Friday, January 21, 2022

What are the Steps for a Deed in Lieu of Foreclosure?

If your home is going into foreclosure and you want to take steps to avoid foreclosure, a deed in lieu of foreclosure is one option that you may consider. While a deed in lieu of foreclosure will not allow you to stay in your house or condo, it can allow you to avoid having a foreclosure on your credit report. With a deed in lieu of foreclosure, you will voluntarily transfer your house over to the bank, as the CFPB explains, and the bank will agree that it will stop taking steps toward foreclosure. In effect, you will walk away from the house, but you will not have to contend with the credit hit of a foreclosure. If you are considering a deed in lieu of foreclosure, you should understand how the process works. Our Oak Park foreclosure defense lawyers can tell you about the steps involved in this process.

Contact the Lender’s Loss Mitigation Department

The process for a deed in lieu of foreclosure typically begins when a homeowner who is at risk of foreclosure contacts the loss mitigation department for the lender and asks for information about a deed in lieu of foreclosure, and an application for this loss mitigation option.

Fill Out the Application

Next, the homeowner will fill out the application, and will typically need to submit a variety of documents to the lender that provide details about the homeowner’s finances, including evidence of the homeowner’s income, tax returns, bank statements, detailed information about income and expenses, and a hardship affidavit. With a hardship affidavit, which is sometimes known as a hardship letter, the homeowner will clarify that they cannot continue to make mortgage payments on the house, and thus that the homeowner is seeking a deed in lieu of foreclosure.

You should know that, in some circumstances, a lender will want to see if it is possible to sell the house before moving forward with a deed in lieu of foreclosure, so you may be required to put the home on the market.

Lender Will Do a Title Search

If your home cannot sell for fair market value, the lender will then do a title search on the property in order to determine whether it can accept a deed in lieu of foreclosure. If you have a second mortgage on the property, a deed in lieu of foreclosure may not be possible unless the same bank is the lender for both your first and your second mortgage. Similarly, if there are any liens on the property, the homeowner will often need to resolve those liens before a deed in lieu of foreclosure can be completed.

Negotiate the Agreement With the Lender

Before you sign over the property, it is important to work with an Oak Park foreclosure defense attorney to negotiate any terms with the bank that can benefit you. Most importantly, you will want to address the issue of a deficiency judgment and whether the bank can file a claim against you to seek the difference between the current market value of the property and the amount of mortgage debt you owe. You will want to make sure the bank cannot pursue a deficiency judgment and that your mortgage debt will be satisfied when you sign over the property.

Sign Over the Property

Finally, you will sign the deed in lieu of foreclosure and transfer the property to the lender.

Contact a Foreclosure Defense Lawyer in Oak Park

If you have questions about avoiding foreclosure, our Oak Park foreclosure defense attorneys can help. Contact the Emerson Law Firm today.


See Related Blog Posts:

Pros and Cons of a Deed in Lieu of Foreclosure

How Do I Complete a Short Sale?

Thursday, December 23, 2021

Pros and Cons of a Deed in Lieu of Foreclosure

Are you struggling to make your mortgage payments and at risk of foreclosure? For many Illinois residents, avoiding foreclosure is the most important thing, even if it means you need to move into a new residence until you can get caught up financially. If you are in this situation, you may be assessing different options that are available to you, including allowing your home to go into foreclosure, considering a short sale, or arranging for a deed in lieu of foreclosure. A deed in lieu of foreclosure has both pros and cons as a recent Forbes article discusses, and our Oak Park foreclosure defense attorneys want to discuss them with you here.

