Friday, June 29, 2012

The Homeowner Bill of Rights in California and What it Means for Illinois

Foreclosure Prevention Bill Close to Passage

As reported by the LA Times, the Homeowner Bill of Rights, a progressive foreclosure prevention measure, faces its final hurdles next week.  On Wednesday, a two-house special committee agreed to send the bill to the California legislature—on a partisan 4-1 vote.  The state Assembly and Senate received identical transcripts of the bill and are set to vote on the measure Monday, July 2.  The bill would take effect on Jan. 1 if approved; with Democratic majorities in both houses, the expectation for its passage is great.  Gov. Jerry Brown has not indicated whether he would sign the measures, though many have said they don't anticipate a veto.

California Attorney General Kamala D. Harris has largely been the face of the bill.  She called for “urgent efforts” Wednesday in order to aid struggling citizens.  The Homeowner Bill of Rights is a result of months of negotiations between banks, a bipartisan legislature, consumer groups, and the Atty. Gen. herself.  Although many have praised the reforming measure, there has also been much criticism towards the bill.  The California Bankers Association argued against its radical initiatives and stated it “lacked clarity” and definition.  Still, the controversial measure has hope for passing the state’s legislature.

What is the Homeowner Bill of Rights?

The Homeowner Bill of Rights is a collection of proposed laws, striving to aid and protect California homeowners.  The impetus behind the bill is to stem unnecessary foreclosures.   One of the intentions of the measure is end dual-tracking.  Dual-tracking is a common practice whereby lenders continue to pursue foreclosure even though the homeowner is applying for a mortgage modification; this allows for the lender to protect his or her investment, if the homeowner is not granted a new loan.  Under the Homeowner Bill of Rights, servicers would be required to provide homeowners with "a single point of contact.”  Many consumer advocates believe that dual-tracking dispirits homeowners, leading to unanticipated foreclosures.

Furthermore, the bill intends to not only limit some of the powers of the lender, but also strengthen the capabilities of the homeowner.  The measure gives the owner-occupier, first-mortgage holders the prerogative to sue financial institutions; granted, this right is under limited circumstances but still holds lenders accountable of reckless behavior.  Moreover, the bill also requires lenders to record a clear explanation why they deny a borrower a loan modification.  Holistically, the bill hopes to thwart the massive foreclosure rates—which have plagued California since 2007.  Whether it can achieve this goal is another question.

What It Means for River Forest, Oak Park, Chicago, and the State of Illinois?

This bill—being very progressive in its nature—is the first of its kind in the United States.  Many advocates believe that, if approved, the Homeowner Bill of Rights will serve as a template for other states.  Our River Forest foreclosure defense lawyers know that this means, for the next coming months and possibly years, citizens of Illinois may be hearing calls for related reforms.   A similar bill (aptly named “The Homeowner Bill of Rights”) was created in late 2010 in Illinois, but died in the state Senate this past February.  Do not be surprised if you hear appeals for this older, proposed measure—particular if these efforts in California are successful.     

This endeavor in California is one of many attempts across the country to prevent increasing foreclosures rates.   As those of us work on Oak Park and River Forest foreclosure know, these are complicated and convoluted issue.  The Emerson Law Firm aids multitudes of individuals with troubles such as foreclosure.  If you are dealing with foreclosure, please consider giving our firm a call in order to help you traverse this difficult process.   

See Related Blog Posts:

Job Transfer with an Underwater House

Distressed FHA-Backed Loans To Be Sold in New Foreclosure Reduction Plan

Friday, June 22, 2012

Job Transfer with an Underwater House

Many working professionals around the country today face a difficult situation. They are being transferred by their employers to another state and have to deal with their current home being worth less than their mortgage. Our Oak Park and River Forest real estate lawyers understand that getting out of this situations may not be easy, but it is not impossible.

What are your possible options?

There are two types of foreclosure that may be available depending on which one your state chooses to use. Illinois uses judicial procedures primarily for foreclosure. In a judicial foreclosure the lender must file a complaint and record a claim on the property to all interested parties. After going through the court a sheriff’s sale, which is an auction of the property, is conducted and the property is sold. The disadvantages of conducting a foreclosure are that you may or may not be held responsible for any deficiency resulting from the sale. Also, foreclosure appears on your credit report and has a negative effect on your credit rating.

