Monday, June 22, 2020

Foreclosure Moratorium Re-Extended

If you lost your job as a result of the COVID-19 pandemic and you are struggling to pay your mortgage payments, you may be able to breathe a temporary sigh of relief. According to a recent report in HousingWire, the Department of Housing and Urban Development (HUD) just announced that the federal Housing Administration (FHA) is going to extend its existing moratorium on foreclosures. Initially, the moratorium was set to expire in May and was extended until June 30. Now homeowners have additional protections with another two-month extension until August 31, 2020. We want to tell you more about the additional extension of the foreclosure moratorium and to provide you with information about options for preventing foreclosure.

FHA Will Extend Foreclosure Moratorium Until August 31, 2020
The recent announcement by HUD explains that the foreclosure and eviction moratorium from the FHA will be extended for a second time through August 31, 2020. However, it is important to understand that this moratorium does not apply to any homeowner with a mortgage. Rather, it applies to “homeowners with FHA-insured Title II Single-Family forward and Home Equity Conversion mortgages.” Other homeowners with different types of loans are not eligible for the extension on the moratorium and could be at risk of foreclosure if they do not make mortgage payments.

For those who are covered by the extended moratorium, what does the extension mean in practice? Mortgage servicers will need to “halt all new foreclosure actions and suspend all foreclosure actions currently in progress, excluding legally vacant or abandoned properties.” In addition, any properties that are FHA-insured and are designated as Single-Family properties will have an eviction moratorium, meaning that servicers will need to stop any evictions. That eviction moratorium does not apply to properties that are legally vacant or abandoned. The eviction protections in place apply to renters who are renting from a landlord with a federally backed mortgage.

Options if You are Not Eligible for the Foreclosure Moratorium
If you own a home that is not eligible based on the classifications explained above, you may still have options to avoid or stop a foreclosure. The CARES Act outlines certain mortgage forbearance options, which you should discuss with your mortgage servicer. To qualify for CARES Act protections, your mortgage will need to be federally owned or backed by one of the federal agencies or entities, such as HUD, the FHA, the USDA, the U.S. Department of Veterans Affairs, or Fannie Mae or Freddie Mac.

If your mortgage is not backed by the federal government, your mortgage servicer may still be willing to offer a forbearance for coronavirus-related hardship. If you cannot obtain a forbearance and cannot make your mortgage payments, it may be possible to work with a foreclosure defense lawyer on alternative options. You may be able to have your mortgage refinanced, and if necessary, you may be able to stop a foreclosure by filing for Chapter 13 bankruptcy. However, in order to qualify for Chapter 13 bankruptcy, you will need to be able to prove that you have income to make payments on a debt reorganization plan.

Seek Advice from an Oak Park Foreclosure Defense Attorney
If you have questions or need assistance avoiding foreclosure, an experienced Oak Park foreclosure defense lawyer can speak with you today. Contact the Emerson Law Firm to learn more about how we can assist you.



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Bankruptcy and Home Foreclosure: What You Should Know

Will Foreclosure Rates Soon Exceed Those of the 2008 Financial Crisis?

Sunday, June 14, 2020

Bankruptcy and Home Foreclosure: What You Should Know

What are the links between personal bankruptcy and foreclosure? Is there any risk of losing your home if you file for bankruptcy? You may have heard that some forms of bankruptcy can actually prevent foreclosure in certain circumstances. Accordingly, you may be wondering, if I want to stop a foreclosure, which type of bankruptcy should I file? There are some significant ways in which consumer bankruptcy and home foreclosure are interrelated. If you are struggling with debt and own your home, it is important to gain a clear understanding of the potential ties between bankruptcy and foreclosure.

Chapter 13 Bankruptcy May be Able to Stop a Foreclosure and Allow a Consumer to Stay in the Home
One of the most significant tools in a Chapter 13 bankruptcy is the automatic stay because it can allow a homeowner who is behind on mortgage payments to stop a foreclosure. While the automatic stay applies in any bankruptcy case, it is particularly important for consumers in a Chapter 13 bankruptcy case who are at risk of losing a home to foreclosure.