Pros of the Deed in Lieu of Foreclosure

There are many pros or advantages to a deed in lieu of foreclosure, particularly as an alternative to foreclosure itself. The following are some of the central benefits to a deed in lieu of foreclosure:
  • Quicker way to avoid foreclosure and to move forward: When the bank agrees to a deed in lieu of foreclosure, you should expect the process to take anywhere from approximately 90 to 120 business days, which is significantly faster than a foreclosure and can allow you to move forward much more quickly with your life.
  • Prevent additional financial harm: Once you decide on a deed in lieu of foreclosure, you will not risk missing additional mortgage payments, falling farther behind on your loan, or harming your credit any further. Although your credit will be affected by the mortgage payments you have missed, the impact to your credit will be significantly less than a foreclosure.
  • Relocation assistance may be available: Depending upon the details of your case, you could be eligible to seek relocation assistance from your mortgage servicer if you go through with the deed in lieu of foreclosure and move out of your home. In some cases, you could be eligible to obtain up to $3,000 in relocation assistance for a conventional mortgage and up to $2,000 for an FHA loan.
  • Remain in your property temporarily: Once the bank agrees to a deed in lieu of foreclosure, you can be eligible in some cases to remain in your home for one or more months, which can give you time to find another place to live while still avoiding foreclosure.
  • Qualify sooner for a mortgage: If you choose a deed in lieu of foreclosure instead of your property going into foreclosure, you can qualify sooner for a mortgage and can buy another property once you get back on track with your finances.
Cons of a Deed in Lieu of Foreclosure

What are some of the issues with a deed in lieu of foreclosure that may be disadvantages? Consider the following:
  • Your credit report will be harmed (although not as much as it would be with a foreclosure);
  • Deed in lieu of foreclosure can stay on your credit report for up to 7 years;
  • You could owe money to the bank if the mortgage servicer gets a deficiency judgment against you, so it is important to ensure that the bank agrees to forgive any remaining debt you owe;
  • You will owe income taxes on the debt that the bank has forgiven; and
  • You will not be able to keep any equity in your home.
Contact Our Foreclosure Defense Lawyers in Oak Park

Do you have questions about a deed in lieu of foreclosure? An Oak Park foreclosure defense attorney is here to help. Contact the Emerson Law Firm today for more information.


See Related Blog Posts:

How Do I Complete a Short Sale?

Benefits of a Short Sale Instead of Foreclosure

Wednesday, November 24, 2021

How Do I Complete a Short Sale?

If your home is at risk of going into foreclosure, you may be able to avoid foreclosure by moving forward with a short sale. There are other options for avoiding foreclosure that may be available to you as well, but a short sale can allow you to sell your house and move on, ideally without owing anything to the bank in the future. Short sales are particularly helpful for homeowners who are struggling with underwater mortgages. While the real estate market remains a seller’s market in many parts of the country, anyone who purchased a home at the peak of the real estate market may be struggling to make payments on a property for which they paid a significant amount of money and for which the property would be likely to sell for a lesser amount in the present. For these homeowners, a short sale may be the best option.

If you are considering a short sale, how can you complete this process? Our Oak Park foreclosure defense lawyers can provide you with the information you need.

Learn About Short Sales

The first step in completing a short sale is to learn more about the process and what it entails. As a Bank Rate article explains, a short sale is the sale of a property that occurs “when a lender agrees to accept a mortgage payoff amount less than what is owed in order to facilitate a sale of the property by a financially distressed owner.” Then, in most short sales, the owner enters into an agreement with the lender that it will forgive any amount remaining on the mortgage so that the owner can walk away without owing the bank any additional money.

To clarify, let us give you an example: A homeowner purchased a property for $500,000 and has a mortgage payment of approximately $2,400 per month. The homeowner is struggling to make that monthly mortgage payment and is behind on the loan by numerous months of payments. The homeowner wants to avoid a foreclosure, but the property has recently been appraised at only $300,000, and the homeowner still owes $400,000 on the original loan. With a short sale, the bank can agree to accept $300,000 and to forgive the remaining $100,000 the homeowner owes on the loan.

Work With an Attorney to Obtain Approval From Your Lender

Once you understand how the short sale process works, you can begin by working with your foreclosure defense attorney to obtain approval from your lender to complete a short sale. Once your lender approves, then you can move forward by listing the property as a short sale with a real estate agent who has experience handling short sale properties.

