During a residential real estate transaction or another situation where ownership of a home is transferred from one party to another, the parties will use a deed to complete the transfer. A deed is a legal document in which a grantor who owns or has a claim to the property will transfer their ownership interests to a grantee. There are multiple types of deeds that may be used, and in some cases, a grantor may be looking for a simple release of their ownership claim. In these situations, a quit claim deed may be used, but when doing so, the parties should be sure to understand how this type of deed will affect their rights and obligations.

Situations Where a Quit Claim Deed May Be Used

Typically, ownership of real estate is transferred using a warranty deed, which will provide the grantee with protections and ensure that they are not liable for liens on the property or other encumbrances. A quit claim deed will not provide a grantee with these types of protections. Instead, it simply releases the grantor’s claim on the property. It will not affect the mortgage on the property, and a grantor may still be liable for paying off the amount due on the home loan. 

Since quit claim deeds allow for the simple transfer of property without any warranties, they are usually only used in a few specific situations, including:

Continue Reading...

Homeowners may experience financial difficulties that affect their ability to make mortgage payments. The COVID-19 pandemic has led to hardship for many homeowners, and government programs have been implemented to provide homeowners with relief. In some cases, a homeowner may qualify for forbearance, which will allow them to temporarily pause or reduce mortgage payments. Homeowners who have received forbearances will need to understand how this will affect their ability to sell their home. 

Addressing Forbearances During a Real Estate Transaction

A homeowner can request a forbearance if they experience financial hardship, and a mortgage lender may agree to defer a certain number of mortgage payments, or a person’s monthly payments may be reduced temporarily. However, it is important to understand that these amounts will need to be paid at a later date. Depending on the details of a forbearance agreement, a balloon payment may be added to the end of a loan, or a payment plan may be created in which the amount that is due will be paid off in addition to ongoing mortgage payments. A homeowner may also be able to negotiate loan modifications that will allow them to make affordable payments as they pay off their mortgage and any additional amounts that are due.

If a person chooses to sell their home after receiving a forbearance, they will need to be sure to fully understand the amount that will be due on their mortgage. If a balloon payment was added to the end of the loan, this amount will need to be paid in addition to the loan’s principal. To ensure that the sale price of the home will fully cover the amount due on the mortgage, a homeowner can request a payoff statement from their lender. This will provide them with a full understanding of the amount that will need to be paid to release the mortgage lien. 

Continue Reading...

Many families have been affected by the COVID-19 pandemic, and those who have experienced financial difficulties may have struggled to pay ongoing expenses, including rent. To help protect families from losing their homes and being put at risk of infections, the federal government placed a moratorium on evictions, and multiple state governments did the same. A recent Supreme Court decision ended the federal eviction moratorium, but Illinois’ moratorium is still in effect, and Governor J.B. Pritzker has stated that it will be extended through October 3, 2021. Landlords with tenants who have been unable to pay rent will need to understand their options, including determining whether they may be able to perform evictions or use lease modifications.

Availability of Emergency Rental Assistance

Tenants who have struggled to pay rent and landlords facing financial difficulties due to the inability to collect rent payments may qualify for emergency rental assistance (ERA) provided by state and local programs, including the Illinois Rental Payment Program. The Biden administration and the Treasury Department have implemented new rules meant to ensure that people who qualify for ERA can receive relief quickly. These include:

• A household can use self-attestation to document eligibility for ERA, including providing information about the income earned by family members, the reasons a family has experienced financial hardship, and whether they face the risk of homelessness or housing instability.

  ...

  Continue Reading...

Anyone can encounter financial problems that affect their ability to meet their obligations. Homeowners who are struggling to pay bills may be concerned about what will happen if they get behind on their mortgage payments. Those who are worried about the possibility of foreclosure will want to understand their options, and in some cases, they may qualify for mortgage relief through the Flex Modification Program. 

Eligibility for the Flex Modification Program

To determine whether they qualify for the Flex Modification Program, homeowners will need to understand who owns their loan. This program is available for mortgages owned or guaranteed by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). While a mortgage may have originated with a bank or another private lender, many mortgages are sold to other investors, including Fannie Mae and Freddie Mac. While these loans may then be sold to another investor, they will often be guaranteed by Fannie Mae or Freddie Mac, allowing homeowners to take advantage of relief through the Flex Modification Program.

To qualify for the Flex Modification program, a homeowner will need to meet certain requirements. The mortgage must have originated at least one year prior to being evaluated for relief, and a loan must be a conventional first mortgage, giving the lender the right to be repaid first if a foreclosure sale is completed. A homeowner may seek relief if they are more than 60 days delinquent on mortgage payments, although if the property is the homeowner’s primary residence, they may seek relief if they are current on mortgage payments or are less than 60 days delinquent, including in cases where a lender determines that they are in “imminent default” and will no longer be able to make monthly mortgage payments based on their financial circumstances. While a homeowner will usually be required to provide documentation of financial hardship, proof of income, and other information, those who are more than 90 days delinquent may qualify for streamlined procedures that will allow them to receive a modification more quickly and with fewer documentation requirements.

Continue Reading...

Originally published: November 29, 2015 -- Updated: August 10, 2021

UPDATE: In addition to understanding how the dismissal of a bankruptcy case may affect their ability to refile for bankruptcy and address their debts, a person will also need to understand how foreclosure proceedings will be affected. An initial bankruptcy filing will place an automatic stay on any collection actions, meaning that creditors will be required to cease all attempts to collect the debts owed or repossess property. This automatic stay applies to foreclosure proceedings, so by filing for bankruptcy, a person may be able to prevent the loss of their home. However, if a bankruptcy case is dismissed, a person is returned to the same position they were in before filing for bankruptcy, and creditors will be able to resume foreclosure proceedings.

A recent case in Pennsylvania illustrates how the dismissal of a bankruptcy case may affect foreclosure proceedings. In this case, a homeowner filed for Chapter 13 bankruptcy to prevent the foreclosure of their home. Because the debtor did not file all of the necessary documents, the bankruptcy court dismissed their case. The debtor filed a motion for reconsideration, and the court granted this motion and reinstated the bankruptcy case. However, between when the case was dismissed and when it was reinstated, the lender resumed foreclosure proceedings and sold the home. While the debtor argued that the automatic stay for the initial bankruptcy filing should have applied, the court ultimately ruled in the lender’s favor, finding that the lender was allowed to resume foreclosure proceedings following the dismissal of the case.

Continue Reading...