As you may already know, Chapter 13 bankruptcy is a “reorganization” bankruptcy under the U.S. Bankruptcy Code. As such, when a debtor files for Chapter 13 bankruptcy, the automatic stay prevents creditors or collectors from taking any additional actions on existing debt (including mortgage debt), and the debtor has the opportunity to reorganize debts in a repayment plan. The terms of the repayment plan usually last three to five years, and that plan gives debtors an opportunity to get back on track with mortgage payments. To be clear, the automatic stay can stop the foreclosure, and the repayment plan allows the homeowner to get back on track with mortgage payments to keep the home.

Chapter 7 Bankruptcy Cannot Prevent a Foreclosure
While Chapter 13 bankruptcy can stop a foreclosure and can allow the debtor to remain in his or her home, it is important to understand that Chapter 7 does not have the same ability. Chapter 7 bankruptcy is a liquidation bankruptcy, which means that any non-exempt debt will need to be sold (or liquidated) to repay creditors. Once the bankruptcy process is complete, usually in a number of months, eligible debt will be discharged. Given how the Chapter 7 bankruptcy process works, it will not be possible to file for Chapter 7 bankruptcy and expect to avoid a foreclosure and then remain in the home.

Illinois Does Not Have a Significant Homestead Exemption in a Chapter 7 Bankruptcy Case
While the Illinois homestead exemption may not have a direct correlation with foreclosure, it is important to know that, if you file for Chapter 7 bankruptcy—even if you are not at risk of foreclosure—you may not be able to keep your home. While some states have much higher homestead exemptions, Illinois only has a $15,000 homestead exemption (or $30,000 for a married couple that files for bankruptcy together). A bankruptcy lawyer can discuss the implications with you if you currently own a home and are considering Chapter 7 bankruptcy.

Contact a Bankruptcy Lawyer in Oak Park
If you have questions about bankruptcy and foreclosure prevention, one of our experienced Oak Park bankruptcy attorneys can speak with you today about your case. Contact the Emerson Law Firm for more information.


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Sunday, May 10, 2020

Will Foreclosure Rates Soon Exceed Those of the 2008 Financial Crisis?

If you are struggling to make your mortgage payment in Oak Park or elsewhere in the greater Chicago metropolitan area, you should know that you are not alone. While recognizing that thousands of other families in the U.S. are struggling with the risk of foreclosure during the economic downturn caused by the coronavirus pandemic will not pay your bills, it can be helpful to understand that consumer advocates understand this dangerous trend.

According to a recent article in HousingWire, some experts are predicting an oncoming wave of COVID-19 foreclosures that will surpass those of the Great Recession more than 10 years ago. At the same time, homeowners do have advantages and protections that they did not have previously. We want to say more about the recent article, and about some of the ways that homeowners affected by the coronavirus pandemic may be able to avoid foreclosure.

Healthcare Crisis Foreclosures Could Surpass 2008 Levels
It was not very long ago that the housing market crash of 2008 resulted in millions of home foreclosures. Between 2006 and 2016, experts estimate that about 10 million homes went through the foreclosure process. While that “freefall of the housing market nearly took down the entire U.S. economy” in a way that perhaps seemed like a once-in-a-lifetime occurrence, now the COVID-19 emergency is more than threatening to do the same. The reality is that millions of Americans have lost their jobs and cannot find new ones due to the pandemic and business closures. A wide variety of industries are experiencing effects of the coronavirus pandemic and the economic downturn, from blue-collar and manual labor jobs to white-collar professions. Currently more than 22 million people have filed for unemployment benefits, and HousingWire predicts that 15 million more will occur by its next report.

Currently, about 3 million mortgages nationwide are in forbearance due to the pandemic and job loss. Just as homeowners are unable to make their monthly mortgage payments, millions more could seek forbearances and alternatives to foreclosure in the coming weeks and months. These actions are taking place when lenders are restricting the kinds of loans they are offering and, in some cases, even the lenders are going out of business. All of these facts are leading experts to worry that we could ultimately see rates of home foreclosure that surpass those of the 2008 financial crisis.

Positive Numbers and Foreclosure Avoidance
Although tens of millions of Americans are without a job, there are some protections that did not exist during the 2008 foreclosure crisis. First, disaster relief money and more eligibility for unemployment claims has resulted in some people being able to make ends meet for the time being. In addition, a number of forbearance programs are currently in existence, allowing homeowners to delay making a mortgage payment for up to 12 months if they are experiencing a COVID-related hardship.