Get an Offer

Next, you will need to find a buyer who is interested in the property and who makes an offer. Properties that are sold as short sales are sold on an as-is basis, so some homebuyers may not be interested in making an offer or may not be able to secure funding to purchase the property.

Present the Offer to the Lender

Once you have an offer, you will need to submit the information to the lender, who will need to approve of the sale price and the other aspects of the sale.

Contact an Oak Park Foreclosure Defense Attorney

If you have questions about completing a short sale to avoid foreclosure, an Oak Park foreclosure defense lawyer at our firm can assist you. Contact the Emerson Law Firm today.



See Related Blog Posts:

Benefits of a Short Sale Instead of Foreclosure

Short Sale or Chapter 7 Bankruptcy?


Friday, October 15, 2021

Benefits of a Short Sale Instead of Foreclosure

If you are facing foreclosure after getting far behind on your mortgage payments, you might be considering certain options to avoid foreclosure even if you cannot remain in your property. While your ultimate goal at the start might have been a foreclosure defense option that allowed you to get back on track with your mortgage payments, you may have reached the point at which you are realizing that you will need to move out of your home and find a new place to live. In such situations, you might be asking yourself if there is really any benefit to going through a process to avoid foreclosure such as a short sale or a deed in lieu of foreclosure. In other words, you might be thinking it could make more sense to simply allow the foreclosure to happen. Our Oak Park foreclosure defense lawyers want to explain the many and varied benefits of a short sale instead of a foreclosure.

You Can be Eligible for Another Mortgage Much Sooner

By going through a short sale instead of allowing the foreclosure process to continue, you can be eligible for another mortgage much sooner. Having a foreclosure on your credit can be extremely damaging, and you should take steps as soon as possible to avoid it. As the Federal Trade Commission (FTC) explains, if your home goes into foreclosure, you will likely need to wait for seven years before you are eligible for another mortgage. However, if you have a short sale instead, you may be able to qualify for a mortgage again in just five years.

Shorts Sales Do Not Affect Your Credit as Much as Foreclosures

Short sales are much less damaging to your credit than foreclosures, which means you will be able to rebuild your credit much faster with a short sale instead of a foreclosure. Indeed, as we noted above, you may be able to get another mortgage in as little as two years if you work with a lawyer on a short sale instead of simply letting the foreclosure happen.

You Will Have More Control of the Process

Learning that your home is going into foreclosure can be extremely stressful, and most homeowners feel completely out of control in the process. By choosing to move forward with a short sale and avoiding foreclosure, you can also ensure that you have more control over the process. Although you will still need to work with a lawyer to engage in negotiations and to ensure that all documents are appropriately filled out and filed, you will not need to go through the more emotionally arduous process of a foreclosure.

It is important to recognize that having some control in the short sale process also means that you can work with your lawyer to ensure that the bank waives plans for a deficiency judgment so that you will be free and clear once the house sells.

Contact an Oak Park Short Sale Lawyer Today

If you have questions about short sales, or if you need assistance with foreclosure defense in Illinois, one of our dedicated Oak Park foreclosure defense attorneys can speak with you about the benefits of short sales. Contact the Emerson Law Firm today to learn more about how we can assist you.



See Related Blog Posts:

Short Sale or Chapter 7 Bankruptcy?

Five Things to Know About Short Sales






Wednesday, September 15, 2021

Short Sale or Chapter 7 Bankruptcy?

If you are facing foreclosure, you may be looking at options to avoid foreclosure such as a short sale or a deed in lieu of foreclosure, but you also might be thinking about filing for Chapter 7 bankruptcy. Which option is the right one for you? In order to reach a definitive decision, it is always a good idea to seek advice from an experienced Oak Park foreclosure defense attorney about your particular situation and the facts surrounding your case. In the meantime, we want to explain some of the issues that might arise when deciding between a short sale or a Chapter 7 bankruptcy filing.