Deed in Lieu of Foreclosure
You can agree to give your lender the deed to the property in exchange for not being obligated to repay the mortgage. This agreement must be in writing that states that the lender releases you from any obligations to pay any deficiencies that may arise.

The benefits of conducting a deed in lieu of foreclosure including having your credit repaired sooner rather than later if you conducted a foreclosure sale, avoiding the negative impact of a foreclosure, and it could possibly be a lot less expensive to conduct. The disadvantages include having to vacate your home within a reasonable time, which could vary between 30-90 days.

Short sale
You may be able to negotiate a short sale with your lender to sell your home for the currents value regardless of the amount you owe. The lender then forgives the difference between the property value and the balance of the mortgage. In some cases the lender has the right to approve or disapprove the sale. Lenders may consider your financial situation and their ability to pursue you for the deficiency.

There are a few downsides to conducting a short sale. For one, the remaining balance on the loan is usually not extinguished unless the lender indicates in an agreement that it will not be due. Another down side to conducting the short sale is that it will hurt your credit rating and appear on your credit report.

Renting Out Your Home
You can rent your home out in order to cover the mortgage payments in hopes that the market will eventually recover and housing prices will come back up. This may make it harder to buy another home in terms of qualifying for a new

Legal Help
The Oak Park and River Forest real estate lawyers at the Emerson Law Firm help resident with a wide range of issues like this one.  Dealing with a lender in these situations is stressful and time-consuming.  Please consider giving our office a call if you'd like help navigating these and similar issues.

Thursday, June 21, 2012

Distressed FHA-Backed Loans To Be Sold in New Foreclosure Reduction Plan

The Federal Housing Administration (FHA), a branch of the United States Department of Housing and Urban Development (HUD), is taking steps designed to hopefully prevent foreclosure for thousands of homeowners across the country.  The measures will also enable the agency to rid itself of numerous distressed home mortgages that are threatening the housing market.  According to an article in the Chicago Herald-Tribune, the FHA plans to sell 5,000 mortgages each quarter, and will begin putting this plan into action in September.

HUD’s website states that the FHA provides mortgage insurance on loans made by FHA-approved lenders throughout the United States.  The FHA, which insures mortgages on both single family and multifamily homes, is the largest insurer of mortgages in the world.  At the moment, the agency is reportedly burdened with more than 700,000 delinquent loans.  Selling those mortgages will have an impact on foreclosure because many banks have failed to address FHA-backed loans, even though they are eligible for debt reduction, preferring to address loans that were not backed by the agency.  As our Oak Park foreclosure defense lawyers know, by dragging their feet during the mortgage foreclosure process, banks benefit from fees and penalties racked up by homeowners who cannot pay.  This drives those homeowners further and further into debt as they wait for the resolution of the foreclosure process.

Shaun Donovan, Secretary of HUD, has supported debt reduction for some homeowners, particularly for owners who now own more than their homes are worth due to the market crash.  Those of us working in Oak Park and River Forest mortgage foreclosure understand that many Chicago residents are distressed by falling home prices.  If your home is underwater, you may feel as though you will never be able to get out from under your debt.  However, programs such as the FHA’s plan to sell off loans to reduce foreclosures can be a good option for some homeowners.  For example, the FHA’s program will provide investors with more freedom to reduce homeowners’ principal.  It will also provide them with the flexibility to offer rent-to-own plans.  Some homeowners whose loans are sold under the new FHA program may even benefit from reduced mortgage payments.

Homeowners seeking eligibility under the new FHA program will have to meet a few requirements:

1.  To qualify, loans must be more than six months delinquent
2.  Delinquent loans must also have gone through foreclosure-prevention programs
3.  The loan’s servicer must have already begun the foreclosure process, and
4.  The loan borrower must not be in bankruptcy

If the above criteria were met, the investor would have to halt foreclosure proceedings for at least six months, as well as agree not to sell half the properties secured by the loans for at least three years.  In order for all of this to work, the FHA also will have to sell its distressed loans at significant discounts.

The FHA’s pilot program has sold more than 2,000 distressed loans, but it is still unclear whether the program has been successful.

