Friday, May 25, 2012

Emotional Consequences of Illinois Foreclosures

As Oak Park foreclosure attorneys, we are drilled in understanding the legal realities of these situations.  However, it is important not to forget the real lives behind each case.  We understand that the foreclosure process can be incredibly stressful—particularly because the families dealing with it were usually put in the position because of some other life challenges, like lost jobs and medical emergencies.   

The emotions attached to these issues were brought home in a recent Huffington Post story.  The story explains how a Newbury Park, California man shot and killed himself earlier this month apparently because of a foreclosure.

According to the article, Wells Fargo had commenced a bank home foreclosure proceeding to evict Norman Rousseau and his wife, Oriane, from their home. Rather than have his family live on the street, Rousseau’s plans were to move his family into an RV.  Unfortunately, the difficult circumstances were too much for the man, and in the middle of trying to repair the RV, he decided to take his own life.

This is a devastating incident to say the least and even more alarming because it is not the first report of community members killing themselves because they are about to lose their home. In another untimely death earlier this month, a Connecticut woman who faced foreclosure killed herself after she shot her 85-year-old mother.

All of these national catastrophes are very concerning, and a reminder to our Oak Park foreclosure defense lawyers  of the mental health issues that homeowners across the country may experience with faced with financial difficulties.  During these times the elevated stress levels often lead to severe depression, alcohol dependency, substance abuse, anxiety and other mental health issues. As a result, several homeowners in this predicament could begin to lose hope and subsequently engage in self-destructive behaviors.

If you believe that your recent financial difficulties are causing you to suffer severe mental health issues, including depression and anxiety, or you know someone who may be dealing with these issues, please seek help from a professional counselor in your area. You can obtain additional information about mental illnesses and suicide risk factors by visiting the National Alliance on Mental Illness website at

Also, if you are a homeowner who is currently facing a foreclosure there are several remedies available to you to prevent you from losing your home. Depending upon your circumstances, you may be eligible to take advantage of the benefits under the Home Affordable Refinance Program, especially if your home was backed by federal government agencies such as Freddie Mac or Fannie Mae.  Also, filing for bankruptcy protection may also be a legal alternative available to you. Several homeowners in this situation have contacted our Oak Park real estate lawyers to learn about their legal rights once they recognize that a foreclosure may be inevitable.

However, it is always best to consult with an attorney prior to receiving the official notice of a foreclosure sale since a lawyer can usually review your case to determine if the mortgage servicer has committed serious errors that caused you to default on your loans. Increasingly those who have hired an attorney to review their case have found that their loan servicer has not followed the letter of the law.  Accordingly, many legal remedies may be available to fight the bank actions.

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Tuesday, May 22, 2012

Bank of America Announces Principal Reduction Plan for Underwater Homeowners

Earlier this year, federal and state officials announced a national-level agreement between the federal government and 49 state attorneys general and several large mortgage servicers to address mortgage loan and foreclosure abuses.  The servicers included Bank of America, JP Morgan Chase, Wells Fargo, Citigroup, and Ally Financial.  The final deal emerged out of a series of negotiations between the financial servicers and government officials, resulting in a total settlement of $25 billion.

Bank of America is now taking an additional step toward acknowledging its role in the foreclosure crisis, reports the Los Angeles Times.  The bank intends to reduce by about $100,000 the amount owed on as many as 200,000 underwater mortgages.  The promise is part of a $1-billion “side deal” to the earlier $25-billion foreclosure settlement.  (To read more about the original $25 billion settlement, see our prior post here.)  Our Oak Park foreclosure defense lawyers know this deal could provide important financial relief to struggling homeowners.  According to a Bank of America spokesman, the principal reductions could eliminate the entire underwater portion of some mortgages, with the average reduction projected to be approximately $100,000. 

A mortgage is deemed “underwater” when the amount owed on the mortgage exceeds the value of the home.  Typically, however, a homeowner’s concerns do not stop there.  Once a mortgage is underwater not only is the homeowner paying for a house that has lost significant value, but also he or she may fall behind on the mortgage, which generally results in hefty penalties and fees.

