeowners facing foreclosure while also offering options for financial relief that will allow them to resume mortgage payments and continue owning their homes. This rule will go into effect on August 31, 2021, and it will last until January 1, 2022. This will ensure that homeowners will have protections during foreclosure proceedings that take place after a borrower is delinquent on mortgage payments by at least 120 days.

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North Chicago real estate attorney for home refinancingThere are many reasons why a family may struggle financially, especially since the onset of the COVID-19 pandemic in 2020. If you are having difficulty making mortgage payments, and you do not expect this to change in the near future, you will likely worry about your ability to keep your home. If you default on your mortgage by missing one or more payments, your lender may begin the foreclosure process. Fortunately, you have options, including seeking a new loan to refinance your home. It is best to take action as soon as possible, because once your lender initiates foreclosure proceedings, addressing these issues will become more complicated and costly.

Options for Refinancing

Refinancing differs from other types of loan modifications. When you refinance your home, you will be obtaining a loan that will pay off the balance on your current mortgage. Since this is a completely new loan, you will be required to pay closing costs and fees, and you will need to show that you have a steady income. You will most likely also need to own some equity in your home.

Since you will need to meet a variety of requirements to qualify for a new loan, it is important to begin the refinancing process before defaulting on your current mortgage. Missed payments are reported to credit bureaus, and this will lower your credit score, which will make it less likely that a lender will approve your loan.

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Libertyville foreclosure defense lawyersUPDATE: If you are considering reinstatement as an option for avoiding foreclosure, you will want to be sure to understand your rights, the deadlines that you will need to meet, and what other options may be available. The deadline for reinstating your loan is 90 days after you were served with a foreclosure notice. By this deadline, you will be required to make up the missed payments and pay other fees and expenses. In addition to late fees, you may need to pay other costs related to foreclosure proceedings, such as attorney's fees, recording fees, court costs, and the costs of a home inspection. You will need to request a quote from your lender for the total amount that must be paid to reinstate the loan. If you disagree with the amount provided in this quote, you can send a notice of error disputing the amount. Once you have met the requirements for reinstatement, the foreclosure case will be dismissed. It is important to note that after you have exercised your right to reinstatement, you will not be able to use this form of relief for five years after the date of the dismissal.

Another option that may be available is to pay off your loan in full. This is known as "redemption." To pay off the loan, you may be able to refinance your home through a loan from another lender, or you may receive a personal loan or gift from a person such as a family member. Typically, the deadline for redemption of your loan is seven months after the date you were served with a notice of foreclosure, although there may be some exceptions depending on your individual situation. As with reinstatement, you can request a payoff quote from your lender that will detail the full amount that will need to be paid, which will include the principal of the loan, any applicable late fees or interest, and foreclosure-related expenses.

If you have questions about reinstatement, redemption, loan modifications, or other options for foreclosure defense, contact our Waukegan foreclosure lawyers at 847-549-0000 to schedule a free consultation.

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Libertyville IL foreclosure defense lawyerOver the past decade, the threat of foreclosure has been ever-present for many homeowners. Those who are struggling financially may be concerned that missed or late mortgage payments will result in the loss of their home. However, many homeowners who have refinanced their homes or obtained additional mortgages may be unsure about how these loans will affect their financial situation, including whether mortgage lenders may foreclose if a person is in default on a second mortgage. By working with a bankruptcy attorney to understand these issues, homeowners can determine their best options for defending against foreclosure and managing their debts.

Defaulting on a Second Mortgage

A mortgage is a secured debt, and this means that if a homeowner defaults on the debt, the lender can foreclose and repossess the house. This is true not only for the initial mortgage on a home, but also for any subsequent mortgages or home equity loans. However, during foreclosure, the first mortgage will take priority, and lenders of second or subsequent mortgages will only receive payments if the amount obtained through a foreclosure sale exceeds the amount owed on the first mortgage.

If a home is “underwater,” meaning that its current value is less than the amount owed on the initial mortgage and any subsequent mortgages, lenders may not want to foreclose on a second mortgage, since they will likely not receive full payment of the amount owed. However, these lenders may pursue other options for repayment, such as filing a lawsuit against the homeowner to collect the amount owed. In many cases, homeowners may be able to negotiate with these lenders to determine how they can become current on a loan, since other options may not be financially beneficial for the lender.

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Waukegan IL short sale attorneyMany people and families throughout the United States are struggling with debt, especially during the COVID-19 pandemic, which has resulted in the loss of jobs, reductions in the income that people are able to earn, and other financial difficulties. Homeowners who are struggling to pay ongoing expenses may be concerned about what will happen if they default on their mortgage, including whether they may face foreclosure. While some homeowners may be able to avoid foreclosure through a loan modification, others may find that they will be unable to avoid losing their home. In these cases, a short sale can sometimes be beneficial.

What Is a Short Sale?

A homeowner may owe more on their mortgage than their home is actually worth. If the homeowner is experiencing financial hardship, they may be able to sell their home at a fair price and avoid owing additional money to their mortgage lender. In many cases, a lender will need to approve a short sale, although it may be possible to complete a transaction without lender approval.

Short sales can provide multiple benefits to those who are unable to make mortgage payments, including:

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