See Our Related Blog Posts:

Bank of America Announces Principal Reduction Plan for Underwater Homeowners

Oak Park Foreclosure Defense Lawyers Discuss the State of Illinois Foreclosure

Saturday, June 16, 2012

Sandra Emerson: Foreclosure Warrior

Our very own Oak Park and River Forest foreclosure defense attorney Sandra M. Emerson was recently featured in The Suit Magazine for her tireless work fighting for homeowner rights.  The article, which calls her “A Foreclosure Warrior,” describes why the Emerson Law Firm and its lawyers care so much about helping Chicago residents facing mortgage foreclosure or bankruptcy.  Abuses from banks during both the mortgage lending process and during home foreclosures have contributed greatly to the poor state of the housing market.  Now, when many homeowners in River Forest, Oak Park, and other nearby communities are concerned about the threat of foreclosure, Sandra Emerson believes 90% of mortgage foreclosures result from homeowners’ lack of representation.

Those of us working at the Emerson Law Firm know many individuals facing bankruptcy or foreclosure do not seek professional assistance, but we strive to change that reality.  We empower our clients—supporting them and involving them in every step of the process.  Sandra Emerson says, “Our clients are made to feel they are right there in the cockpit, helping us determine the right path.”

There certainly are a number of reasons that so many residents in our community are worried about the possibly of Chicago mortgage foreclosure.  The downturn of the economic market has led many people to seek our services due to no fault of their own.  Some have been victims of discriminatory or predatory lending.  Others have been victims of robo-signing and other bad mortgage company or bank behavior.  Still others are considering filing for bankruptcy due to unemployment or underemployment, high medical costs, mounting educational debt, or serious life changes such as injury or divorce.

Here are just a few reasons you can be confident in seeking assistance at the Emerson Law Firm:

Caring, Qualified Professionals

Our office is staffed with professionals who really care about our clients and about the state of bankruptcy and foreclosure in Illinois.  All of our employees are passionate and knowledgeable.  To learn more about the services our firm provides, click here.

Cutting Edge Technology

We use cutting edge technology at the Emerson Law Firm because we believe in making the most of the resources we need to be successful in representing you or your family.  In addition to high-speed scanners and specialized software, we have calendaring programs for deadlines and e-filing systems so our clients’ documents can be available instantly.  Our staff is well trained, courteous, and professional.

A Sense of Community

We aim to better the state of foreclosure for everyone living in Illinois.  One of Sandra Emerson’s dreams is to establish a foreclosure liaison committee that would improve the foreclosure process.  In particular, streamlining court procedures and mediation could greatly assist our clients, as well as homeowners across the state, so that they do not have to wait as long for their cases to be resolved.

But our greatest reward as foreclosure defense lawyers is knowing we have helped a client remain in his or her home.  “Our clients are not just numbers to us,” says Sandra Emerson. “We make them feel they are part of a family.”

See Our Related Blog Posts:

Bank of America Announces Principal Reduction Plan for Underwater Homeowners
Bank of America Settles Huge Fair-Lending Lawsuit For Discriminating Against Minority Borrowers

Friday, June 15, 2012

Illinois Foreclosures Rise in May

There is a misguided assumption that the housing crisis is over.  Several years have passed since the bubble first burst when homeowners across our area found themselves in significant financial trouble, often through no fault of their own.  However, the Oak Park and River Forest foreclosure attorneys at our firm are well aware that the problem is far from over.  The hole created by the recession was deep--we are yet to pull our way out of it.

For example, this week Chicago Real Estate Daily explained how Illinois foreclosures rose substantially last month.  The latest RealtyTrac report found that there were 16, 318 foreclosure filings in Illinois in May.  That represents a 29% jump from April and a shocking 54% jump from May of 2011.  For purposes of this statistic the total foreclosures includes default notices, auction-sale notices, and bank repossessions.

These figures work out to foreclosures on one in every three hundred and twenty five housing units in the state.  That rate places Illinois among the worst in the country--fifth out of fifty states.  Only Georgia, Arizona, Nevada, and California posted higher foreclosure rates last month.

Chicago-specific foreclosures are no better.  The city had a foreclosure for every two hundred and fifty two housing units--the fourth worst out of the top twenty major metropolitan units.

Those working on Oak Park and River Forest mortgage foreclosure defense strategies understand that these figures are yet another reminder that that the foreclosure crisis is far from over.  Families in our area and across the state continue to face problems meeting mortgage obligations and getting back on track after financial setbacks in recent years.  

One of the reasons for the jump in recent foreclosures are the backlog that built up following the “robo-signing” crisis.  Banks consistently cut legal corners in their effort to secure their mortgage, resulting in attempts to unfairly skirt the rights of homeowners.  Fortunately many legal professionals worked to defend homeowners, forcing a temporary moratorium on filings that has since been lifted.