If you may be at risk of foreclosure, you should learn about forbearance options and discuss other potential measures with an Oak Park foreclosure defense lawyer.

Contact a Foreclosure Defense Attorney in Oak Park
If you are struggling to make your mortgage payment and are at risk of foreclosure, an experienced and compassionate Oak Park foreclosure defense lawyer can discuss your options with you. Contact the Emerson Law Firm for more information.



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Friday, April 3, 2020

Avoiding Foreclosure During the Coronavirus Pandemic

Illinois residents and Americans across the country have lost their jobs—and are continuing to lose their jobs—as a result of the coronavirus pandemic. According to a recent article in The New York Times, job-loss rates are likely to significantly exceed the rate of job loss during the foreclosure crisis of 2008 and the recession. Given that so many Americans are out of work and so quickly, many are unlikely to be able to pay their mortgage payments this month or in the coming months. What can you do to avoid foreclosure?

Federal Freezes on Certain Foreclosures, Mortgage Payment Moratoriums, and Forbearances
As we have already discussed, Trump ordered a freeze on foreclosures and evictions for 60 days last month. According to an article in Bankrate, all of the following government agencies announced foreclosure freezes and eviction freezes, along with some option for forbearance:
  • The Federal Housing Finance Agency (FHFA);
  • Housing and Urban Development (HUD);
  • U.S. Department of Agriculture (USDA); and
  • Fannie Mae and Freddie Mac.
For borrowers through Freddie Mac and Fannie Mae, there are forbearance options that can allow homeowners to have their mortgage payments suspended for up to 12 months if they have experienced economic hardship as a result of the coronavirus pandemic. Fannie Mae and Freddie Mac currently own approximately 50% of mortgages in the U.S. As an article in MarketWatch highlights, however, borrowers will likely need to contact their mortgage servicers in order to be eligible for such a forbearance. Although there are many other issues on most homeowners’ minds right now, it is important to take the time to make the phone call—and likely to wait on hold—to get this relief.

Banks are Also Promising Foreclosure Suspensions and Relief
As the Bankrate article clarifies, specific banks and mortgage servicers have also announced freezes and mortgage payment moratoriums. Ally Bank is issuing a 120-day mortgage payment moratorium, and Bank of America indicated that it planned to offer a suspension of mortgage payments “for eligible borrowers,” although it did not indicate the amount of time for which mortgages would be suspended.

Indeed, a recent report in Forbes also provides a list of banks that are suspending foreclosure activity, typically for a period of 30 to 90 days, during the pandemic. Those banks include:
  • Ally Bank (until July 30);
  • Associated Bank (60 days);
  • Bank of America (90 days);
  • Citizens Bank (60 days);
  • Fifth Third Bank (60 days);
  • First National Bank;
  • Flagstar Bank (through the end of May);
  • Huntington National Bank (through the end of May);
  • KeyBank;
  • Regions Bank (30 days);
  • Santander;
  • TCF Bank (through the end of April);
  • Webster Bank (90 days); and
  • Wells Fargo.
Contact a Foreclosure Defense Lawyer in Oak Park
If you have questions about avoiding foreclosure during this difficult time, an Oak Park foreclosure defense attorney can help. While you are struggling to keep your family healthy and with necessities, you should not have to worry about losing your home. Contact the Emerson Law Firm today to learn more about steps you can take to avoid foreclosure in Oak Park and elsewhere in Chicagoland.


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Monday, March 23, 2020

Foreclosures Suspended Due to Coronavirus

If you are struggling to make mortgage payments amidst the coronavirus crisis, you should know that you are not alone. Many homeowners are struggling with business closures and job loss, making it difficult and even impossible to pay monthly mortgage payments. For many homeowners who were already struggling, the coronavirus outbreak is exacerbating financial problems that already existed. According to a recent report in CNN, the federal government will put a hold on certain foreclosure activity due to coronavirus until the end of April.

Single-Family Homes and Foreclosure Halt Until End of April
If you have a mortgage on a single-family home and that mortgage is a Federal Housing Administration-insured mortgage, you will not be at risk of foreclosure until the end of April. According to the report, Trump indicated that “the Department of Housing and Urban Development is providing immediate relief to renters and homeowners by suspending all foreclosures and evictions until the end of April.”

