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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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North Chicago foreclosure defense attorneyThe economic impact of the COVID-19 pandemic has been significant. Many people throughout the United States have either taken a pay cut, been temporarily furloughed, or lost their jobs completely. As a result, renters and homeowners are struggling to make their monthly housing payments. While repossession and foreclosure are both processes used by creditors to reclaim property that is used as collateral for a loan, the procedures followed in each type of case are different.

Defaulting on a Loan

Repossession is common in vehicle loans. Once a person becomes delinquent on payments and the borrower is in default on the loan, the lender can take back possession of the property at any time. The foreclosure process, on the other hand, is more complicated than repossession. If someone is 120 days delinquent on his or her mortgage, the lender can begin official foreclosure proceedings by filing a complaint in court. The homeowner has 30 days to respond to the complaint.

Foreclosure refers to the legal process where real estate is taken away from a borrower. Depending on state law and the circumstances of a case, a foreclosure may be judicial or nonjudicial. Illinois law outlines specific procedures that the lending institution must go through before having a foreclosure sale. 

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Lake County foreclosure defense attorneysBuying 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.

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Lake County foreclosure defense attorneysBuying your first home can be exciting, but it can also be overwhelming to take on such a major responsibility. Regardless if you are single or married, it is important to carefully consider your mortgage and what you can afford in terms of a loan. During the COVID-19 pandemic, many people have been furloughed or laid off from their jobs for an indefinite period of time. Although they may be entitled to unemployment, those funds may not cover their monthly mortgage payment. The federal government has issued protections for tenants and mortgage loan borrowers under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. However, once this moratorium expires, home owners may still be struggling to keep afloat financially if they cannot return to work. Forensic loan auditing can help reveal any violation of the law with regard to the loan package. An experienced attorney can help determine if this specific type of auditing can help in your foreclosure defense

Uncovering Violations in Your Loan Package

The Truth in Lending Act (TILA) was created by the federal government to ensure that consumers are given accurate information when they enter into credit transactions. TILA covers credit loans, including mortgages, home equity loans, and credit cards. The disclosures by lenders should be consistent and standardized, but unfortunately, this is not always the case. If the creditor does not disclose pertinent data to the borrowing party, the creditor may be liable to pay damages to the borrower.
Examples of common loan violations may include any of the following:

  • Truth in Lending Act violations: This occurs when a creditor fails to disclose information in writing regarding the terms of a loan or any type of credit transaction. 
  • HUD violations: The U.S. Department of Housing and Urban Development (HUD) regulates the housing industry. Housing providers, including landlords or management companies that refuse to rent or sell dwellings to people based on race, color, nationality, religion, sex, familial status, or disability are in violating of federal law.
  • Interest rate violations: When the terms of your loan, such as the interest rate and structure (fixed, adjustable, balloon) are not fully disclosed, this may be considered a violation. Many first-time homeowners do not realize that their mortgage payments can go up substantially once the term ends.   
  • Predatory lending practices: In some cases, lending institutions engage in unethical actions in order to obtain business. This may include charging excessive or hidden fees, not disclosing appropriate information, or not notifying borrowers of their right to cancel a loan.

An attorney can help uncover the above violations and assist you with defending your home foreclosure by holding those accountable. In certain situations, you may also be eligible for remedies such as a loan modification or mortgage relief programs. 

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