Dealing with an Illinois Foreclosure      
Local residents who receive notices should understand that they have many options.  Simply doing nothing and allowing the process to unfold is often the least advisable option.  Instead, it is important to visit with an Illinois foreclosure defense lawyer to learn about ways to deal with the issue in your case.  

For example, the
Chicago Daily Real Estate Daily article noted how RealtyTrac officials admitted that many of the foreclosures will not actually result in bank repossessions.  Instead, things like short sales are going to be used more often.  A legal professional can explain how options like a short sale, deed in lieu of foreclosure, or loan modification might be appropriate in your case.  

It remains important not to go into negotiations with the bank without a full understanding of what the long-term repercussions might be.  For one thing, it is crucial to have an attorney guarantee that you do not receive a deficiency judgment after working on agreements with the bank.  The whole point is to deal with the situation in a way that provides you a clean slate to get things back on track.

See Our Related Blog Posts:

I’ve Got Multiple Mortgages, Can I Still Short Sell?

High Percentage of Underwater Mortgages in Chicagoland

Friday, June 8, 2012

I’ve Got Multiple Mortgages, Can I Still Short Sell?

The Oak Park and River Forest short sale lawyer at our firm often fields questions from clients trying to get help with mortgage problems.  We often explain that a “short sale” is a helpful tool whereby those struggling to pay a mortgage can deal with the problem without the need to go through the entire foreclosure process. In fact, a short sale is possible even when one has two (or three!) mortgages on a single home.  It is not easy and can get complicated, but a competent legal professional in the area can help you get it done.

Short Selling with Multiple Lenders
A short sale involves a homeowner working out an agreement with a bank to sell the home to a third-party for less than the total debt due on the home.  Many local residents were severely hurt in the recent recession—through no fault of their own—and found their house value plummet.  The short sale then, is an important way to escape from underwater homes.  When multiple lenders have a lien on the property, however, each lender must sign off on the short sale.  For example, if you took out a second mortgage on your home, both lenders would have to consent to the short sale before it could go through.

Some local resident might worry that getting two lenders to agree might pose a complication.  Of course, it is always a possibility that one of the lenders might hold up the process or put an end to it entirely.  Yet, our Cook County short sale attorneys understand that in some situations lenders are growing more eager to approve short sales.  Getting multiple lien holders to agree on a sale is not an insurmountable barrier.

For one thing, junior lien holders may have clear incentives to approve a short sale.  The junior lien holder is usually the second (or third) lender.  These lien holders often have little to gain via a foreclosure.  In a foreclosure, whoever holds the first mortgage gets first priority.  There is rarely any money left over for junior lien holders, and they may end up with nothing.  A short sale may prevent this

Last week news broke regarding changes in policy that will likely make short sales move along more quickly.  Federal regulations now require Fannie Mae and Freddie Mac to give short sale buyers a decision within two months.  This represents a big improvement and will make the short sale process more feasible for many local residents—including those who have multiple mortgages.

Dealing with foreclosure, the threat of foreclosure, or an underwater home can be a stressful, lonely time.  But resident should never forget that legal options exist to help them out of the situation.  The first step for those in our area is visiting with a local Cook County real estate lawyer to learn what is available in your case.  There is nothing to lose from learning more from legal professionals who have experience navigating all of these short sale and foreclosure complexities. 

See Related Blog Posts:

High Percentage of Underwater Mortgages in Chicagoland                              

Wednesday, June 6, 2012

DOJ and SunTrust Mortgage Inc. Reach $21 Million Discriminatory Lending Settlement

Another large mortgage lending company is on the hook for discriminatory policies and practices.  Last week, the U.S. Department of Justice announced that SunTrust Mortgage Inc. has entered into a $21 million settlement to resolve accusations of lending discrimination.  Our Oak Park and River Forest foreclosure defense attorneys know that many occurrences of mortgage fraud and abuse occurred before and after the burst of the housing bubble.  The Justice Department’s lawsuit alleges that SunTrust Mortgage Inc. charged minority borrowers higher fees based on their race or national origin between 2005 and 2009.  Specifically, the government alleged that SunTrust engaged in a pattern of discrimination against African American and Hispanic applicants that increased loan prices for many of those qualified borrowers.