HUD Secretary Ben Carson explained that the temporary suspension of foreclosure activity “will allow households who have an FHA-insured mortgage to meet the challenges of COVID-19 without fear of losing their homes, and help steady market concerns.”

Ways of Avoiding Foreclosure
While homeowners who are struggling to make monthly mortgage payments can have some relief from the news that foreclosure activity on FHA-insured mortgages will be put on hold until the end of April, it is still important to think about ways to stop foreclosure from that point onward. Temporary relief is important for homeowners, but anyone who is struggling to make mortgage payments and is at risk of losing their home should work with a foreclosure defense attorney to make a longer-term plan. An article in Bankrate cites the following ways that struggling homeowners can stop a foreclosure:
  • Contact the lender to find out about your options: While homeowners often assume that the lender will not provide any relief—and this certainly may be true in a number of cases—it is important to keep in mind that lenders do not want to go through a foreclosure process if they can find a way to be repaid by working with the homeowner. If a lender thinks a homeowner may be able to get back on track with mortgage payments through refinancing or a loan modification, for example, the lender may offer these or other options for loss mitigation.
  • Loan modification: Like we mentioned above, a mortgage lender or servicer often has the ability to provide homeowners with a loan modification to lower monthly mortgage payments. A modification can involve lowering the interest rate or shifting the terms of the loan.
  • Deed-in-lieu of foreclosure: This is not an option that allows a homeowner to stay in the home, but it can prevent a foreclosure. With a deed-in-lieu of foreclosure, the homeowner gives the property back to the lender to avoid the foreclosure.
  • Short sale: This is also an option that requires the homeowner to leave the home, but it can prevent a foreclosure from affecting the homeowner’s credit. With a short sale, the lender allows the homeowner to sell the house for an amount that is less than what they owe on the mortgage, and the lender agrees to forgive the remaining amount.
  • File for Chapter 13 bankruptcy: This is an option that allows a homeowner to stay in the home and to catch up on mortgage payments. With a reorganization bankruptcy, the automatic stay will stop the foreclosure from happening and will allow the homeowner to create a repayment plan for repaying the lender.
Contact an Oak Park Foreclosure Defense Lawyer
If you have questions about preventing foreclosure, an Oak Park foreclosure defense attorney can assist you today. Contact the Emerson Law Firm for more information.


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How the Foreclosure Crisis Continues to Affect Single-Family Homes

Friday, February 28, 2020

Five Things to Know About Foreclosure in Illinois

If you are struggling to make payments on your mortgage, it is important to know that you are not alone. Even though Oak Park residents are no longer in the midst of a foreclosure crisis as many were a decade ago, homeowners are still having difficulty making monthly mortgage payments and trying to figure out how best to manage consumer debt. The following are five things to know about foreclosure in Illinois, including ways to avoid foreclosure.

1. Refinancing Your Loan is One Option to Prevent Foreclosure While Remaining in Your Home
Refinancing is a common route for avoiding foreclosure. As a HUD fact sheet explains, a homeowner who is late on mortgage payments should learn more about assistance options, including refinancing the mortgage to a rate and length that the homeowner can afford.

2. Short Sales can Allow a Homeowner to Avoid Foreclosure, but the Homeowner Will Lose the Property
A short sale can also allow a homeowner to avoid foreclosure, but the homeowner will need to sell the house. This option also requires the lender to agree to the sale, since the lender will need to forgive any portion of the mortgage debt that it does not recoup in the sale.

3. Chapter 13 Bankruptcy is a Useful Tool to Prevent Foreclosure and to Keep Your House
Filing for chapter 13 bankruptcy is a particularly helpful way of avoiding foreclosure. Chapter 13 bankruptcy can stop a foreclosure process through the automatic stay, and it can allow a homeowner to get back on track with mortgage payments in order to keep the home.

4. Fewer Lenders are Foreclosing on Homes in Most Places, but Illinois Foreclosure Starts Are Up
Recent data suggests that the rate of foreclosure starts in many states is down as of January 2020, but that information is not true for a number of states, and Illinois is one of them. According to an article in Mortgage Orb, Illinois is one of 19 states in which the rate of foreclosure starts actually increased in January 2020 in comparison to foreclosure start rates a year prior.

