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.
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
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.