This “side deal,” while potentially helpful to a number of homeowners, is also self-serving.  By reducing the amount owed on its mortgages, Bank of America could cut significantly the amount of penalties it owes due to the settlement.  In fact, the $3.25 billion the organization faces in penalties could be reduced by approximately $850 million.

If you are a homeowner whose loan was serviced by Bank of America and you were at least 60 days delinquent on your mortgage as of January 31st, you may be eligible for an underwater mortgage reduction.  However, only loans serviced by the bank or private investors are eligible for the program.  That does include loans serviced by Countrywide Financial Corporation (“Countrywide”), the sub-prime lender that Bank of America purchased in 2008 and which led to many of the company’s woes due to the number of “troubled” loans Countrywide brought with it.  Unfortunately, loans owned or backed Fannie Mae, Freddie Mac, the Federal Housing Administration, or the Veterans Administration are not eligible for the principal reduction program.

According to Bank of America, about 200,000 homeowners will be eligible for the principal reduction program.  If you are a Chicago homeowner and you think you may be eligible, you can call 877-488-7814 for more information.

Those of us working in Oak Park foreclosure law know that no one wants to lose their home.  We also know there is no shame in asking for help.  Our attorneys are here to listen to your questions and concerns and will do our best to explain all of the legal options available to you.

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Friday, May 18, 2012

Oak Park Foreclosure Defense Lawyers Discuss the State of Illinois Foreclosure

A recent Chicago Tribune article discusses the condition of Chicago mortgage foreclosure, noting that the state is the third worst in the nation in foreclosures despite overall improvement across the country.  Illinois and New Jersey still trail Florida, but both states are getting worse.  In fact, according to the chief economist of the Mortgage Bankers Association, the Illinois foreclosure rate is more than double that of California.

One of the reasons Chicago’s foreclosure rate is so poor is not because loans necessarily are entering foreclosure at a greater pace than in other states, but because they stay in foreclosure for longer periods of time.  For example, according to the Chicago Tribune, the percentage of loans in foreclosure in judicial states is at an all-time high of nearly 7% during the first quarter.  In contrast, in non-judicial states the rate is 2.8%, the lowest since early 2009. 

Illinois is a judicial foreclosure state, which means a lender must sue a homeowner in state court.  Those of us working in Illinois mortgage foreclosure know that while judicial foreclosure can take longer, it typically yields more protections for debtors.  In non-judicial foreclosure states, a homeowner receives a notice of default from the mortgagee.  Thus, the mortgagee does not need to file an actual lawsuit to begin the foreclosure process.  Oak Park foreclosure defense lawyers know this can be very problematic because some debtors may never receive a notice of foreclosure due to errors in the system, putting them in jeopardy of losing their homes outside of the protections of a court.  In judicial foreclosure states, for instance, homeowners have the constitutional protection of due process, which requires the state to protect all legal rights of an individual and to ensure the legal procedures are fair. 

Even though Illinois is a judicial foreclosure state, thus affording its citizens more protections than those living in non-judicial foreclosure states, creditors may try to play hardball or take advantage of debtors who are unrepresented by legal counsel.  If you are concerned you may be facing Oak Park mortgage foreclosure, consider consulting with a legal professional.  Homeowners should not give up.  There are many foreclosure defense options at your disposal.  Sometimes allowing your home to be foreclosed upon is the best option, but it is important to make an informed and careful decision because a house is likely one of the largest financial investments you will ever make.

More than a year ago, the Illinois Supreme Court formed a committee to study our state’s mortgage foreclosure process, as well as how other states are dealing with large volumes of foreclosure cases.  The backlog of foreclosures, some of which is due to the exposure of lenders’ fraudulent behavior including robo-signing, is clogging the system.  Some of the committee’s recommendations to ease the backlog include paperwork changes and providing homeowners with more notice about their rights.  However, the committee also suggested that foreclosure sales should be held within 45 days of the expiration of the redemption period, the date by which a homeowner can make the mortgage current and keep the property, in most cases.  Although this is only a recommendation, such a change could seriously harm homeowners’ rights, so it is important to speak with a professional if you are worried about losing your home since Illinois foreclosure law is constantly changing.