Illinois did not have the highest increase of all states in the U.S.—those spots went to California, Tennessee, and Georgia, with foreclosure start rate increases of 27%, 21%, and 14%, respectively. However, Illinois ranked 4th in terms of an increase in its foreclosure start rate, with a 9% increase from January 2019 to January 2020. In other words, banks initiated more foreclosures in January of this year than they did just one year before.

5. Illinois is a Judicial Foreclosure State
If your home does go into foreclosure, it is important to know that Illinois is what is known as a judicial foreclosure state. This means that, in order for a lender to foreclose on a property, it needs to file a lawsuit against the homeowner, and the homeowner has to be served. Homeowners should know that they do have rights during the foreclosure process, including once they have been served with a complaint. The homeowner will have a specific time to file an answer, and a lawyer still may be able to help that homeowner avoid foreclosure.

Contact an Oak Park Foreclosure Defense Attorney
Do you need help avoiding foreclosure? A dedicated Oak Park foreclosure defense lawyer can help you. Contact the Emerson Law Firm today to learn about our services.


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Thursday, November 28, 2019

How the Foreclosure Crisis Continues to Affect Single-Family Homes

Although the foreclosure crisis occurred more than a decade ago and most people have bounced back from the recession that ensued, the effects of the foreclosure crisis linger. According to a recent article in DSNews.com, a new study reports that the foreclosure crisis and real estate bubble burst of 2008 continues to “impact housing, from more unaffordable house and household instability to increased rents and evictions, depressed house prices, and deferred maintenance.” To learn more about how the foreclosure crisis continues to affect home costs in the U.S., we want to take a closer look at the article and the recent study.

More Rental Properties in Suburban Neighborhoods
As a result of the foreclosure crisis, there are fewer family-owned single-family houses in suburbs across the country, including the suburbs of Chicago. According to Suzanne Lanyi Charles, a professor of city and regional planning at Cornell University who authored the report, more families are now renting instead of buying homes. Charles explained how “single-family rental housing is an increasingly prevalent form of housing tenure in U.S. suburban neighborhoods, representing a paradigm shift in how households gain access to a suburban single-family home.”

Why are there more rental properties than family-owned homes? Many large corporations, Charles clarified, purchased foreclosed single-family homes after the 2008 crisis “in an attempt to stabilize neighborhoods.” Those properties remain corporation-owned, and those corporations continue to rent properties to families in those areas. For some families, being able to rent—as opposed to buying—a single-family home in a suburban area has been helpful.

Charles suggests, the fact that many of these houses are now rentals makes them available to families that would not have been able to buy those same homes in those neighborhoods. At the same time, however, “the reverse is also true,” Charles argues. She discusses the paradox: “Single-family rental housing in some neighborhoods may afford renters access to the opportunity that some neighborhoods can provide, while . . . in others [it] may have negative effects on households and neighborhoods.” Accordingly, Charles argues that a one-size-fits-all solution to managing corporation-owned housing will not work for all families. Charles refers specifically to Democratic presidential candidate Elizabeth Warren’s plans to limit the ability of corporations to own a large portion of single-family rental homes.

Additional Changes in Housing Since the Foreclosure Crisis
In addition to shifts in the rental market—meaning that there are far more single-family homes for rent and fewer for sale—the foreclosure crisis has also led to other changes in single-family housing. An article in The Washington Post cites the following as other ways in which the foreclosure crisis has affected single-family homes:
  • Types of home loans that existed before the foreclosure crisis largely do not exist anymore—instead, potential homebuyers typically choose between a fixed-rate loan or a loan that meets “Qualified Mortgage” standards”;
  • Most loans require a down payment of at least 3.5%;
  • Potential homebuyers are unlikely to qualify for a home loan with a credit score of under 620; and
  • Potential homebuyers with a credit score of under 760 will likely pay more in interest.
Contact an Oak Park Foreclosure Defense Lawyer

If you have questions about foreclosure or need help saving your home, an Oak Park foreclosure defense attorney can speak with you about your options. Contact the Emerson Law Firm to learn more.


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