The Problem
SunTrust Mortgage Inc. is the mortgage-lending subsidiary of one of the country’s largest commercial banks.  The Department of Justice investigated the company for over two years, including reviewing SunTrust Mortgage Inc.’s internal data and reports.  According to the lawsuit, the subsidiary engaged in discriminatory lending practices from 2005 to 2009.  However, at some point around 2009, the company implemented new policies to prevent discrimination.  Thus, a condition of the $21 settlement requires the company to continue using the policies it adopted to prevent discriminatory lending.  The Department of Justice stated that SunTrust Mortgage Inc. cooperated fully with the government’s investigation.

A judge must approve the SunTrust Mortgage Inc. settlement before it becomes effective.  The settlement was filed in federal court in Richmond, Virginia, which is where the subsidiary has its headquarters.

Bad Bank Behavior
This is not the first time a big mortgage lender has been accused of racial discrimination.  At then end of last year, Bank of America entered into the largest residential fair-lending settlement in history.  The company paid $335 million to settle allegations that its Countrywide Financial unit discriminated against minority borrowers.  In that case, Countrywide charged minorities more, on average, than non-minority applicants with similar credit histories.  To read more about that settlement and discriminatory lending practices, please click here.

It is not surprising for those of us working in Oak Park and River Forest mortgage foreclosure that another big mortgage lender is being held responsible for its questionable lending practices and policies.  We can only hope that those responsible for contributing to the downturn of the housing market will continue to be held accountable. 

While such settlements are important, we also realize that many struggling Chicagoland homeowners may feel these settlements do not have much of an impact on their everyday lives.  That is why learning about the legal options available to you in your individual circumstances can be so crucial.  If you believe you were a victim of lending discrimination or if you are concerned about the possibility of foreclosure, please know that you do not have to handle the burden alone.  At the Emerson Law Firm, we feel you should at least have the chance to tell your story.  That is why we offer confidential consultations so that you can learn about the many protections that are available to help struggling homeowners.

See Our Related Blog Posts:

Bank of America Settles Huge Fair-Lending Lawsuit For Discriminating Against Minority Borrowers

Friday, June 1, 2012

High Percentages of Underwater Mortgages in Chicagoland

An alarming number of mortgages in Cook County, Illinois are underwater.  In fact, in the greater Chicago area nearly 667,000 homes (or 44%) with a mortgage were underwater as of March of this year, the Chicago Tribune reports.  A mortgage is considered underwater when the amount owed exceeds the value of the home and is expected to remain so for the foreseeable future.  Those of us working in Chicago mortgage foreclosure are concerned about the high number of underwater mortgages in our state.  Significantly, 13% of the homeowners who were underwater on their mortgages were also delinquent on their payments by three months or more.  Such numbers indicate serious financial troubles for some Chicago-area families, despite minor improvements in the national economy.

Though many counties in the greater Chicago area are suffering high percentages of underwater mortgages, the numbers and total losses vary from county to county.  According to data from Zillow, a real estate website, 33.1% of homes had underwater mortgages, or negative equity, but the paper losses for those homes totaled approximately $5 billion.  On the other hand, some counties may have a greater percentage of homes with negative equity, but the total losses for that county could be less.  Kendall County, with 55.6% of homes with underwater mortgages, had paper losses of only $1 billion.

Homeowners whose mortgages are underwater are not necessarily facing Oak Park foreclosure.  As long as a homeowner is able to make payments on his or her mortgage, the possibility of foreclosure may never be an issue.  But many homeowners rightly may be concerned that their homes are not worth what they once were before the housing bubble burst.  Even if a homeowner is able to pay his or her mortgage, negative equity will become an issue upon attempts to place the underwater home on the market.  

Some homeowners even allow their mortgages to fall into strategic default when they decide to stop making payments on the debt despite possessing the ability to pay.  The homeowners literally walk away often because they fear they will not be able to regain equity in their homes.  It is important to remember that allowing your mortgage to fall into strategic default could have financial repercussions, including potentially damaging your credit, so you should make sure to complete extensive research and possibly speak with a tax attorney or accountant prior to taking that step.

Our Cook County foreclosure defense attorneys know that realizing your mortgage is underwater can be a very worrisome and even an overwhelming prospect.  However, acknowledging you may need help could be the first step toward regaining your financial security.  If you are a homeowner whose loan was serviced by Bank of America, you may be eligible for a new principle reduction program for underwater mortgages.  (To read more about Bank of America’s principle reduction program, read our previous post here.)  You also may want to consider speaking with a mortgage foreclosure defense attorney to learn more about the legal options available to you.

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