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Saturday, May 12, 2012

Many American Debtors are Too Poor to File Bankruptcy

Many American families are too poor to file for bankruptcy, according to a recent article in CNNMoney.  Hefty filing fees may be preventing struggling consumers from taking the difficult, yet increasingly important, step toward getting out from under their crushing debt.  Recent research submitted to the National Bureau of Economic Research shows that the average cost to file for Chapter 7 bankruptcy protection is more than $1,500.  Those of us working in Chicago bankruptcy law know that making the decision to file for bankruptcy is never easy.  It can be difficult to admit you need help, but our attorneys are here to answer your questions, as well as to assist you as you consider all of your options. 

Why is filing for bankruptcy so expensive, potentially prohibitively so, for the people in the most need?  The answer is the cost of filing for bankruptcy has risen significantly in recent years due to the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act.  The law tacked on extra requirements to the filing process, including additional paperwork and consumer credit counseling and debtor education, many of which cost debtors.

The numerous fees involved in filing bankruptcy are making it tougher for lower-income individuals to take advantage of Cook County bankruptcy.  For example, it costs about $300 to file bankruptcy paperwork in federal court.  In addition, there are fees for the mandatory pre-bankruptcy credit counseling and a pre-discharge debtor education course, which cost about $85 altogether.  The higher fees correspond with the additional paperwork that is now necessary due to the changes in the law.  Bankruptcy cases can be complicated, and the changes make it even more crucial to consult a competent professional. 

According to CNN Money, the rising cost of bankruptcy filing will cause between approximately 200,000 and 1 million consumers to be unable to afford to file this year.  The National Bureau of Economic Research found that the bankruptcy rate has fallen slightly since the Bankruptcy Abuse Prevention and Consumer Protection Act took effect, but the average income of bankruptcy filers has increased.  Thus, consumers who are better off or middle class are more likely to be able to file, rather than lower-income debtors who may need it the most.

The attorneys at the Emerson Law Firm frequently handle Chapter 7 bankruptcy proceedings.  Chapter 7 bankruptcy is the most common form of consumer bankruptcy.  It allows consumers to consolidate student loans, protect loan co-signers, or eliminate credit card debt.  However, not all debt is dischargeable through bankruptcy, so it is important to consult a professional before you file.  For instance, student loan debt is not currently dischargeable, though the issue is being hotly debated.  There are also tax consequences related to filing for bankruptcy, so those most be carefully considered as well.  Our Oak Park bankruptcy lawyers have handled many bankruptcy proceedings and know how to successfully navigate the legal system.  For example, bankruptcy lawyers know you can request to have the $300 court fee waived if you are filing for Chapter 7 bankruptcy.  To be eligible, you must meet certain income and financial requirements, however, so, again, it is important to discuss your bankruptcy case with a qualified professional.

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Thursday, May 10, 2012

Mortgage Refinancing Challenges for Chicago Homeowners

The Wall Street Journal reported this week on the struggles that homeowners across the country continue to face as they try to refinance their mortgages.  This is an issue with which our Oak Park and River Forest mortgage foreclosure attorneys are intimately familiar.  It s yet another hurdle faced by those throughout our area who continue to work hard to try to get their finances in order following the recession.

 Like trying to talk to a real person when calling the cable company, residents are finding it difficult to even get a real conversation going with bank employees about the refinancing process.  One man interviewed for the story heard something when calling Bank of America that is likely familiar to many local residents: the bank was “swamped with business” and might be able to call him back in two to three months.

This can be incredibly stressful for all local homeowners trying to take advantage of the particularly low mortgage rates—averaging 4.05% at the end of April.  However, the increased demand for refinancing comes when banks own a larger share of the market than ever before.  In addition, it comes as banks generally tighten standards, taking more care when figuring out who to lend money to and how to process their loans. 

Experts advise that is it crucial to shop around.  The bigger banks often boost their rates, because they have enough traffic that they can afford to demand higher rates and make bigger profits.  The president of a smaller bank, Accunet Mortgage, explained, “It really is a rat’s maze for the consumer.  [Big banks] have enough people saying ‘yes’ to those [high] offers that they’re taking super-high profit margins.”