Thinking About Short Sales and Bankruptcy Based on Your Existing Debt

If you are considering the possibility of a short sale or filing for Chapter 7 bankruptcy, it is important to think carefully about the other debt you have currently. Is the majority of your debt associated with your mortgage, or are you also facing a looming amount of consumer debt from medical bills, credit cards, student loans, or other debt sources? If it is the former—that is, if most of your debt is linked to your mortgage—a short sale may be a strong option for avoiding foreclosure while also allowing you to avoid a bankruptcy filing. Yet if you are also struggling with a significant amount of additional debt, some of the limitations associated with a short sale might mean that filing for Chapter 7 bankruptcy will be more beneficial for you.

Short Sales Can Allow You to Avoid Foreclosure but May Come With Debt

What are those limitations of a short sale when it comes to avoiding foreclosure? First, let us emphasize that short sales can be extremely beneficial for consumers who are struggling largely with mortgage debt and are facing foreclosure. To be clear, a short sale is a process through which your mortgage lender can agree to take a payment for less than the amount you owe on your mortgage and release its lien for that lower amount so that the house is not ultimately sold through the foreclosure process. How does this work? The house will be put up for sale as a short sale, and even if it sells for less than the amount you owe on your mortgage, the lender will accept that amount.

However, there are some potential complications. If your mortgage lender will not waive the deficiency amount—the amount of money still owed based on the sales price of the house and your mortgage amount—then you will still owe that money. These deficiencies can range widely in amount, from several thousand dollars to tens of thousands of dollars. Your lawyer can help you to negotiate a waiver from the lender so that you do not owe this money. Yet even if the lender agrees and forgives the remaining amount, you will likely be required to pay taxes on that forgiven amount. While the tax on $5,000 of forgiven debt will not be particularly steep, the tax consequences of having, for example, $100,000 or more of mortgage debt forgiven can be significant.

Learn More From a Foreclosure Defense Lawyer in Oak Park

If you are considering a short sale or bankruptcy, you should seek advice from our Oak Park foreclosure defense attorneys today. Contact the Emerson Law Firm for more information.



See Related Blog Posts:

Five Things to Know About Short Sales

What is a Consent Foreclosure?

Tuesday, August 10, 2021

Five Things to Know About Short Sales

If you are facing foreclosure due to the inability to make mortgage payments, it is important to consider ways of avoiding foreclosure—even if you cannot remain in your home. While a number of foreclosure avoidance options may not allow a struggling homeowner to keep the house, they can prevent a damaging foreclosure sale and everything it means for the debtor’s credit. Short sales are one option to avoid foreclosure in Oak Park and throughout Illinois. If you have never considered foreclosure prevention options in the past, the prospect of a short sale can be confusing. However, our experienced Oak Park foreclosure defense lawyers are here to assist you. The following are five things to know about short sales.

Short Sales are One Option to Avoid Foreclosure

As we mentioned above, short sales are one option to avoid foreclosure. Other options may include, for example, a deed-in-lieu of foreclosure or even a Chapter 13 bankruptcy filing if you are eligible. Unlike a short sale and a deed-in-lieu, a Chapter 13 bankruptcy can allow you to remain in your home and to get back on track with mortgage payments. When Chapter 13 is not an option, a short sale or deed-in-lieu can allow you to avoid dealing with the more severe consequences of a foreclosure.

Short Sales Can Still Damage Your Credit, But to a Lesser Extent Than Foreclosure

You should know that a short sale will still result in some damage to your credit. However, its effects will be much less significant than a foreclosure.

You Will Need Lender Approval to Do a Short Sale

You cannot simply decide to do a short sale on your own and move forward with the process. Instead, you will need to seek approval from the lender, and it will be critical to ensure that the lender agrees to forgive any remaining debt after the sale goes through.

Short Sales Can Take Some Time

Since short sales are complex, you should not expect that they will necessarily be quick. While short sales can happen relatively quickly, they can take many months.