One expert explained that “You have more loans going through a pipeline that is too small.”

Loan originations  seems to be concentrating with larger banks more than at any time the past,  particularly the nation’s four largest banks.  In 2004 these banks—Wells Fargo, J.P. Morgan Chase, Citigroup, and Bank of America—originated about 38% of loans.  Now, six years later, those banks account for 55%

Right now more than one-third of all refinance applications are coming amid President Obama’s Home Affordable Refinance Program, according to the Mortgage Banker’s Association. The program generally allows those with loans backed by Fannie Mae and Freddie Mac to refinance even without equity or particularly strong credit.  The President continues to push for similar legislation to help underwater homeowners who have loans not backed by Fannie or Freddie.  It remains to be seen if that legislative proposal will become  

At the end of the day when it comes to refinancing, dealing with foreclosure, or working with banks on any number of home ownership issues, it is easy to get confused and overwhelmed.  No matter what, please remember that help is available.  Each Oak Park real estate lawyer at our firm is available to help residents throughout the area on these issues.  Whether you’re hoping to reinstate your mortgage, modify your loan, arrange a short sale, or just learn what options are available, the Oak Park foreclosure lawyers at the Emerson Law Firm can provide the experienced legal counsel you need.

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Friday, May 4, 2012

High-Fee Credit Cards Target Consumers with Poor Credit Histories

Recently, we explained that the Supreme Court ruled that binding arbitration clauses in credit card agreements are permissible, making it harder for consumers to challenge lenders in courts.  In fact, the Supreme Court’s decision all but ensures that a significant number of consumers will lock themselves into such agreements without realizing they cannot sue their credit card companies in court.  Compounding this setback for consumers, the Consumer Financial Protection Bureau is now proposing the reversal of a ban on exorbitant credit card sign-up fees. 
Those of us working in Chicago bankruptcy law know that many consumers in the greater Chicago area and across the country are still struggling.  Unfortunately, at least some of the current economic recession is due in part to poor choices made by those in the financial industry.  Many big banks were bailed out, and a number of predatory lending practices have been exposed.  Yet our Oak Park bankruptcy attorneys know that unscrupulous lenders may still prey upon consumers if our legislators do not remain vigilant.

According to an article in The Washington Post, the high credit card fees target consumers with poor credit histories.  The high-fee credit cards are known as “fee-harvester cards” because they typically have low credit limits, but high fees and interest rates, sometimes up to 36%.  Consumers trying to rebuild their credit histories with high-fee credit cards (likely because it is difficult to obtain approval for other cards) could actually cause their scores to plunge even further.

Three years ago Congress attempted to curb high-fee credit cards as part of a plan to address abuses by the credit card industry.  Congress wanted to cap the fees a credit card issuer could charge at 25% of the card’s limit during its first year of use.  So, for example, a card with a $300 credit limit would have a $75 annual fee.  However, such high-fee cards also come with a large up-front fee—e.g. $95 to open the account—which lenders can legally charge because the fee is imposed before the account is opened, thus circumventing the cap required by Congress.  In 2010, the Federal Reserve tried to extend the cap to include up-front fees, but its plan was thwarted, at least temporarily, by a lawsuit seeking a preliminary injunction to stop the rule from taking effect.

The Consumer Financial Protection Bureau (CFPB), formed last summer, took over the responsibilities formerly held by the Federal Reserve and other agencies for regulating consumer protections.  Yet the CFPB, an agency that is supposed to be working to protect consumers, is now proposing to undo the Federal Reserve’s regulation on up-front fees, which would allow banks to impose large sign-up fees (and high annual fees as well). 

Those of us working in Oak Park bankruptcy hope the government will do what is best for consumers.  Making the decision to file for bankruptcy is not easy, but there is no shame in asking for help and finding out about all of the legal options available to you.  If you are concerned about your credit card debt, or if you are worried you might lose your home to Chicago mortgage foreclosure, please consider speaking with a qualified professional today.

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Supreme Court Finds Binding Arbitration Clauses in Credit Card Agreements Permissible