Short Sales Tend to Fall Through More Often Than Traditional House Sales

If you are trying to sell your home through a short sale, it is essential to keep in mind that these are complex transactions and that there are often more routes for the lender or the buyer to back out, according to Bankrate. As such, while short sales are frequently strong foreclosure avoidance options for struggling homeowners, it is important to know that short sales do fall through with some frequency.

Contact Our Oak Park Foreclosure Defense Lawyers

Do you have questions about avoiding foreclosure or about short sales more specifically? One of our experienced Oak Park foreclosure defense attorneys can speak with you today about your options. We routinely assist homeowners with a variety of foreclosure defense strategies, including short sales, deed-in-lieu of foreclosure, and Chapter 13 bankruptcy. Contact the Emerson Law Firm today for more information about how we can assist you.



See Related Blog Posts:

What is a Consent Foreclosure?

My Home is Going Into Foreclosure: Should I Consider a Short Sale or Deed in Lieu of Foreclosure?


Friday, July 2, 2021

What is a Consent Foreclosure?

When you are struggling to make payments on your mortgage and are considering options to avoid a foreclosure sale of your property, such as a short sale or a deed in lieu of foreclosure, it is also important to understand how a consent foreclosure works. Illinois is a judicial foreclosure state, which means that the lender will need to file a foreclosure action in court and go through a judicial process before a foreclosure can be completed. When the lender must go through this extensive foreclosure lawsuit process, the lender will end up spending a significant amount of time and money on attorney’s fees and court costs. As such, the lender might consider alternate options to a judicial foreclosure in Illinois if you know you cannot get caught up on your mortgage payments.

While a short sale or a deed-in-lieu can be beneficial for many homeowners who are facing foreclosure, a consent foreclosure can also be beneficial to the homeowner. Our Oak Park foreclosure defense lawyers want to provide you with more information.

Why a Consent Foreclosure Can be Helpful to a Homeowner Facing Foreclosure

Anyone who is facing foreclosure should know that, if the lender wins a foreclosure lawsuit, not only can your home be seized and sold, but the lender can continue to pursue a deficiency judgment against you in order to recover the difference between the foreclosure sale price of the property and the amount you still owe on the mortgage. For example, if you have a mortgage and still owe $300,000 on that loan but the foreclosure sale results in the property being sold for only $200,000, the bank will be owed $100,000—the difference between the foreclosure sale price and the amount you owe on the mortgage. In such scenarios, the lender may be able to pursue a deficiency judgment in order to collect that remaining $100,000 from you.

However, the lender has an interest in saving the time and money associated with a foreclosure lawsuit. Accordingly, if you agree to the foreclosure—a consent foreclosure—the lender might agree to waive its right to seek a deficiency judgment in the event that the house sells for less than what you owe on the mortgage.

How Consent Foreclosures Work Under Illinois Law

Under Illinois law, the statute concerning consent foreclosures begins with the phrase “no objection.” The law clarifies that a court can enter a foreclosure judgment when the homeowner consents to the foreclosure if the lender agrees to waive its right to a deficiency judgment and if all affected parties consent to the entry of a foreclosure judgment.

It will be important to have an Oak Park foreclosure lawyer on your side during this process to ensure that the terms of the consent judgment are crafted properly and that you will not have to worry about the lender pursuing a deficiency judgment once the foreclosure judgment is entered.

Contact Our Oak Park Foreclosure Attorneys

If you have any questions about how a consent judgment works, or if you want to pursue other options to avoid foreclosure such as a short sale or a deed in lieu, one of our experienced foreclosure defense attorneys in Oak Park can speak with you today. Contact the Emerson Law Firm for more information.



See Related Blog Posts:

My Home is Going Into Foreclosure: Should I Consider a Short Sale or Deed in Lieu of Foreclosure?

Is a Mortgage Modification My Only Option to Avoid Foreclosure?